anna: welcome to "bloomberg market: the european open." i am anna edwards live in london aside matt miller in berlin. matt: good morning. today, political risk drives the day. treasuries fall with u.s. futures as investors watched senate races in georgia, but european futures point to a positive open. the cash trade, an hour away.

here are your top headlines. we have one down. networks report democrat raphael warnock wins one of the two georgia runoffs that will decide which party controls the u.s. senate. beijing tightens its grip. hong kong police arrest about 50 people, including a prominent american lawyer. it is the biggest crackdown yet under china's national security law, and saudi arabia surprises the market with a major oil production cut. crude touches a 10-month high. just an hour away from the start of cash trading in europe. in terms of european futures, we have green arrows. most european equity indexes were lower at the close yesterday with the exception of ftse futures, the highest, .9%. the nasdaq futures amidst the georgia vote count, getting crushed.

see aore than 1% as we gain in dow jones industrial futures. dow futures up almost 2.2%, nasdaq futures down 1.3%. the georgia election results as they come in, really moving the markets. not just futures, but we also see them moving currencies, both traditional and digital as well as rates. absolutely, so we focus on the other race in georgia, then. jon ossoff versus purdue to see if that gives the same color of results and the blue wave. let's get to the gmm because you see the uncertainty and the narrative coming out of georgia. he see that reflected over on the gmm. in terms of the equity market conversation, it is a little next.

in terms of the asian session, we are in limbo. there are different dynamics, the kospi dropped down, the chinese market shrugging off president trump's latest attempts to block activity overpayment channels, so that is what is happening in stocks in asia. futures mixed with european futures higher, u.s. wobbling around the stimulus tax. 10 year yields, something to watch in fixed-income markets, and we see appetite for some of the riskier currencies. up .4%,ralian dollar, and the euro stronger against a slightly weaker dollar. this morning. . matt: is get the first word news. today's top stories from the bloomberg terminal. kong has arrested dozens of opposition figures under a controversial massacre --

national security law. some 50 people were detained, including a u.s. american lawyer. president-elect joe biden's pick for secretary of state denounced the move, anthony blinken saying the arrests are an assault on democracy. germany is extending its locked down and tightening coronavirus restrictions as pressure mounts on angela merkel to contain the pandemic. deep confusion in financial markets.

u.s. intelligence agencies, as well as the fbi, say a major hack of the federal government was likely undertaken by russia. this contradicts president trump's efforts to suggest china may be responsible. the agencies say cyberattacks are ongoing. russia denies responsibility. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. anna: let's get into a markets conversation. we are joined by kristine aquino . good morning to you. sayingying to avoid georgia is on my mind, but i can't help myself. we are focused on the politics in the united states in this tight race. we've seen one of the races called for the democrats. that would give them 50-50. the market still focuses in on georgia. nasdaq futures retreat.

kristine: absolutely. this is the biggest catalyst for markets this week. we've been waiting for this basically since they november elections given it was going to come down to this in the end in terms of the future of what congress is going to look like, what governing in the u.s. is going to look like, and what implications are for stimulus. it is right that markets have george on their mind. it is interesting reaction to the initial results. one could take it has a bit of a the the fact moment given fact there has been a lot of anticipation and we are finally revival seeing a little of blue wave hopes, but we are not completely there yet. definitely reflected in treasury yields. the stocks reaction, a bit more curious and i think that is more reflecting the sell the fact situation we are talking about here. matt: there's so much going on

today surrounding china, from the arrests in hong kong, alibaba is trying to raise money, the new york stock exchange goes back again on delisting on its decision. also on the mliv blog, will trump's china bans have a lasting impact? what are you hearing? interesting,is because for all the kind of individual stories about china, in terms of the macro picture, investors are still focused on the fact that it is the only major economy that is expected to grow this year. its recovery from the pandemic has really been stellar, so that really remains the bigger focus. bouts of, we get reaction to the various stories, particularly yesterday's u-turn at the stock exchange regarding

chinese companies, but these are more noise related events. the signal most investors are taking from china is the broader macro picture. when it comes to what we are thinking moving forward related u.s.ump and china's relationship, i think it is the sense that there might be a bit of a change coming with the new biden administration. we know president-elect biden himself has said he might not immediately roll back some of the measures that president trump has enacted with regards to china. we will have to see what the situation is. i think the base case expectation for most investors is that u.s.-china relations would become less acrimony all that it was under president trump's administration. it is probably unfolding over

months rather than weeks. anna: u.s. futures, trimming losses a little bit. nasdaq futures, down by 1%. i want to ask about commodities because we got interesting developments from opec-plus. the saudi unilateral new year gift to oil markets, but copper prices are riding high. seems to be a demand side, also a supply side, but taking copper prices above $8,000 a ton for the first time in eight years. kristine: absolutely, and for all the comments about copper failing as a barometer of global activity in recent years, i think that is still very much the story that we are seeing of late with copper's run. it is very much a recovery hopes driven story here. there's also interestingly a green angle to copper. it is a crucial component in

making electric vehicles and some of the circuitry related, so in addition to the expectations that vaccines will help accelerate the normalization and recovery, which is great for copper as a barometer of global activity, there is also the kind of green angle here that could give a bit more longevity beyond the recovery story and something that could support it longer run, so it does have a lot of things going for it, especially because we are coming from such a low base in global growth last year and if we see eventually normalization, once major economies get past their lockdowns, especially in europe and the u.k., and once that story gets taken over by the vaccine rollout and that fully gets underway in massive

countries, yeah, the recovery story, very much a driver for copper this year and potentially propelling its to higher levels from what we are seeing now. >> thanks for joining us. matt: u.s. networks are calling one of the georgia runoffs for democrats. raphael warnock. with england back in lockdown, has westminster done enough to support businesses. we will speak to the british chambers of commerce director after 8:30 a.m. u.k. time. this is bloomberg. berg. save hundreds on your wireless bill without even leaving your house. just keep your phone and switch to xfinity mobile.

