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tv   Bloomberg Markets European Open  Bloomberg  January 5, 2021 2:00am-4:00am EST

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>> good morning and welcome to bloomberg markets, the european open. markets say -- watch the case markets. on thearkets are mixed concern of rising infection rates. mixed.n futurists
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here are the top headlines from the bloomberg terminal. winter of discontent. the u.k. goes back into lockdown in an attempt to stop hospitals from being overwhelmed. germany prepares to extend its stricter measures to the end of the month. -- joe biden and donald trump holding rallies ahead of a critical runoff election to decide which party will control the senate and opec are temporarily suspended after disagreements over raising output. discussions resumed today. oil extends its losses. we are just under an hour of cash trading in europe. -- on the continent, there is not a lot of real direction. you can seefeel -- ftse futures are down 0.2%. dax futures are little changed
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up marginally. not a lot of movement. u.s. futures rising. s&p futures up 0.2% as are the dow and nasdaq futures. what do you see on the g.m.? heads -- nod our heads in the direction of resales. what is front and center for retailers is at the closure of nonessential stores. we have not gotten any comments just yet. they do see prices dropping about 16%. hardlythan expected but an enormous difference. the other side of the u.k. retail space that more about groceries. this is the part of the retail
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space that has done well. including fuel up by 8.1%. interesting to see how well supermarkets do and how badly other retailers will do as we go into a third lockdown. that is the picture for the u.k. retail space. let's get to the gmm. futures. what we expect to see. asian markets up around 0.5%. the pandemic is still on the minds of investors. the georgian runoff, to the extent to which democrats will have full control under president joe biden is a question for markets and is question for the markets. in terms of the fx market, we are seeing risk on moves.
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the dollar down. the australian dollar moving to the upside. not getting a clear risk on, risk off picture. it is more complicated. fromoms getting a boost the about-face from the nyse. 300 --re seeing the csi the benchmark index we look to for direction in china, rising. up 1.9%. 53 55uts it passed the level from june 2015 which was considered by many to be a bubble level. its bubble peak. chinese stocks rallying on that nyse decision. the highest since 2008. keep an eye on an all new high
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milestone of bullishness and risk on sentiment. let's get to the markets. our editor is based out of singapore. what do you think about the new level we have reached in china? another milestone. not a record high but the highest we have seen since the beginning of the financial crisis. that does seem to be a milestone that the chinese markets are having at the moment. in a broad sense, the markets are struggling to find a clear direction at the moment. as you said earlier. there has been a lot of uncertainty priced into the market especially ahead of the georgia runoff. people seem divided on how the impact of the georgia election will impact things. a blue wave with democrats
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taking control of the u.s. senate could mean more stimulus. the risk is hand, higher taxes and greater regulations and that may undermine stocks. tech companies in particular. outperformed during the pandemic. there is a fair amount of uncertainty priced into the markets overall which is likely to keep assets volatile until we get the election results later on. eyee will certainly keep an on what is going on in georgia. , riskms of the risk on off indicators flashing for you, what do you see at the moment in terms of the haven bid? gold was strong yesterday but pausing. on thed also move georgia results with inflation in mind. possible.
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as the georgia election is one the market issues in at the moment. gold hasomes to gold, had a strong start to the year because of the fresh lockdowns in the raging pandemic. bullionend, we think gainsck up much of the from last year as we expect the global situation to improve. theation trade will reduce appeal of gold. and a bitcoin market is still on the back foot. key consumers like china and india. due to the current elevated price levels. we will see a precarious path ahead for gold. demand season in china
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during the lunar holiday. gold is losing some of its followers to cryptocurrencies like a bitcoin. but given bitcoin is a risk bond asset, it poses no direct competition and is unlikely to lure portfolio managers into liquidating their gold purchases. manus: one of the most read stories on the bloomberg today is from j.p. morgan saying money is leaving golden going to bitcoin. they forecast a bitcoin price of $146,000. me ask what you think about yorkbout-face on the new elist exchange to not d
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.he chinese telcos what does this mean for assets? what does this mean for u.s.-china relations? perhaps that is beyond what i can comment on. you can look at markets and also chinese tech companies. perhaps markets een on how this latest development will play out because it is a bit of a u-turn from the previous stance. we will have to see. at the moment, if you look at the index, it is extending gains after the new york stock
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exchange announcement. it seems to be a positive driver at the moment. >> certainly the latest twists and turns. thank you very much. our market live editor in singapore. up next on the program, winter of discontent. the u.k. goes back into lockdown in an attempt to stop hospitals from being overwhelmed. we had news from scotland and england yesterday. will brexit add to the mix? this is bloomberg. ♪ ♪ you can go your own way it's time you make the rules. so join the 2 million people who
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>> welcome back to bloomberg markets. this is the european open. we are 47 minutes away from the start of cash equity trading across europe and in the u.k. we are looking at little changed nt but stronger red arrows on the ftse. top stories from the bloomberg terminal. the new york stock exchange is sharesng plans to delist of china's biggest telecom companies. this comes four days after the nyse said it would remove shares of china mobile, china telecom, and china unicorn. jeffries called this u-turn bazaar. -- bizarre.
