♪ anna: welcome to bloomberg markets the european open. i'm anna edwards alongside matt miller in berlin. matt: good morning. the markets say enough for now. christine lagarde signals that monetary stimulus has hit its peak. the stock rally stalls after indexes hit record highs overnight. the cash trade is in our away. here are your top headlines from

the bloomberg terminal. the dark winter of the pandemic. joe biden says he will move heaven and earth to vaccinate 100 million americans in the next 100 days but warrants that 100,000 may die in the next month. a last resort. angela merkel warns that germany could close its borders as eu leaders say stricter lockdowns could be necessary. christie look hard points to a downtown for the eurozone. hong kong will lock down tens of thousands of residents for the first time. that index has been growing higher and higher. we are under an hour away from the start of cash trading across europe. let's take a look at futures this morning. red arrows as warnings about virus lockdowns and concerns about vaccine shortages continue to plague markets around the

world. you can see the euro stoxx 50 futures down about half a percent. u.s. futures are down as well this morning. as we said, these drops that we are seeing are after continued highs. yesterday, the s&p 500 was up to 3853. markets can't continue to keep going up every single day forever. that's just not how it goes. anna: [laughter] years and years of experience to make that kind of statement. certainly not how it has been. let's get some u.k. data. the retail sales number. if you are looking for reasons to be cheerful, this might not provide this for you. backward looking but gives us a sense of where things are. u.k. december retail sales, excluding fuel, 0.4% month on month increase. the estimate was 1%.

we were coming out of the november lockdown then. we are currently in locked down 3.0. whether you include or exclude fuel, it looks as though that retail sales number is below estimates. the other big news this morning is in the u.k.. the budget deficit, excluding banking groups, 34 billion pounds in the month of december. this means the u.k. december budget deficit. the estimate was a little lower. it wasn't that far away from that number. just putting the public finances very much in focus. the chancellor wants to restore, start to restore the public finances from march when he announces the details of his budget. a big political dividing line around when you should start to do that. when are we going to remove these lockdown measures in the u.k. economy? very topical and the talk of

summer. let's get onto the gmm briefly and have a look at where we are. you talked about how the hang seng, monitoring that story about how that is moving to the downside. concern around lockdowns. if it starts to be the case that we see further lockdown measures in asia, not just in europe, that could change the conversation a little bit. let's get into a markets chat now with our bluebird cross asset reporter. good to speak to you. i want to start with what we are hearing out of hong kong. lockdowns proposed in a part of the city. an extent that we have never seen before. we are following lockdown activity in parts of china. if anything damages that narrative, that greater china has done very well in dealing with the pandemic compared to other countries around the world , that could change investor thinking. >> yeah. absolutely. that's one of the risks that

people are pricing in at the moment. a lot of weakness in commodities, oil, precious metals heading lower. this has been one thing that's really underpinning the inflation trade a little bit more. shaky today. you've seen that in the asian benchmark. less for the land indexes at the moment. hong kong is bearing the brunt of things at the moment. a fairly small part of town that is affected. the initial headlines produced quite a sharp bit of risk off. a year to the day after lujan went into lockdown. it is certainly front of mine. matt: yeah. people in hong kong have been, in the past, for months and months.

at least confined to homes, only able to get take-out food. there's lockdowns and there's lockdowns. let's ask you about the u.s.. this 1.9 trillion dollar stimulus bill that markets priced in before we heard about and then sold off on the news. it looks like also a filibuster could keep it from happening at all. where do we stand as far as fiscal spending in the u.s. driving equity or risk assets? gregor: we've already had a lift in treasury yields over the past weeks. the market action in asia today has been around defensive trades that have done well during the pandemic. health care stocks, home names in the tech sector have done really well. the malaysian rubber glove makers, tencent, nintendo are leading the charge.

a better reversal to the reflation trade. that is still not really coming out of treasury markets at the moment. despite the worries, there isn't much of a change there. anna: let me ask you are question of the day. how would less dovish policy affect assets? we are asking this not because we are expecting any tilt to the more hawkish side from some of the world's global central banks. there might be areas where that is anticipated. we did notice that we had an op-ed on bloomberg from william dudley of the bank of new york federal reserve. he was saying that bonds will suffer a temper tantrum when we start to see this policy shift, when we start to see the fed more hawkish. what are you hearing on this? gregor: it was only a week ago that we were getting briefly

worked up about the possibility of this. fed officials swatted down talk from the market. it's worth noticing that that tapir is starting to happen elsewhere. we had the reserve bank of new zealand already stating -- starting to taper. a bit of an inflation surprise. other hawkish commentary from central banks. markets are caught in a pence at the moment. hidden growth from the research and pandemic and those countries that have successfully contained the virus having to possibly look towards an inflation shock at some point.

that is clearly something that is top of mind for fed officials. you need to look at the way that oil prices have come up recently to think, that has to start filtering through to cpi at some point. the taper talk seems to be premature at this stage. it's a conversation that will have to happen at some point if breakevens, inflation swaps are be -- to be believed. the amount of easing that's going on is going to matt: thanks for joining us. bloomberg's cross asset reporter gregor stuart hunter. stock split as hong kong lockdowns reignite fears that global growth may be stalling. eu leaders warning that further virus restrictions may be necessary. joe biden unveils his plan to tackle the covid crisis on the health and economic fronts.