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thatcations, i believe could mean more aggressive fiscal stimulus. well above the 900 billion approved, the 1.6 trillion stimulus and to follow, we also expect the democrats will try to pay for that by hiking corporate taxes, potentially even income ,axes in the u.s. reversing some part of the fiscal stimulus implemented under the trump administration, and it should be mentioned also that part of the policy package, there could be ,ore emphasis on regulation

environmental protection regulation, and all of that seems this is a knee-jerk the dollarading weaker. we believe that is over the increasedm, with taxes and regulation, that will reduce the appeal so the reaction we are seeing at the moment is justified. sizablehink with a more fiscal package, potentially on the table, improving prospects in the u.s. in the morning or term accompanied by higher treasury yields could actually help the dollar, especially against low yielding safe haven currencies the like of the swiss franc and the japanese yen. purduee are seeing now is saying -- this is the incumbent republican david perdue saying the race is exceptionally close, so we will keep watching the latest developments.

the dollar could strengthen all weekend. i suppose in the more medium-term, which wins out? if we do see this blue wave, even if it is very tense in the senate, if we get democratic see concerns over tax and regulation trumping the yields gains against low yielding currencies? where does the dollar head? >> we think lower. the way we see it, we are at the end of an era for the dollar, the pride ofrently the trump's policy package boosting the economy via and lowerlower taxes, regulation and now, with potential democratic control over the congress, that era is coming to an end. dollar assets the less appealing.

that also means after four years longs in theast dollar, investors will be looking to diversify away from that. that could pave the way for a secular downturn in the dollar and markets could be the beneficiary, they could now attract portfolio flows potentially lower and so on and so forth. longer-term negative for the dollar. matt: is a good way to diverse away from that buying the pound? it has always been good, solid money and if the dollar is weakening, maybe the cable rate rises on the other hand, it looks like the british economy may shrink and british influence over the next coming years. valentin: well, there is a theme, a weak dollar theme and there are extensions to that theme, the pound is one of those

exceptions. it is the case of where we are at the moment. we are just coming from a brexit assessingcember and the long-term impacts to the economy, it does not seem to like an awful lot. withdition, we are dealing the third lockdown in the u.k. in less than 12 months and that will increase the risk of a double-dip recession in the u.k. we may be in the midst of a double-dip already. the bank of england will be and therates again markets, speculating about negative rates, so at the current level, cable -- take profit in the pound if you are buying at lower levels and depending on the near-term developments, cable could weaken .

fiscal stimulus in the u.s. would boost outlook at the same time the u.k. is dealing with a potentially double-dip recession. the theme of a weaker dollar could start dominating, but at i would rather be looking for interesting selling opportunities, potentially against other risk correlated currency. anna: valentin marinov from credit agricole stays with us. we are watching all the latest developments in georgia. markets as they were at the top of the hour, the nasdaq down by 1.2%. dow futures, a little higher as we wait for details. one of the two races has been settled, at least called by two networks. we are awaiting the networks to call the other race.

tightens, merkel germany's lockdown in a push to contain the pandemic. we will discuss the impact on the currency markets next. this is bloomberg. ♪

>> this is a clear reduction from the current limit of five people from two different households. weause of the reasons discussed, returning to this restriction we had in march is necessary and we believe this is the right thing to do, even if it is a difficult for people. anna: that was the german chancellor angela merkel who announced that the nation would be extending lockdown measures until the end of january as pressure mounts on the german government to contain the pandemic and speedup

vaccinations. state leaders have agreed to controversial limits on movement across the country. valentin marinov from credit agricole is still with us. can you tell us about the way we have seen currency markets move at the start of this year, and what that tells us about risk appetite? the pandemic is still the big story and markets tell a lot about where thinking is everyday on this, but what do you sense in markets is the level of risk appetite around the pandemic at this point? clear theit is still markets are trying to look through the pandemic and focus on the outlook further out once the pandemic has been contained, and a lot of that, especially at the start of the year, had to do with the rollout of the vaccine in the u.s., the u.k., other countries and it seems like reality is donning upon those investors realizing the rollout, however quick, will inevitably be slow. to feel theded,

positive impact of those rollouts, we it might have to wait until march and april but we could be dealing with a double-dip recession in the u.k., growth slowdown in the u.s., and europe. in ank we are very much situation whereby the markets risk,irly willing to buy appetite driving high and fundamentals are not all that supportive for the rally, so there will be a day of reckoning coming whereby investors want to see those vaccines at work, want to see the success of the lockdowns before they start adding to the risk exposure. matt: is there a day of reckoning coming for the euro, for the currency when all of this debt starts to actually bother people? is an interesting question and yeah, i think it will come at some point because

a big part of the resilience has to do with the expectation for a joint issuance. finally coming together, fiscal solidarity in the face of adversity. of the euissuer recovery bonds will not come before the second quarter of the year. the first funds will be distributed potentially by june of this year. in the meantime, we have to rely on the effectiveness of lockdowns, the vaccine, and it is lagging behind other economies so what some point, potentially by march, if the data doesn't improve and lockdowns are still not working, you could have people starting to get nervous about how much is in the price. i think that will come in potentially the first quarter of the year. anna: ok. thank you. interesting to see it is the

prospect of further borrowing and get pushing up the euro at this point in your thoughts. valentin marinov, joining us from credit agricole. this is bloomberg. ♪

matt: welcome back to bloomberg markets, this is the european open. we are 30 minutes from the start of cash equity trading across europe and in the u.k. we see futures rising across the continent and on the island. it is interesting because you have futures in the u.s. that are getting hit hard, as we continue to get election results that favor democrats. raphael warnock has been declared the winner by u.s. networks, the first black

senator from georgia, the first democrat to be elected out of georgia in the senate for 20 years. jon ossoff's campaign says they are confident he will win. says theirt, perdue, campaign will exhaust every legal recourse on the election. they are indicating they will put up a legal battle. we get german inflation data at 1:00 p.m. london time. over in the u.k. the governor of the bank of england, andrew makers willpolicy be questioned about the central banks financial stability report. that is from 2:00 p.m. the u.s. congress will count thetoral votes, and declare winner of the 2020 presidential election. that count is normally a

formality, but will get held up with allegations of voting fraud , leading to delays. update ons get an first word news. germany is extending its lockdown and tightening coronavirus restrictions. looking tomerkel speed up vaccinations. state leaders agree to controversial measures on movements within the country. the measures will remain in effect until the end of january. the british government says a million people have coronavirus. boris johnson is looking to accelerate the vaccine program, wanting to treat 14 million of the most vulnerable over the next month. pounds offered in emergency aid is said to be not enough.

the fbi says a major hack at the federal government was likely undertaken by russia. effortsadicts trump's that china is responsible. the cyberattacks are ongoing. 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. matt: hong kong authorities have arrested around 50 people under his controversial national security law, beijing's national security law, including a prominent american lawyer. the unprecedented crackdown was condemned by the incoming u.s. secretary of state. joining us is our asia government editor. what is the political context and background to the mass arrests today? ian: the national secured a law was enacted back in june.

there have been a trickle of arrests, a lot of prominent activists and former lawmakers have been arrested. a lot of people have fled into exile, some by boat leaving for taiwan. we saw the number of people arrested double in a single day. this is the biggest mass arrests under the law. as you said, un-american lawyer was caught up in this, which will -- an american lawyer was caught up in this, which will exacerbate tensions between the u.s. and china. anna: we are hearing from the chinese foreign ministry, saying groupsays those hong kong planned to topple the government. what does this mean for hong kong? ian: the opposition was

organizing and opposition primary ahead of elections scheduled for september. hong kong officials warned them not to do that, saying it was in violation of the law. the democrats said that was absurd, many of these things are enshrined in the hong kong constitution. china will arrest anyone who was a part of that democratic primary. at the moment it means hong kong has no political opposition whatsoever. a lot of opposition lawmakers resigned in protest a couple months back, and now we have a situation where anyone who is prominent is arrested, in exile, or fearing arrest. much iaink you very marlow. vaccine -- european countries

are facing criticisms over slow vaccine rollouts. germany, france, italy and spain have vaccinated fewer than half the number of people who have received a shot in israel, according to data compiled by bloomberg. israel is doing better than the rest of the world. commission is coming under pressure to buy more doses of the vaccine and to get them out quickly. we are joined by a member of the european parliament, luis garicano. your critical of the european strategy, saying it has been slow and mismanaged. you are addressing this to the head of the european commission. have you had a response from the commission why this is so slow?

yet. no, we have not had it is a disappointing situation. we are relying on only one manufacturer. all of this is important. somewhat europe is doing this foolishly. few hundred million when we really need to get to one billion doses. it is a case of six or seven vaccines in a portfolio we will get there, but it will take about a year. we do not have that time. we need to solve the approval bottleneck. this is urgent. help me understand

something that baffles me, the idea that the pfizer vaccine is the only one approved for public use. why is the commission not buying more of this? said hee head of pfizer faces a manufacturing bottleneck. he needs all the vaccines to fill in the hole. we have 300 million and need to buy more. the main issue is approval. we need to move faster with approval of the other vaccines. israel is a big example for everybody. emea needs to realize it is thousands of lives and hundreds of millions of euros in losses of employment etc.

this is not acceptable. as ife to deal with this it is a war operation, and money has to not be an object. before he moved into the regulators, there has been speculation one of the issues is the commission was careful to balance different pharma companies and nationalities and did not want to upset the french or favor german labs over french ones. is that the impression that you get? yes, i have heard people say that, but i have not seen any evidence that the purchases of pfizer biontech was held because of the sanofi french vaccine. i know countries will lobby for their manufacturers, that is fine. but the job of the commission is to ensure we have a european

strategy. that was the reason that would be disappointing. europe exited 2020 having acted very well with vaccines and the recovery plan. we had a good 2020 for europe, and it is a pity to start 2021 with these problems. maria: the market today is focused on the emea and decision on moderna. how likely is it to get approved today? luis: i would hope the moderna approval is as fast as possible. researchll seen the coming out with approval in other places, and it looks like a easy decision. whichalso a mrna, according to scientists, it

should be rolled out quickly. criticismre has been the european regulator seems to be slower than in the u.k. and united states. the regular says they are doing all they can. is the criticism fair? talked andwe have asked, the problem is we have to be careful, they realize and see this clear. that is fair enough. -- anti-circ crowd anti-vaxxer crowd have no reason to make these noises. i still think on balance that consideration, the anti--vaxxers will make noise no matter what you do. thatriority should be sure a safe vaccine is deployed

aggressively and fast. isia: the criticism governments are paying too much attention to the anti--vaxxers, and not doing enough for those who want a vaccine. luis garicano, mep, european parliament joining us here this morning, thank you. anna: thank you very much to maria tadeo with that important conversation in terms of the rollout of the vaccine across europe. developments in georgia. democratic senator rough ale warnock ousts kelly loeffler. focus now on one other key senate race. we will get details on that. futures in the u.s. fairly flat. this is bloomberg. ♪

matt: welcome back to "bloomberg markets: european open." we are 15 minutes from the start of cash equity trading. it looks like bloomberg is declaring warnock has won his senate race in georgia. we have seen networks declare he has beaten kelly leffler in georgia. we are waiting to see what ssoff andith alo purdue. the democrats have taken one of two senate seats which will be determined who controls the senate and in effect the entire government. as we said, jon ossoff's campaign is assuring media that they will win because the remaining votes to be counted come from democrats.