we assess the market impact. this is bloomberg. ♪

♪ >> the honest truth is, we are still in a dark winter of this pandemic. it will get worse before it gets better. it will take many months to get where we need to be, despite the best intentions. we will face setbacks which i will always explain to you. i also know that we can do this if we come together. matt: in his first full day in office, joe biden unveiled a national strategy to combat the coronavirus, saying he would move heaven and earth to get 100 million americans vaccinated in the next 100 days. the president did warn that

things would get worse before they get better. as he has been doing, saying the pandemic is likely to claim another 100,000 lives on u.s. soil in the next month. we are joined by anna country on -- anneka treon. thanks for coming back on the program. what do you think about the continuing worsening picture in terms of the coronavirus around the world? another 100,000 deaths to expect in the u.s. over the next month. the possibility of a lockdown in hong kong. now the u.k. says, don't rule out being locked down until the summer. >> -- anneka: good morning. it's really tough. it's exhausting. it's very sad. it's tough. the reason it's tough business -- is because its capital markets to be forward-looking.

how forward are they able to look? what strike to me as interesting , there were lots of eyeballs on the ecb meeting yesterday. lagarde was referring to the physical situation, new lockdowns. yet she still stood by the economic growth forecast put in place six weeks ago for 2021. 4% gdp growth. that's interesting. what you do see is economic data continuously supported. obviously, the markets are still looking forward to a vaccinated world in which economic things look much better. anna: good morning to you. things will look worse before they look better. this is money in the investment community have been thinking about for a long time.

how long does that apply for? what do you think base case assumptions are about when we start to turn the corner? spring or are we beyond talking about saving spring? anneka: it's a great point. that's the million-dollar question. it's the base case in the market that 2021 will be the year of recovery. it's the base case in the market whether that's -- previously, some thought it would be first half. clearly, people are moving towards the second half. i think the exact timing doesn't matter that much. what matters more is that if the virus

worse for longer, we do have the backing of policymakers, monetary policy, fiscal policy to see us through. that's why markets have been raging ahead on a biden win and on the statements by biden. we are up 14% in the s&p since the election results, the strongest we have seen in 70 years. this progrowth mindset is what the markets like to see. that takes precedent. yellen's statements are indicative. she civilly said, the smartest thing we can do is to act big. that's what markets want to hear. matt: there's a big problem with passing any big funding measures in the senate. the filibuster, it can be done through reconciliation. that's not as exciting. the other thing that the biden ministration might want to do is re-regulate, increase regulation, raise taxes. these are things that typically concern markets, at least in theory. are you worried about those

things? anneka: i think these factors are further confirmation of this massive rotation we saw starting in november of last year. this was a rotation from growth to value to cyclicals. greater taxation is negative for the market as a whole. with the fiscal support, particularly targeted fiscal support in areas of the economy, this is the right backdrop for cyclical companies. obviously, big tech trades dominated the markets over the last 10 years. they are clearly starting to lose their alert or -- allure of being safe havens. with the u.s. being on the same page, i think what it means is that for navigating markets over 2021, you need to be more

idiosyncratic, buying big tech and assuming you are good to go. i don't think it is as simple as that anymore. the earnings backing as a factor which everything is looking for right now. 2021 will be ruled by real earnings growth. anna: thanks very much. stay with us. anneka treon. let's go to our bluebird first word news update. laura: rising virus numbers mean the continent will likely be on lockdown for longer. a video call demanding drug companies ramp up production to deliver more shots. they are calling on people to us -- avoid non-essential travel even within countries. the u.k. is warning it's too early to think about using the third lockdown. boris johnson is telling people to be prepared for a tough few weeks ahead, dropping a pledge for the u.k. to return to normal by april. the government is enhancing enforcement of the virus roles and not ruling out the lockdown

lasting until summer. the top u.s. infectious disease expert anthony fauci says he feels liberated by working for president biden after president trump tried to sideline him. the new administration chief medical advisor said it felt uncomfortable to have to contradict the previous president over medical advice, saying he took no pleasure in it at all. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. anna: -- matt: thanks very much. coming up, angela merkel warns that border closures must be a last resort as european the leaders raise the alarm over the spread of the coronavirus this winter. this is bloomberg. ♪ so you're a small business, or a big one.

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we must maintain our borders open to guarantee the good working of the internal market. at the same time, we are also convinced that when it comes to non-essential travel, restrictions should be considered. anna: european council president speaking after a private video call between eu leaders where they warned that life is normal won't return anytime soon and that tough or restrictions may be needed on the continent. anneka treon. we touched on the european angle here. you are talking about the comments we got yesterday from kristi lagarde -- christine lagarde. the virus is still the main story she's needing to work

around, just like everybody else. does anybody stand out to you in terms of the european central bank conversation? are they just wasp -- watching the fiscal development at this point? anneka: they are certainly emphasizing the fiscal development. they are acknowledging the fact that monetary policy is running out of ammo. what stood out to me the most is the fact that the ecb is in the midst of a strategic review. there's a good reason for it. if you think about the core goals of the ecb, it has actually been failing. core inflation has been nowhere near the 2% target while deposit rates were at an all-time low. those deposit rates were at -0.5% pre-pandemic. the pandemic approach of asset purchases has still not been able to move the needle from an inflation perspective. we are still in negative territory.

it's been 10 years of stagnation. what adds to the problem, what lagarde has spoken about, is the appreciation of the euro. the reason this is such a concern is that it starts to make one think that this japan of acacia problem -- j apanification problem. the bank of japan came in very large with a norma's asset purchases, making it the largest owner of domestic stocks. yet they have not solved the problem. this is the crux of which the ecb is trying to adjust. i think it is simply a catch 22. anything at does has been dwarfed by the fed. currency is relative game. matt: first of all, that's one of my all-time favorite books. joseph heller's catch-22.

i read it when i led -- lived in london. it is amazing. secondly, the ecb may not be able to achieve its goal. do you think christine lagarde is going to try and a japanese way? can you take advantage of their attempts from an investment perspective? anneka: i think the point is that what went wrong in japan is that market participants in japan did not believe in inflation. no matter what monetary policy was called out, it didn't work. in the case of europe, that's the golden question. what we must not underestimate is what is happening in the real economy. we can get so locked in on the policy side. on the real economy, there were all sorts of speculations about what shape recovery we could see.

on the good side, the recovery has been v-shaped. eight consecutive months of growth in terms of manufacturing . pmi at a decade high. this is a very powerful point. on the services side, we've not seen it. this has been a locked up economy. from a money supply perspective, that has been shooting up. the velocity of money perspective, the combination drives inflation. that's been tough to use. arguably. the point about europe is, let's not underestimate the level of pent-up savings which could access the economy this year, hopefully, once we are on the others of this. matt: yes. i think a lot of people share that optimism. thanks for joining us. it's been a pleasure having you on the program. anneka treon.

van lanschot kempen, head of competence centre. talking about the ecb and usa. coming up shipment delays. brexit red tape. virus restrictions causing border holdups in the u.k.. this is bloomberg. ♪

matt: welcome back. this is the european open. we are 30 minutes away from the start of cash equity trading. the u.k. saying it is too early to think about easing the nation's third locked down. boris johnson saying be prepared for a tough few weeks. boris johnson -- not ruling out the lockdown lasting into summer. red tape and virus restrictions

causing holdouts. is have experienced delays since the first of january, according to a survey. joining us is laura wright. what has been leading to these delays since the official end of the transition time? >> bureaucracy. the government system put in place to circumvent this contributed to the problem. they would need customs declarations. even drivers trying to enter france must supply a negative covid test. this has resulted in 5% of trucks being stopped at the border. >> what is clear on the brexit story, we seem to be seen new

developments coming through. insights into what the relationship looks like right now. we are thing about what the economic cost of this disruption is. looking at reporting about how customs charges are sometimes not being imposed by re-sailors and have to be taken by -- what do we know about it so far? >> it is hard to tell at this stage. the think of england forecast the marginal -- industries say they are leaving one million pounds every single day. that is according to one accounting firm. interestingly, on inflation, bloomberg economics thinks inflation could reach around

1.5%. that is in part because of these extra costs. matt: are we going to see an improvement in the situation any lineup of trucks, the bureaucracy at the border? is that something that is going to clear out like a logjam? >> i think the situation will deteriorate. toward the end of december, remember how many firms were stockpiling because they wanted to get ahead of those brexit deadlines. the stockpiles depleting. once levels reach 100%, we could expect some significant delays. i don't know if will be like scenes we expected over -- saw over christmas but we do expect the situation to deteriorate. >> wall street may have called in a windfall in 2020, but the results for traders more modest

read the biggest banks boosting -- $271. why has not pay moved much at these banks? >> there are probably some bankers not happy looking at their pay increases and bonuses. revenue at these lenders might have been large because of the trading in markets. things like lending have not done as well. it is not even in terms of earnings. these reflect the overall average pay. a crucial part of this is the optics. we are in the middle of the pandemic. there is a lot of inequality and it does not look great for these wall street book we mess -- behemoths to give a lot of pay.

we have a new guard and they might put more scrutiny in washington. look at j.p. morgan, bringing in 22% more revenue. pay increase, only 1%. a big disparity at goldman sachs as well. matt: if that is overall pay, what about some of the top rainmakers and executives? the big people in the room. is there pay stalled as well? >> we don't know the exact numbers but what we have heard, their pay does likely look better than a 1% increase. these banks emphasize they want to keep talent, they want to keep them at their bank. the big rainmakers probably are getting a better bonus. in terms of executive pay and

see suites, that is unknown as well. hopefully we will have those soon. we already do know some banks, at top banks, executives are getting bonus cuts. still, it goes to show even for the top dogs, the pay or at least -- a pay or at least bonus cut is not off the table. matt: dani burger talking to us about wall street pay. we are 24 minutes away from the market open. take a look at futures this morning. we have seen a drop in concern about global virus restrictions. futures down 0.7%. investors looking for a little safety. not looking for bitcoin at the u.s. dollar, up zero -- up right now. bitcoin down 0.5%.

31,000, which seems so low since we talk about it every day. it was only like three weeks ago we thought it was amazing it would hit 20,000 again. it is very volatile currency. taking a look at those indexes then, we await the market open. 23 minutes time. this is bloomberg. ♪

matt: welcome back. this is the european open. about 20 minutes to go until cash trading kicks off. joe biden has big stimulus plans. what is the outlook for the economy? we asked joseph stiglitz for his view and how long term the damage could be. >> unfortunately the united

states did not have leadership at the top and we did not get the kind of program that worked in some of the other countries like new zealand and denmark. the result is we have this enormous spike in unemployment rate another 900,000 people on unemployment, almost 500,000 under the special program for the self-employed whose income had plummeted. those are drastic numbers. you are right, we should be worried about whether there will be this long term scarring. i am hopeful as the economy picks up again, many of these people will naturally get

rehired. but i think we will have to have some active labor programs to help retrain workers. one of the things that is going to be happening, there may be some restructuring of our economy. we know that, we need that. but whenever there is restructuring, you have to give some assistance to move from sectors of the past like the fossil fuel into the new sectors, like renewable energy and the caring sectors. >> a major priority is going to be getting back to precrisis levels of activity. what is the longer-term trajectory? how does the economy reverse some of the longer trends of inequity? we know that is something in the administration's mind.