purdue is assuring media they will put up a legal fight to drag this out. let's get to derek wallbank with the latest. when one side says they will sue, can you take it for granted that they think they will lose the count? the math is what it is. every network has called one of these races for raphael warnock over kelly loeffler. the other one is not just jon ossoff-david purdue, but control of the senate. you would expect this to be a fight. it is also closer. jon ossoff is ahead. if you look at the areas in georgia where you see votes legally cast waiting to be counted, you are seeing those in democratic areas. you would probably rather be jon ossoff than david purdue, with a

lead and more of your home turf left to count. you can read into the lines in both statements from the campaigns put out, with purdue promising a fight, and jon ossoff saying, we think we will win. anna: the markets are moving on this story, nasdaq futures moving lower. other markets little flatter. 2%.ell 2000 futures jumping in terms of what this would mean, if we see democrats take control of the senate, this for the bidenh agenda. what will be the first order of business? maybe appointing the people he wants to appoint. derek: i think the big control is agenda. people who do not follow

washington extreme the closely will learn a lot about senate procedure coming up. yes, the first one is appointments. at the end of barack obama's administration, he had a supreme court vacancy and mitch mcconnell did not let them have a vote on his nominee. that ends. you have reconciliation processes that let you do financial things. a great putter therrien -- twitter thread was written on that. tax stuff, stimulus stuff, that would be along the lines where democrats will have a better chance with control of getting what they want, whereas the more policy related stuff, climate change and things like that, the is still subject to legislative filibuster, and it requires 60 votes. nobody is going to get 60 votes, so you will see a divided

washington. republicans both hanging on a thread, both majorities in the house and senate hanging on a thread. democrats getting to do everything they want is overstated, but the idea this would be a major obstacle to overcome is real. much, derekyou very wallbank talking to us about the state of the georgia elections and its implications for the u.s. even as investors wait for the outcome of the runoff elections, traders are positioning for more stimulus. five andch between 30's is the widest since november 2016 in the wake of president trump's victory. joining us is dani burger.

dani: we have talked to strategists and read their work over the past few months, and it seems that the majority of opinion was that a democrat sweep of both senate runoffs, or even one winning seemed to be not a likely scenario. it was posted as a tail risk. that is when you get a day like this where we get dramatic action. traders in hsa u.s. futures when it comes to treasuries have seen normal.es the volume of we get the u.s. ten-year piercing 1% and a steepening of the yield curve because the long bonds are getting beat up. traders saying there is a possibility for more spending and stimulus and deficits, as well as supply. nasdaq futures getting crushed, shows the capital gains and higher tax rate is a fear for

investors. small-cap futures are doing better in the u.s. the volatility picture is interesting. curve,ook at the february contracts have a big jump that captures january 20. we could see drama over the next month. anna: thank you very much, dani burger with the latest on how markets are preparing for the handover of power. we are minutes away from the market open. up next, a look at stocks to watch. including greg's, the bakery chain that does not want to return to profit levels until 2022 because of the lockdown on hospitality businesses. this is bloomberg. ♪

matt: welcome back to the

european open. we are six minutes from the start of cash equity trading. let's get your stocks to watch. joining us is dani burger. you are going to kick it off with gregg's. dani: it is a sausage maker that makes vegan sausage rolls as well. we were talking how they will do well from the vegan sausage. they are seeing pain in the fourth quarter and full year and do not see a return to pre-covid profit until 2022. 80%t quarter sales fell by from 2019. social restrictions and higher unemployment means it will be difficult to predict performance from here on out. anna: sausage roll maker. heard?at have we m&s are close to buying a

fashion brand, according to sky reporting late yesterday. stock butcquire the not their standalone stores. sky reporting this could be signed in terms of an agreement as soon as this week. day i wouldn the buy all my blt's from m&s. i used to bind my underwear from m&s when it was next to our office. tmi.tle logistics, what is the story? dani: clifford logistics have becauseurge in activity of the holiday period. they are seeing more logistics business coming in higher

year-over-year. somebody got a logistics story to work well at the end of the year. thank you dani burger. coming up, the market open. all eyes are on georgia. this is bloomberg. ♪

anna: one minute until the start of cash equity trading. here are your headlines. democrat raphael warnock house the republican incumbent in george's runoff, leaving the future of the senate race hinged on one other key battle. beijing tightens its grip. hong kong police arrest around 50 people, the biggest crackdown under china's controversial national security law. saudi arabia surprises the market with oil production cut.

crude touch is a 10 month high. futures, we look at are looking at gains. we did close down yesterday across european equity indexes. the ftse put up some gains, and it is showing the biggest gains in terms of futures as well. it is typically the first index out of the gate in terms of trading, and the markets are opening now. the ibex straight up 1%, a big bounce at the open for the madrid index. up 0.5% up and is hovering at that level. we wait for other indexes to open, it seems clear european markets will show green across the board. the u.k. setting another daily

even as it sets another record with coronavirus cases. we do have gains. i assume we are talking about haveavirus cases, but you a deeper and longer lockdown announced in germany yesterday. anna: yes, yours extended until the end of january, and our lockdown in england, we have guidance that schools will be closed until the middle of february. we have to wait and see. we will get daily data on the number of vaccinations. that hopefully focuses on the progress. let's look at u.s. futures, focused on what is going on .in georgia

nasdaq futures down 1.8%. we have seen a steepening of losses. dow futures moving to the upside. the russell 2000 index of moving to theures upside as well. there are different assumptions made about may the regulatory and tax challenges the economy will face. let's get back to the start of the european open. daily case is. set another record with one in england to have the virus. we talked about the lockdown measures announced. sonja laud, cio, legal & general investment is with us. markets havetite at this point or investors have, we spent time talking about the

medium-term promise of vaccination, and now are reminded daily through the winter of the stresses in the short term. i wonder if short-term concerns can take a front seat for markets, or will investors remain focused on the promise of the vaccine? anda: i think you are right phrased it perfectly. it is what is currently happening. we were fully geared toward the cyclical recovery based on normalization in the second half based on the fiscal and monetary support, and now we are reminded on a daily basis that the virus is not going away soon, and has deteriorated significantly across europe. early pickups in the vaccination, we

knew there would be some hiccups. it seems if you look at the volatility, the focus on the cyclical recovery is the dominant driver here. watching on a daily basis and making sure the vaccination rollout and efficacy of vaccinations as promised. matt: it looks like we have a lot of cash in the hands of consumers. are a lot of people with no money and no job, struggling to pay rent. higherings rate is much and rising in europe. a lot of people take this as a of this other side bridge, those funds could be released, helping prop up the economy further. sonja: absolutely.

there have been comparisons with the roaring 1920's. there is pent-up demand building. people would unleash that spending on areas we have had no chance to spend on the last couple of months. it is linked to how the normalization would unfold. in particular, how long the psychological impact will last. it is interesting that we do not we would brush it aside once normalized, and then go back to a pre-pandemic hate your, or if there is longer-lasting effects that might have an impact on the potential of a roaring 1920's repeat. you are right with that, but we have to be mindful that this is an unusual period, and the

impact on our social and consumption behavior might have changed. expect demands to be unleashed once we normalize. anna: i am looking forward to the jazz music, the dress and parties if we are heading for another roaring 1920's. about what we see in treasury markets? treasury yields touching 1%. this is focused on the politics out of georgia. how high do you think treasury yields move on a democratic takeover in washington, even though it might be a tentative takeover of the senate? sonja: we have to be mindful it ontentative and dependent vice president-elect kamala

harris veto's role. be furthermight stimulus, and it is clear the democrats are at the higher end of additional stimulus. we know from the programs that all the democratic candidates said it will go hand-in-hand with tax hikes, so you will have a balancing act. this is what equity markets are looking at. mindful that even if they were to win the second seat, how this can be translated into policy measures down the line. ,e should not forget the u.s. the vaccination rollout, the is ann cases -- it immediate reaction to what is unfolding in georgia, but we will not see a complete reversal in equities or treasuries. matt: is there a rotation out of

the u.s. and possibly into europe? we have heard people talk about that. i do not see evidence, the tech stock rally seems to continue but today they are down 1.7% on the nasdaq. sonja: our base case has been on the basis of our assumption of a cyclical recovery come on normalization, continued fiscal and monetary stimulus, that market leadership would automatically broaden. given that the u.s. and tech stocks have been dominant implies you will have better opportunities elsewhere. we are focusing a lot on the accelerated long-term structural theme, and we should not forget technology is a big winner of the pandemic. you have to balance and identify long term structure trends, and identified the right investment

opportunities. with this, you have more upside potential. a 1.7% drop in nasdaq futures does not undo all of that. , sonja laud, cio, legal & general investment, who sticks with us. is bloomberg. ♪

anna: welcome back to the european market open. european equity markets up 0.3% despite the fact u.s. equity markets point two the downside, pre-oak abide by u.s. -- preoccupied by u.s. politics. london is facing its biggest reset, but with u.k. eu trade deal, the financial center has been cast into doubt. let's get the thoughts of sonja laud, cio, legal & general investment, somebody who has a lot of thoughts on this subject. i wonder what you make of the potential for a change to the delegation rules under eu rules

which allow companies and other jurisdictions to manage the money and you investors. you expect eu regulators to take control of where that money is managed? right,you are absolutely it is the elephant in the room and the way we have to think about the future. prior toregulators, the deal that was arranged over christmas, made clear they would like to see the balance shift more toward europe, and they are keen to strengthen the european asset management industry. that is not fully surprising if you think about the amount of aum sold into europe or managed on behalf of european clients. you rightly pointed out, we

do not know yet because services and financial services have not been part of the deal agreed before christmas. we have to wait and see how this turns out. this is an area that is important for the u.k. and the eu. the focus immediately on market access, we have talk around the equivalence of trading venues, derivative trading and share trading obligations, we have more clarity here, although it is clear that on monday we saw a big shift. the majority of euro dominated shares traded in the euro zone. that might be a taste of what is to come. there is a lot of detail to define. europe has allocation agreements with the u.s. the u.k. is not an outlier, but it is an important part of london. we see a change in

regulations, will there be anything money managers can do to mitigate it? will it be a case of setting up operations in european cities? sonja: yes, this is what u.k. based asset managers had to do anyway. banksse u.k. based had to set up european headquarters to demonstrate you have the right substance in the eu to manage the business you have on the ground. from that angle, all companies by now are prepared. what would change is if we were required to have investment managers and fund managers on the ground. that would be a shift that would trigger some people to move. it would not be that you need to do the regulatory set up, we have our headquarters in dublin like other money managers.