what we would be the key thing in your view the white house should pursue such that the post crisis economy does not look like the strains we were seeing precrisis? >> we don't want to go back to where we were in january, 2020. we want to build back better. part of building back better is to build back with less inequality. in a speech last thursday, he outlined two measures that are important. one is increasing the minimum wage. most americans don't realize adjusted for inflation, the minimum wage in the u.s. is the same level it was roughly 65 years ago. can you imagine? no pay raise and 65 years. the evidence is it would be good for our economy to have that

kind of increase in the minimum wage. it will not cause a loss of jobs. it will actually stimulate the economy. anna: that was the nobel laureate joseph stiglitz speaking in the long-term damage from coronavirus. let's stick with the economy, the global economy, focus on europe. the u.k. and eu have to resolve the issue of financial services the two sides hope to achieve a memorandum of understanding by march. we are joined by the european commissioner for financial services and the capital market union. good to speak to you. i will start on the subject of equivalents. can you give us any sense of the timings you are working to? you have a deadline in mind when

it comes to deciding whether to grant equivalents? -- equivalence? >> our timeline is to reach a memorandum of understanding by march. that would be about how we operate as partners. then we would look at the details. we do not have a timeline about what needs to be done. we warned market participants of what would happen with brexit. some have made changes. i am happy to see our preparation work was good. there are a number of areas which we already took action. we will be looking within the european union to see how we can move those critical infrastructures within the eu. the future hinges on understanding fully how our partners in the united kingdom

expect to continue now that brexit is a reality. we have heard words like deregulation. we know brexit was about moving away from what europe has done across all sectors and possibly including the financial sector. we are ready to sit down and engage. it is important we get the first step right. what we will be doing with the united kingdom, this memorandum, is similar to our relationship with the united states. we will build those steps with our u.k. counterparts. we always have financial stability in mind. the u.k. did grant some equivalents. finally to say, throughout the last year, we have engaged with the united kingdom in financial services but really to find out what their future vision is, if you like. we have sent detailed

questionnaires. we will be pursuing the u.k.. iran those particular issues. -- i ran those particular issues. >> we know the u.k. has signaled brexit could trigger a big bang 2.0. what matters is a level playing field. it is confusing how you get a deal based on this. it seems you are moving in opposite ways. >> remember, we did not move anywhere. the united kingdom has moved in a significant way with the vote and 2016. what we are doing is insuring our system is fit for purposes of the future. we want and desire a relationship with united kingdom. we have it already. we agreed to a incorporation and

trade agreement. but even there, there are difficulties. the reality of being a third country has come home to roost. in financial services, we are not moving. the global economy in finance is a reality. we need to make sure the regulation of it is it for purpose. i did make an important point. we do recall the past. it did no one any favors. we have moved away from that. we want effective regulation. when it comes to the united kingdom, it is clear london is a major financial center. it is important to acknowledge its significance was part and parcel being within the european union. i do hope when the memorandum is agreed between us, we will move to the detail on specifics and i hope we can make progress and cooperate.

however, there is no re-creating the single market for financial services when they have decided to leave the single market. what i'm saying is change is coming. >> change is coming. let me ask you about some of the changes we have seen. there was chaos at the time of brexit. can i ask you about where derivatives trading takes place and how much you care about that. there is some evidence you are denominated trading moved from europe to new york and the early weeks of january. it did not move from london to the eu. it moved from london to new york. does that matter to you? >> we are well aware of what is happening in the marketplace. two issues. one, we did speak to market

participants about the realities of brexit around derivatives. we understand there is some movement toward the u.s.. we are aware of these developments and they feed into our work here. fundamentally our work is to understand the future of the european union financial system with brexit clearly because that's what we are discussing but equally with the global context in mind. huge changes in that sector. we are aware of those points. when i s -- u.s. me if i worry, i am worried about everything that might impinge on the financial stability. we have to take that context when we look to the future. at this point, it is a relief we have a trade agreement with the u.k. heavens if i was speaking to you with no deal.

we are in a better place, i believe. from the eu side, to move forward. to be clear to our u.k. friends, we want to move in a direction that is best suited for the european union. perhaps there is another reality that may have happened with covid in mind. the idea of one major center may not be as important in the future as in the past. we are relocated to wherever we live and we are able to do business. we are in challenging times and changing times and i look forward to the end of this year when hopefully we will have completed this work and we can say, we worked with our u.k. colleagues and we came to a good solution. >> commissioner, you make it very clear everyone in europe -- we have seen evidence some of

the money and assets are moving to new york. how much do you worry about wall street? this is probably a much bigger beast. it is further away from the european sphere of influence. >> we have very good cooperation with the u.s.. we have already a very strong bond. i believe we are on the same path when it comes to regulatory issues. the model we have with the u.s. is certainly a good one as an initial step, and we look to the united kingdom. clearly, the u.s. was never part of the european union, the u.k. was. it has exactly the same regulatory framework today. our big question, and we cannot answer this morning, is to understand how the u.k. intends to be for the future. art of our work is to try in our context, to understand in some way how they intend to proceed.

we worry about many things here. her main worry at the moment is public health. it is not beyond the bounds of possibility that we resolve these issues. anna: thank you very much. thank you for joining us here on bloomberg. thanks also to maria tadeo for being us that interview. we will look into your stocks to watch including remi control -- the french distiller. this is bloomberg. ♪

matt: welcome back to bloomberg markets. we are five minutes away from the start of cash equity trading. let's get stocks to watch with dani burger. let's kick it off with the

beverage maker we referred to in the tees. >> that is remi contra -- it looks like they are drinking alcohol at the same time. it is a 25% sales growth. they think they can keep up high growth, but perhaps not as strong as this quarter. siemens up as much as 4%. two of the main businesses saw profits rise. it is a sign german industry is doing better as china grows as well. u.k. retail sales growing less than expected, 0.3%. a percentage point less than expected. it is one of a few figures we have gotten over the past few weeks perhaps u.k. consumers are not as healthy as some have thought. this lockdown is thought to not be as bad as the others. new evidence the consumer thinks

credit card spending not as strong as expected. >> thank you very much. keep an eye on the travel and leisure sectors as we contemplate further -- this is bloomberg.

anna: come back to the european market open, one minute until the start of cash equity trading for friday morning. the dark winter of the pandemic, joe biden says he will move heaven and earth to vaccinate 100 million americans in the next 100 days, but warns 100,000 may die in the next month. angela merkel warns germany could close its borders,

hong kong will lock down for the first time. matt: let's look at the futures just before the open. they are pointing down all morning. u.s. futures off on concern about increased coronavirus restrictions, never-ending coronavirus restrictions around the world. you can see euro stocks 50 futures down 0.6%. ftse futures not down as much. the ftse opens off 0.1%. we did have bigger drops in european continental futures. you could see bigger drops on the cac, the dax, the ibex etc. they take longer to open than the ftse 100, which is moving lower, down 0.3%. here we see the cac down 0.4%, and the ibex down 0.7%.

european equity indexes opening to the downside as global stocks dropped from all-time highs. restrictions to curb escalating covid infections have dented the optimism around earnings and the prospect of additional stimulus. joining us to talk about that is geoffrey yu, senior strategist, emea markets, the bank of new york mellon. we knew it was bad, but things are getting better -- or are getting worse, i should say. when i read that the u.k. was warning of lockdowns into the summer, it depressed me. is that how markets are reacting? geoffrey: i think markets are reacting on the hopes of vaccinations and the speed of them will accelerate reflation, but that has proven not to be the case. if you look at the euro zone and

european union, many countries are falling behind, not as strong as we hoped. if you look at asia, new lockdowns. there seems to be a lack of a vaccination strategy. the u.k. alone is about to push things forward, given the global economy is linked to the rest of the world. there is a strong vaccination plan, so more misses than hits so far. that is why markets are choppy. anna: i will say on the u.k. story, it seems the government did not want to enter into a conversation about summer when asked about that yesterday, and refused to rule out lockdowns until summer rather than deliberately warning about that, and wanting to focus on the here and now. it is interesting to see hong

kong taking tougher measures, part of china locking down with the resurgence of the virus. is any of this enough to change the market narrative of asia exposure and chinese exposure, given the chinese did such a good job eradicating the virus in the early days? geoffrey: i think medium to longer term, i do not think it will. there is a risk given the timelines. holidays are coming up in asia, and there is travel between the provinces in china. there is a concern we may repeat last year with the virus spreading around and that could cause a wider spread. there is a risk, and not just chinese assets. germany, france, europe

manufacturing numbers facing stronger chinese demand, if that comes off even slightly, i think that is can tribbett eating -- that is contributing. softer asia growth could be a problem. matt: there is so much optimism for the other side of this even if it is not until the end of the summer or the end of the year. the pent up savings, people are ready to pounce and buy airplane tickets, go too faraway destinations, get expensive hotels and spend money -- at least those who have not lost their jobs. do you think that is uniform across markets? is the u.s. just as good of a recovery bet as the eu? geoffrey: i do not think it is

as uniform across markets. it depends on a few things, one is that consistency of fiscal spending. on the eu side, governments have been stronger with income support. in the u.k. we are talking about more fiscal consolidation. that sets the u.k. apart. you talk about more savings, that is in place in the u.k. and u.s., but how much of that is going to be released, it is not one-for-one. we will not go from top 20% to low single digits. the case shape recovery -- k-shaped recovery will not be uniform within countries. governments need to be attuned to that. anna: let me ask you more about

the dollar. geoffrey: sorry, i cannot hear you. anna: i wanted to ask where you see the dollar heading. we heard from janet yellen, no strong dollar policy mentioned. where do you see the dollar heading? matt: can you hear me? we both lost you. the good news is, because he is one of my favorite guests, the good news is we have a commercial break between us, and hopefully getting geoff back on again. we will redial and try to get him back on the line, and hear more from geoffrey yu.

christine lagarde says that eurozone is headed for a double-dip recession. i do not know why i say that with so much enthusiasm because it is a bummer as well. we will discuss the latest from the ecb, next. this is bloomberg. ♪ - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub.

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remained tilted to the downside, but less pronounced. anna: that was the ecb president, christine lagarde, signaling the eurozone economy is heading for a double-dip recession. let's get back to our conversation with geoffrey yu, senior strategist, emea markets, the bank of new york mellon. i want to finish our conversation on the dollar. janet yellen, no strong dollar policy talk, assessing the dollar through market said you would expect. i wonder where you expect the dollar to go from here? geoffrey: i think the broader allocation strategy to maintain the dollar is sound, even as we have a push for fiscal stimulus. the fed will keep financial

conditions, and a weaker dollar could be part of that story. allocations can be made, but the question is, cable, we are positive on the euro. the investment plan set europe apart. the vaccination strategy -- more confident on leisure, em performance, euro-dollar. matt: before we leave the u.s. story, i have to ask about your expectations in washington. the market has priced in optimism around biden's spending plan, but it looks like he will run into filibusters and get nothing through but stuffing it

into reconciliation bills. what can we expect in terms of the stimulus? geoffrey: i think the stimulus is less about size and will be more about timing. markets are looking for a strong push into q2. that is where expectations need to be checked. reconciliation will probably be most likely, so any proper reflation pricing will need to come later in the year. the onus is on the rest of the world to recover in the meantime with a strong fiscal push. europe has that in place. right now it is more vaccination rates that is putting a damper on things. anna: what did you make from the press conference of christine lagarde, we heard staff asked for new ways to measure financial conditions in the euro area to work out how best and

how much to stimulate the eurozone economy. geoffrey: i think that is a step toward more targeted stimulus, because if you look at areas which are needed in the euro zone, especially the corporate side, that is where they want to the corporate side, that is where they want to measure how can corporate's be best helped? the green economy is in line with the eu plan. i think we will hear more about that later in the year.