it is not unusual, this is a set up most companies have in place. what would be the difference is if you have managers on the ground, because as it stands, most branches are distribution hubs. there might be issues, which would be fundamental because this has been the model, you have your distribution staff in the region and an investment hub in london or new york. matt: why is it important to keep that hub in london? it is a great city, i love it. but paris is beautiful as well in the spring. why post-brexit will london remain key? sonja: there is a benefit of having key investment staff together, but not impossible. some other houses have investment staff on the ground already. most global asset managers will

have investment staff in the u.s., asia, and london. it is something to think about if you think about the proximity, in the past, asset managers did not see the need to flip between u.k. and europe because it was so easy to communicate or travel on a daily basis to the continent to speak to clients. now that will have to be looked at depending on what the agreement will be between the u.k. and eu. anna: thank you very much for joining us, sonja laud, cio, legal & general investment. she will continue her conversation with us on bloomberg radio at the top of the hour. coming up, the saudi's take charge, the kingdom announces a large oil cut sending crude higher. we will get more details. we wil- [announcer] imagine having fuller, thicker,

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markets: european open." we are 20 minutes into the session and looking at a mixed picture. the dax down 0.2% and the ftse gaining 0.5%. very little change on the cac quarante. a mixed picture with a lot going

on in u.s. politics as well as in europe. i think china is where it is at when it comes to the big story. alibaba intends to raise as much a dollar bondvia sale as early as next week. this is something bloomberg is reporting. it matches alibaba's record for a single issuance of offshore corporate debt, and comes after the ant ipo was crushed by regulators. -- joiningis china's us is bloomberg's china reporter. why is alibaba coming to the offshore bond market to raise money? it looks like they are grabbing for cash as they worry about a regulatory lockdown. alibaba is at a

low coming to market. we have seen a rush with chinese and asian companies coming to issue dollar bond debt. they are trying to take advantage of low rates before they move higher, and take advantage of strong demand from buyers. havealibaba does maturities coming up, 1.5 billion this year. 5 billion potentially 8 billion would be massive. this is well beyond the size of any of the other deals. fundingion to cheaper costs, there is discussion around whether alibaba is trying to take advantage and capitalize on its access to capital markets. how are investors expected

to receive this sale? rebecca: that is the critical question. there is some interest around the timing of the sale. it is the first time they are coming to market with dollar bonds since beijing launched the antitrust investigation on ant group. some say this will be an important test for global investor appetite for alibaba. i think the think we are paying attention to is whether or not and buyers buyers outside asia coming to support this deal. 5 billion is an ambitious target. expectations.bust the interest will be whether we get to the 8 billion outer limit. comew a rush of tech names to the market last year, and even then this tencent deal would be the biggest, set that

record or keep that record when inbaba issued 8 billion 2014. matt: thank you very much, we will get you back here in the coming days to continue your reporting. let's take a quick look at what is going on with nasdaq futures. and this isan 2%, double the drop we saw 10-20 minutes ago. they are accelerating. it could be tied to the georgia runoff election results, after we already saw one of those elections declared for a democrat. race,k winning the senate a historical win because he is the first black senator ever theted from georgia, and

first democrat georgia has sent to the senate in 20 years. jon ossoff, if he wins the second race, that would put democrats in control of the senate. it would be a 50-50 split with the vice president deciding a tie. the nasdaq futures are selling off. saudi arabia has donned the oil arket by announcing crude production cut of one million barrels per day. we are joined by will kennedy. meeting,an interesting extended, and now saudi is making a gesture. will: it is a bold gesture and a bit of a surprise. what we expected was they may increase production. about 50, but at

the saudis are nervous about the prospects of the virus, and what is happening in the u.k. and the u.s. they decided to make a bold move to assert control over the market and take a million barrels out of the market every day for the next two months. the market reacted strongly, about $53, the highest since the pandemic. it means the market may be short of oil for the next couple of months, and we will scramble to find balance. anna: thank you very much. will kennedy, bloomberg's executive energy and commodities reporter. t government doing

enough to help businesses during the latest lockdown? al,will speak to anna marsh that conversation next. this is bloomberg. ♪

♪ anna: welcome back to "bloomberg markets: european open" 30 minutes into a trading session that seems a bit jittery based on the results coming in from georgia. really playing catch up with yesterday's story in the united states, where we were left behind by some of the gains they made. today are u.s. futures, nasdaq ,utures down by more than 2% pricing in concerns about regulation, taxation if we see control of the senate from the

democrat side. they have settled one of those battles in georgia, another still left to be settled. that's the overall picture. the banking stocks doing quite well. hsbc up by more than 5%. we have seen the 10 year treasury above. we also have the oil stocks doing quite well. brent rightandle on now. matt? matt: let's get the bloomberg first word news for you. these are today's top stories from the terminal. who will control the senate? that is hanging in the balance in georgia right now. warnock hasael defeated incumbent republican senator kelly loeffler in one runoff election. the other race has not been called. democrat jon ossoff is in the lead. the dems need both to control

the senate. , and the vpve 50-50 has the deciding vote. arrested dozens of opposition figures under a controversial national security law. some 50 people were detained, including a u.s. american lawyer. pickdent-elect joe biden's for secretary of state announced a move, antony blinken saying the arrests are an assault on the city's democracy. the new york stock exchange is considering another u-turn again. it may revert to its original majoro delist three chinese telecoms firms. that's after steve mnuchin criticized the decision to grant the company is a reprieve. the back and forth has soda deep confusion and financial markets -- sewed deep confusion in financial markets.

global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. anna? 4.6 billion pounds in emergency support has been made available to help u.k. businesses survive this third lockdown that we are currently embarking on. the restrictions in england will be in place until at least the middle of february, putting the economy at risk of a sharp double-digit recession. businessesspitality will be granted to funds to tide them over until spring. joining us now is at the marshal, british chambers of commerce director general. marshall,- is adam british chambers of commerce director general. what specific measures do we need to be extended and how quickly? adam: quite frankly, we need to see all of the measures that been put in place extended beyond their existing finish dates.

some of them, including some tax reliefs, finish at the end of march. the furlough scheme which has helped to preserve a significant amount of employment in the u.k. ends at the end of april. the british chambers of commerce has been calling on the u.k. government to set out a plan for the whole of 2021 rather than drip feed measures through every couple of months to tide businesses over. unless we see that longer-term plan, it's going to be very difficult for businesses to look at. anna: will any plan, though, undoubtedly or inevitably cliffes some kind of edge? what is the impact of those cliff edges? adam: it is absolutely the case that measures will have to taper or come to an end at some point in time. that will cause discomfort or more serious consequences for some businesses. what we know from the grassroots

of business communities literally right across the u.k. is that cash is the major problem facing companies right now. they have been running a marathon over the last 10 or 11 months. they arctic -- they think they are within sight of the finish line but they might fall before they get there because they run out of cash, run out of energy to survive. that would be a bad outcome. the u.k. government has put billions into supporting businesses and employment. you would not want them to fall within sight of the finish. matt: is that enough, though? is what the u.k. government has done, adam, enough? specificbcc want measures taken that have not yet been? adam: yes, i do think they need to go further. i think that business rates relief, tax exemptions for businesses need to be extended and amplified so they include more affected firms.

we need some help for businesses that are in supply chains. there has been a lot of focus on the retail, hospitality, and leisure industries in the u.k. they are so visible to people as businesses that have suffered through the pandemic. they have got behind them huge numbers of companies in their supply chain, service providers, and others who have not had the same level of help. rel needo to see tax iefs, forbearance and other help extended. what kind of assumptions are members making about when life does get a little bit more normal? we get the best analysis possible without any certainty. whatar from the government they are planning but what kind of working assumptions do your members make? adam: i think they are working on two time horizons.

they are trying to battle through the days and weeks in front of them. the situation is critical for so many businesses. those who are able to raise their sites towards the horizon are looking at the warmer months of the year, so the summer months of the year, as a point in which things can become significantly more normal and where demand could return. some of these restrictions come to an end. governments now need to do whatever they can to accelerate that. there is two ways that they can do it. the first is rolling out vaccines as quickly as possible. the second is also rolling out mass testing in the workplace. that is another way we can keep businesses and the economy open and keep the confidence of the public, too. matt: we had a story on the bloomberg this morning saying that european savers have amassed more than 600 billion euros to be unleashed on the others of this, you know, after

the vaccines have been rolled out, etc. do you see something similar, do you see such a coiled spring in the u.k. economy as well? adam: i think undoubtedly there is pent up consumer demand out there. a lot of people have been saving more through the pandemic. some have not been able to do that at all. in aggregate, i think there is money waiting to be spent. we know human beings are social animals and we know that sectors like hospitality and leisure would see a return of their customers, if they were able to do so. thei do think that getting economy back open with vaccines and testing will unleash some of that consumer spending power. we are going to need to see that because the consumer in the u.k. in particular is a huge driver of the economy. anna: thanks very much for your time, good to speak to you. adam marshall, british chambers

of commerce director general. good to have you on the program. coming up, revenue growth and strong returns for firms which are lgbtq inclusive. we will discuss diversity and the findings of some really interesting analysis by credit suisse. that's next. this is bloomberg. ♪

♪ welcome back to "bloomberg markets: european open" 41

minutes into wednesday's trading session. we have modest gains coming through on the european equity markets space. u.s. futures suggesting there could be some downside to come. nasdaq futures down by more than 2%. the big focus on the extensive control democrats will have in washington. here is today's rundown of top corporate stories we are covering. resident donald has signed an order banning u.s. transactions with 8 chinese apps, including anti-group alipay -- ant group's alipay. it does not come into force for another 45 days. has overtaken man warren as the sixth wealthiest person -- orientate -- overtaken warren buffett as the six dwelt in person on the planet. -- sixth wealthiest person on the planet. he has gained over $13 billion

since the start of the year. ceos of the u.k. biggest companies learn more than 34 hours a week than the media worker will earn in all of 2021. today, the gap is about 120 times higher between worker and executive pay. onlyin the 1920's, it was 20 times higher. -- back in the --, it was only 20 times higher. matt: credit suisse says it's lgbtq inclusive stock basket has outperformed. the bank's analysts found that revenue growth and returns are stronger at firms which embrace diversity. joining us now is eugene klerk, credit suisse global head of the esg research. how much of this is simply about embracing diversity? i mean, if you want to sell more stuff to more people, it's good

to get all different kinds on board, isn't it? eugene: good morning, met. the first -- matt. the first thing to say is that betweenfficult to prove a more diverse company and outperformance. we believe the relevance of diversity is undeniably significant, not just from a quality perspective, but also very much because -- an e quality perspective, but also very much because it taps into a significant group of consumers. if it were an economy, it would be the fifth largest economy in the world, and therefore, a more diverse company is likely to be better equipped to tap into those consumers, as well as the broader issue -- nation. anna: if consumers are shopping with an awareness of that inclusivity, i can see how that makes sense. how do you measure lb gt cute