matt: what about things you would not touch with a 10 foot pole? i am thinking about banks that had a hard time here in europe. will they continue to be difficult? geoffrey: for the yield curve related strategies, that will be difficult. if we look before the press conference yesterday, the direction of travel seems to be yield curve control. i would not take that off the table. madame lagarde did not rule that out. that is the direction of travel for the financial sector in europe for industries and the proper yield curve and reflation play. the greater risk is, if you think europe is going the route of japan in terms of policy and structural growth, there will be issues for the sectors that are exposed. anna: we have been worrying

about the strength in the euro. one guest said it is not that strong. what do you think about the euro battle the ecb is facing? geoffrey: it is not strong, but it is more about the pace of appreciation. if we have the euro-dollar at 1.26, the conversation would be more different, the language would have been stronger. the ecb will push back, they just want to manage the pace. by the end of the year, i do not think the ecb will have an issue. matt: thank you so much for joining us. i appreciate you sticking with

us through the technical cult he's. geoffrey yu, senior strategist, emea markets, the bank of new york mellon. he will continue the conversation with us on bloomberg radio at 9:00 a.m.. tune into dab digital radio. anywhere else in the world, google bloomberg radio. let's get over to laura wright. laura: siemens says its earnings beat by a wide margin on demand from china. two of its business units, growth in china is key support to some of germany's biggest exporters. wall street's biggest bank is rising much lower than revenue, goldman sachs generated an extra 15% per employee but only spent 2% more. the gap was wider at j.p. morgan. pay was only up 1%.

they also cap jamie dimon's compensation steady. bitcoin dropped below $30,000, raising fresh questions about the cryptocurrency boom. the digital coin is down from an all-time high set two weeks ago, heading for its worst run since the pandemic began. a sustained drop could lead to more losses. that is the bloomberg business flash. anna: coming up, we get back to hong kong. the hang seng slumped on reports hong kong will lockdown tens of thousands of residents for the first time. we will have all the details, next.

matt: welcome back to the open, we are 20 minutes into the session, looking at losses of about 0.9% on the broader stocxx 600. in terms of the individual sectors that are weighing the most heavily on the index, the stoxx 600 travel and leisure sector, which makes sense if you are worried about continued and extended lockdowns. then the auto index is also moving lower, more than 1.6%.

stocks in hong kong slumped following local media reports the government will lockdown tens of thousands of residents for the first time to limit the spread of the coronavirus. joining us from hong kong, thank you for coming on the program. tell us about what kind of lockdown we are talking about. i know people in hong kong have been taking precautions, but what is the story with this lockdown? >> actually this is the first time government is considering doing a locked down, according to local media reports. hong kong is small, a lot of people do not have proper conditions to cook at home. it is very difficult for the government to take such a drastic approach. over the last year as cases went

higher, the government never did something like this. now that we are seeing from this weekend the core urban area will be locked down, this is something that takes us to another stage of virus control. anna: this is a step up, a proper lockdown. what could be the impact of this? >> if we compare this lockdown to mainland china's lockdown, local media says if you have negative tests, you can go out of the region. in mainland china, you cannot go anywhere. you are locked in your apartment. this is something that will be impactful for low income families in the region. they are already suffering under

economic contraction, so they will be targeted because of the poor conditions, and the government wants to inspect further. there will be impacts because hong kong is about to start its virus vaccine rollout next month. we are seeing whether citizens will step up and take the vaccine. it is a more drastic approach coming to the city that we need to see if it changes the sentiment. anna: thank you very much, ji nshan hong. wall street may have a windfall, but the rewards for traders may be more modest. the largest banks basten -- boosted pay as overall revenue soared. why hasn't pay moved much at the

banks despite the successes many have had? dani: one of the biggest reasons is optics. optics throughout the rest of the bank. on one hand you have a large disparity, so it does not look great with the new guard in washington to give your workers this huge pay increase when so many people are struggling. they want to avoid that scrutiny. just because of the wall street portion of these lenders did well in markets, other parts of the banks did struggle. lending did not do as well. we see this average overall pain number look disconnected from the growth. goldman sachs, 15% increase in revenue year-over-year but only a 2% increase in pay. jp morgan, the disparity is bigger.