inclusivity -- lgbtq inclusivity? how do you define it? how do you turn that into something you can measure? eugene: very good question. it goes to the heart of one of the toughest areas of esg research more generally, and that is within the social aspects. historically speaking, we have a focused on diversity from a gender perspective, male versus female. for this particular report, our first in a venture into the ontq topic, relied firmly external sources. you have a stone employers survey in the u.k., the hrc corporate quality index. it basically reviews or surveys not just companies, but also employees working for companies to assess their inclusive policies towards members of the

lgbt community. is fair to say that in terms of disclosure, that this is an area that needs improvement. specificallyrates, those outside the u.s., to disclose more on their policies towards equality, diversity, and lgbt, something we believe will happen over time but something in need of improvement, as far as we are concerned. stdr, the look at the u.s.r diversity index, she equity on the bloomberg, which is something we talk about a lot, he massively underperformed the s&p over the last five years -- it massively underperformed the s&p over the last five years.

i wonder how much that underperformance is simply to the technical construction of your index? andne: we set to adjust market cap weight all of our baskets in order to remove any sector buyers. there is arguably a sector buys. if you look at -- bias. the constituency of our universe is dominated by the tech sector, for example. some investors would argue there is a tech story running through here. we adjust for sector biases. i am not altogether familiar with what you are referring to, but we certainly remove sector and market cap biases to basically eliminate that particular element. --a: when you are looking at if you are an investor and you want to get exposure to this kind of thinking within business, if you want to invest in these businesses that are this inclusive, do you have to go to the u.s.? is that where you find indexes that are ready-made for this

purpose or are they available elsewhere? eugene: it is largely u.s. focused. that is predominantly because of disclosure. u.s. companies are more open about their policies, their diversity policies. benchmark -- our benchmark consists of about of 88% of companies coming from north america. companies outside of europe or north america account for 2%. it is really a u.s. dominated basket. matt: how much interest to you get now from clients for these kinds of products? eugene: it is rapidly increasing. as i mentioned at the beginning, the area that has received less focus from investors as far as e.g. is concerned -- esg is concerned is a social area. what we find is a rapidly increasing interest in trying to tap into companies with a strong

social policy, be it diversity even onader context or a more narrow context, male versus female. there is definitely a rapidly rising interest. a lot of that is driven by the interest in esg more broadly, which we think will continue. anna: thanks very much. eugene klerk, credit suisse global head of esg research. the warnock ousted republican incumbent in georgia's runoff, leaving the future of the senate hinged on one key race. we have one to find the answer to. when we do, we will look at the market reaction. markets are reacting in anticipation of these results. we will get the latest from our markets live team next. this is bloomberg. ♪

♪ matt: welcome back to "bloomberg markets: european open" 52 minutes into the session, and we are looking at european equity indexes that are kind of mixed. not a lot of change on the dax and cac right now. the ftse is up 2/3 of 1%. joining us is richard jones.

me, the georgia inctions, i mean, everyone the u.s. was staying up late enough to talk to me on the phone when i woke up this morning and are all following it very closely. markets seem to really be reacting. what do you see? >> good morning, matt. i think markets are trading as if the democrats are about to take control of congress. that's probably going to lead to the sort of noise we are seeing today in u.s. markets. u.s. stocks and bonds are selling off in tandem. i think the reason is because you have investors weighing the short-term and long-term implications of the democrats controlling the white house and both houses of congress. it is a huge shift. i think it's going to take some time for assets to digest all the implications. and the short-term, the bond market expects to see much more fiscal stimulus from the fact

that the democrats control both houses of congress. thisnk in theory, additional fiscal spending should probably be good for stocks. you have equity markets reflecting longer-term concerns about potential higher taxes and more stringent regulations. i think this tug-of-war is going on right now. it's going to take a few days for this to actually settle down. the most important thing is, how does the fed react to of this if yields keep pushing higher, the fed could take more dovish tactics. it is early days. we have yet to see what the long-term implications are but i think those are the elements at play right now. xnna: might that guide f markets and the trade between dollar and euro? because we see the euro beginning quite substantially this morning and more dollar weakness coming through. how long-lived do you think that will be? >> my colleague and i wrote a

year ahead piece. we think the euro-dollar can probably rise again this year. we do not think it will be as aggressive a move as last year but we think there is still some upside. in europe, growth and the stock markets have potential to play catch up against the u.s. i think that they u.s. has outperformed in 2020, but there is some potential for europe to close that gap and perhaps outperform the u.s.. we also think that in terms of the relative size of the balance sheets of the fed and the ecb, the fed has been growing much more quickly and will continue to grow more quickly this year. that will also weigh on the dollar and should help the euro rise. one key thing that we have seen is that if the dollar is facing a threat of reserved -- we have seen reserve managers s rise. euro'

matt: merkel has locked us down until the end of the month. that will be a four quarter. i fully expected germany to extend that as soon as we get closer to the end of january. we cannot even drive 15 kilometers away from our homes and a lot of major cities in germany. doesn't that hurt the euro at all? think that is consistent with the sort of dynamics that we saw last year. i agree with you. not only have the lockdowns been extended, but they are more stringent than before. that's going to be a reality that certainly extends until next month and may be beyond that. is a lot of uncertainty and it might mimic what we saw last year. the euro might rise, but not as quickly as last year. anna: thank you so much.

richard jones. german and french services pmi numbers coming in, both below 50, underlining the difficulties for the services sector. we are off to radio. this is bloomberg. ♪

francine: dissident in the balance. -- the senate in the balance. currently leads republican david perdue. the gop could lose control of the senate. people cracking down, 50 including a prominent american lawyer. and boris johnson says one person in every 60