22% revenue increase versus 1% for pay. again, it is an environment where there is a crisis and it does not look great to pay your traders that much more money. matt: if that is overall pay, what about the top rainmakers, the big executives who get multimillion dollar checks? is there pay also stalled? dani: we have seen some of those stalling. jp morgan is keeping jamie dimon's pay flat. we usually get the figures around the end of january. we are expecting the top rainmakers to get a pay increase. companies localized this, wanting to retain talent, and that means paying well. we have seen other companies like citi say they will slash

back pay for executives, that has to do with regulatory issues, but it shows a willingness to cut back on pay even at the top. anna: thank you dani burger with the latest on pay in the banking sector. 25 minutes into the trading session, let's look where we are . key movers, the industrial giant, siemens with a beat by a wide margin. up 5%. negativity on european lockdown has been affecting other stocks. down 3% on easyjet, so broad concern around the duration of the lockdowns. we are also focused on the auto sector, down 1.7% right now, one

of the worst performing sectors in europe. you leaders paint a grim picture. this is bloomberg. ♪

anna: welcome back to the european market open. 30 minutes and of trading session. losing steam in what has been a strong week for global equities. focused on the blue wave and fiscal spending in the united states. fear about further lockdown in europe or extended lockdowns and further locked down in parts of asia really starting to permeate the market thinking. you can see all sectors in negative territory.

auto, travel, leisure, all to the downside. some by more than 1%. just a bit of data out of germany -- german numbers. january manufacturing pmi coming in at 57. expansion territory. perhaps a little better than anticipated but still in contraction territory on services. similar to the french numbers. the french numbers showing expansion and manufacturing in contraction in services. let's get a bloomberg first word news update. laura: the ok is warning -- the u.k. is warning it is too early to think about dropping the lockdown. the government is not ruling out

the lockdown lasting until summer. the biden administration is planning a meeting to discuss its covid relief plan. the price tag is drawing widening opposition from republicans. president biden's chief economic advisor will meet with the group in the next week or so. the u.s. top infectious disease expert says he feels liberated by working for president biden after president trump tried to sideline him. the new administration's chief medical advisor says it felt uncomfortable contradicting the previous president over medical advice. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.. this is bloomberg. matt. and now. matt: europe is grappling again

with rising numbers of covid infections and deaths. eu leaders painted a bleak picture of the health care emergency across the continent and they warned variants could prolong lockdowns. >> it would be totally incorrect to think that we still had all of the time in the world to deal with this. we have to deal with this now. not just today but all of us in our discussions. matt: joining us now to discuss is susi dennison, european council on foreign relations senior policy fellow. thank you for joining us. let me ask you first about this vaccine. i keep hearing officials say they want to accelerate vaccine production or make sure pharmaceutical companies meet their commitments but aren't

they already producing as much as they possibly can as quickly as they can as well? susi: what european leaders i think are dealing with at the moment is the twin pressure to ensure that the vaccine rollout is done as quickly as possible at the national level. but at the same time, ensuring that the national efforts are not at the cost of the collect of european -- collective european and further international vaccine use. there is a very clear acceptance among european leaders that given the connectedness of european markets and how close we live together as europeans, there is a need to to operate effectively at the european

level and for measures to be taken in lockstep. i think that what we have seen around the meeting table is a different perspective from council leader us. countries under high pressure like belgium calling for revisiting the idea of national border closures within europe, more restrictions on travel within europe, and especially for the countries that are concerned about the economic perspective with people not being able to travel including greece. greece has been promoting a vaccine passport. and i think these tensions are being felt around the table now. anna: what do you think is the thinking around ideas about vaccine passports? and i use the word "passport" loosely.

we might be talking about something that allows you access to your local coffee shop and the response and thinking and legal backdrop to those things might be very different. how is this conversation evolving? susi: i think it is evolving differently in different member states. here in france, where i am talking to you from, there is a very tense discussion around the idea of a passport because it is closely linked to the idea of the vaccine effectively becoming manufactured -- effectively becoming mandatory. and the notion of the passport that you have described is anathema here in france. there is a need not to close

national borders because the number of member states have been very nervous about this idea because in the first wave of the coronavirus that we saw in the spring, there were a lot of questions about how european states were unilaterally responding. and there was a breakdown of communications. that has all gotten a lot better now with better communication. the idea of a passport is precisely to avoid a repeat of what we saw before. anna: and on that subject of a freedom of movement, clearly, that becomes very political. is there any sense that the policy can be taken out of this? and i'm thinking of other large bodies of land, not between

nations, but to stop the flow. for example, in australia, they close state borders. i'm sure many australians do not like it but it does not generate quite the same fear about limited movement. matt: here in germany coming you can only travel 15 kilometers from your home. susi: and i think our tolerance as citizens for these kinds of control has grown over the years. as matt rightly points out, the borders have not just been national in this context. in france, you had restrictions on the number of kilometers you are allowed to move and i think matt is indicating that it has occurred in a number of other countries as well. when we get public opinion polling, we did in the spring of last year, when we asked what

measures europeans had become more tolerant of as a result of this experience, the top answer was greater use of border control. clearly, that is there. at the same time, i think we have also seen a growing acceptance that the european space is the most practical manner to handle this pandemic. both in terms of ensuring supply chains for essential goods for health products and other critical supplies. there has been an acceptance to look at that at a more european level. and how europe should change after the crisis. the top answer was an ability to work together on global channels. i think there is a desire or a recognition of the need for this to be a european and not

national response. ultimately, none of the national borders mean very much anymore in terms of how the train and trade works and connectivity. so, i think border control is being discussed and there is some support of it that i don't think it is necessarily linked to the idea of a national response. matt: and in testing -- the borders don't really matter as long as you can test everyone likely or if their test is relatively recent, that should already be a prerequisite for going from one place to another. maybe we will see that kind of passport, i am doing air quotes, because it could be a bracelet or some other form of identification. i hope we get you back on. a pleasure having you on the program. thank you for joining us.

susi dennison, european council on foreign relations senior policy fellow. one way to recovery could be airline industry bouncing back quicker than expected. if you think so, today is the great day to purchase those stocks. and up next, avalon. this is bloomberg. ♪

matt: welcome back to bloomberg markets. this is the european open. almost 45 minutes into the session and we are looking at red arrows across the indexes with investors growing increasingly worried about extended and deeper lockdowns. let's go to laura wright in london. laura: citigroup is making gradual progress on narrowing its gender pay gap. there has been a 1% improvement from a year ago. the bank gives detailed statistics on its pay gap. siemens, two of its holdings grew unexpectedly. siemens has weathered the

pandemic better than many rivals. google is threatening to disable its search engine in australia. a dramatic escalation over a months long impact. that is the bloomberg business flash. matt, anna. anna: 2020 was the toughest year ever for the commercial aviation industry. could recovery come more quickly than expected or could it be delayed? avolon holdings ceo, donald slattery is with us -- domhnal slattery is with us. plenty of examples across the road with a lockdown measures being taken, how far out you

have to push your recovery thinking? domhnal: the baseline for the industry which has been effectively outlined is a full recovery by 2024. we were comfortable with that as a forecast up to a couple of months ago. however, we think that recovery could accelerate. we are thinking now 2021 will be like 2020 in reverse. matt: you think it is going to recover just like a v. what about what customers want from you now? are they asking for deferral of lease payments? are they asking for contractual breaks? domhnal: i don't think it is going to be a v. i think it will be a steady recovery. i think the recovery kicks in

earlier than anticipated because of demand and i think it will start in the second half of this year. in terms of what customers have needed, as far back as march of last year, we had to step up as a key stakeholder. we were able to do that because of the liquidity that we carried on our balance sheet. we were almost a buffer in that cash liquidity. all of the above really is what we have been dealing with. whether it is deferrals of rentals, forgiveness of rentals for periods of time. it is been the whole smorgasbord. we have 160 clients around the world and the vast majority in one form or another has needed support. anna: you're talking cure customers about that and you say

the second half of this year will be key in terms of starting to recovery. where does that leave you -- thinking about europe, where does that leave summer, 2021? will it be a washout like last summer or will we see a substantial return to business by that point? domhnal: i'm not sure. i think summer 2021 in europe is uncertain and it is ultimately going to be driven by the pace of the rollout in europe. my gut feeling is that it will not be a busy summer on the airline side. certainly, the first half. make, june, july. perhaps the latter part of the summer, the vaccine metrics will start to take in. the pent-up demand globally for people that want to get on aircraft, see friends and family, and take a break just to get away from the humdrum of

zoom calls and of course, people have been saving a lot of money so there's plenty of disposable income. i think when people can, they will get on those airplanes in droves. matt: yes, i am really hoping i will be able to get to mauritius by the end of april. what do you think about the actual demand for aircraft by boeing and airbus? will they have to cut production this year? domhnal: that is a big question. the reality is there is excess supply of aircraft in the world market today. several thousand are currently parked and not being used. they will slowly come back into the system as recovery kicks in with the ginsburg aircraft first. it is quite likely that a lot of aircraft will never return because of their age.

and my opinion and we have communicated it clearly to airbus, boeing, and the engine manufacturers, there should be no rush to pick up production levels. we saw overnight that airbus indicated that they will take back their expected forecast order of 47 aircraft back to 45. i would encourage them to consider going back to 40. it will take the demand for aircraft several years to get back to equilibrium. there is a lag factor. matt: we appreciate your time. great to get your insight. domhnal slattery from avolon holdings. today, we are asking the question on the mliv log, how

would a less dovish policy affect assets? we will put that to mliv laura cooper. this is bloomberg. ♪

matt: welcome back to bloomberg markets. this is the european open. we are 53 minutes into the trading day and we are looking

at red arrows on equity indexes over concern regarding the worsening virus situation and the deepening and extending of lockdowns. what are we watching today? let me tell you. 9:00 a.m. u.k. time we will be watching for euro area pmi data. we have rdc it bunch of data come out including germany. retreating in january as result of tighter restrictions and we could observe a similar pattern in the uk's pmi which will be out at 9:30 a.m. it comes out after the european data. 10:30 a.m. in the u.s., the publication of the weekly crude inventory report and on saturday, it will be one year since chinese authorities put the city of wuhan under lockdown

and it feels like it has been 10. anna: feels like a lifetime. matt: i feel like 2021 has already lasted a long time and it is only the 22nd. and with that, i will bring in lara cooper. before -- laura cooper. a hong kong health official says they will not comment on the lockdown speculation. but it does seem to be moving markets at the moment. do we have laura? matt: have we dropped her? she has been hanging up on us recently, hasn't she? anna: it was this story coming

from hong kong that was weighing on the hang seng and through the night, we have been tracking that conversation. hang seng down now by about 1.6%. matt: but to be fair, when you look at the hang seng index, if you look at a one-year chart, it goes up like al gore's hockey stick over the last few days and weeks. it is definitely do for a breather if any index was. and the first lockdown, that is very procedural. they have been staying in their homes and working from home a lot and not going out to restaurants for a large part of the year already. you have to wonder how much it will really hit the economy and how much this is just an excuse for investors. on the other hand, the fact that the u.k. could be locked down until summer is very depressing. anna: interesting to have that

conversation with the aviation sector about whether we would be able to fly anywhere this summer and he puts it at the second half of the year which is leaving it awkward for people that are thinking about summer vacation. matt and i are off to the radio. bloomberg surveillance is next. this is bloomberg. ♪

francine: the dark winter of the pandemic. joe biden says he will move heaven and earth to vaccinate 100 million americans in 100 days but warns 100,000 may die in the next month due to covid. germany may close its borders as eu leaders say stricter lockdowns may be necessary. bitcoin raises fresh questions about sustainability of the crypto boom. good morning, everyone.