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saudi arabia is reopening its borders with qatar. leaders in the region are planning to meet. iran has seized a south korean tanker hours before announcing it will ramp up its nuclear enrichment. most opec members including saudi arabia are opposing russia's proposal to hike supply. discussions continue today to give the group more time to resolve its differences. it casts doubt on an increase of 500,000 barrels a day the market had been expecting for february. 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. anna: england's and mainland scotland are once again under a lockdown as the u.k. struggles to control the virus. more than 50,000 cases of the
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virus have been counted. boris johnson said the weeks ahead will be the hardest yet. the country of already under extreme measures it is clear that we need to do more together to bring this new under control while our vaccines are rolled out. in england, we must therefore go into a national lockdown which is critical to containing this variant. that means the government is once again instructing you to stay-at-home. stay at home. anna: we are joined by andrew pease. for a couple of months, a lot of investors told us they are concerned about the windsor but the are confident in
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medium-term aspects of the vaccine. i wonder what it would take for the pandemic to worsen? how restrictive would life have become in western europe and north america for investors to refocus on the here and now rather than medium-term optimism? andrew: a good question and it is being talked about a lot. it is hard to say what could cause this optimism to be upset. as the lockdowns get worse, the in -- the assumption of most is that there will be more stimulus coming through to offset any economic weakness. would be this new causes and if it problems with the vaccine. if the vaccine turns out to be less effective than markets are expecting, that could cause a rethink.
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markets are thinking that if the lockdowns get worse, there will be stimulus. matt: is there a point at which there is too much stimulus? is there a point where investors in the westworld worry about debt load? andrew: it will be an issue but it is still probably 2-3 years away. will bepoint, investors worried about do central governments have to refinance this debt load? that is when they will get worried. until then, i don't inc. it is an issue that people will particularly be worried about. wonder how high inflation expectations have to get for all of that to kick in?
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this is 10 your expectations hitting 2% for the first time since 2018. that is very -- that is not very high inflation but to what extent do you have concerns around inflation? or are you not concerned? do you think it will remain fairly contained? tooew: i cannot get concerned about it in 2021 or even 2022. but in 2023, inflation pressure could pick back up. when will we get back to that really low unemployment rate we saw particularly in the u.s.? i think that is at least 18 months away. happen, you are looking at inflation rates up above 2.5% before you start to see central bank rhetoric change to become more hawkish, i would
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imagine. corporate debta concern that you see? i saw in the financial times, howard marks warning about the fact that even after the recovery, profits will not keep up with these balance sheets or a were to profit will not keep up with these balance sheets so many have been pushed out by the financial repression of central debt. to even junkier andrew: i think that will be something we start to get concerned about down the track. everyone is thinking about the long-term implications of the lockdowns, of the coronavirus recession. the scars on the economy. an obvious one is government debt. there has been corporate debt but not as much as you would imagine. when i look at the rates of
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itkruptcy around the world, has not picked up that much. i do agree that the quality of the debt being issued will start to become a focus but i still think that is an issue for later on. and not a significant issue for 2021. these things it will bubble away as the recovery strengthens and as it matures. but at this early stage in the recovery, these are issues i'm not too concerned about yet. you so much. thank stay with us. he will be longer with us on the program. weing up on the program, will give you more details on what is going on here in london. further lockdown measures being introduced. , perhaps.e old normal we discussed the economic outlook. this is bloomberg. ♪
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matt: welcome back to bloomberg markets, this is the european open. we are 37 minutes away from cash trading across europe. futures pointing down a little bit. in europe, u.s. futures are still holding onto the green arrows. let's talk about the risks i had. russell and -- risks ahead. 2020ll investment believes one will be a year of economic recovery. andrew pease is still with us. you and cannot touched on this -- the biggest risk must be a hitch in the vaccine rollout in the western world. is that right, andrew? andrew: it is the most identifiable risk.
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about the one not being discussed and that is the new u.s. administration. there is a risk of geopolitical uncertainty. but thee other risks vaccine is a big one. anna: that is a risk but also an opportunity. you mentioned a geopolitical uncertainty. you still think this is a time that we will see dollar decline and you like emerging-market assets. andrew: the u.s. dollar -- a 2021e way to think about is that given there is an economic shift, the losers of 2020 are likely to be the winners of 2021. that is the simplest way to put the outlook. matt: china after an early exit from the lockdown and stimulus
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really -- well, today, we see a new record high for chinese stocks. i want to talk about europe. sees a continued rotation or rotation from u.s. assets into european assets from the big momentum -- tech stocks into value stocks. is that correct? andrew: that is reasonable. , value stocks are replacing the technology focused stocks. yes. anna: what about real estate? team likesrr those. is that because you think we will return to offices? spaceerefore office providers will do well or is it
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more about residential property? where in that space do you focus? bad 2020. had such a is familiaryone with how the story looks for retail. haveeisure and real estate the potential to do well. matt: excellent. andrew, thank you for joining us. fascinating stuff there. andrew pease from russell investments talking about value stocks and real assets and coming back to europe as well. as we were talking about earlier, the new york stock exchange did what jeffries calls a bizarre u-turn.
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scrapping plans to delist chinese telecoms. we discuss. this is bloomberg. ♪
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anna: welcome back to the european mark open. 30 minutes from of the start of cash equity trading. futures developing this morning. we have u.s. futuring pointing to the up side. we saw heavy losses coming through on u.s. equity markets. rare for the first day of trading in a new year. the european markets moving to the down side in terms of futures. that is about we see. thinking about things we look ahead to, it is a big day in the unless with run-off elections held in the state of georgia. the result will determine which party controls the senate for
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the first two years of the biden administration. on the agenda, the german chancellor, angela merkel is meeting regional leaders. they are expected to discuss a national lock down until the end of the month. on thursday well get a bigger picture when euro area inflation figures are published. reflation. ng about in the united states, initial jobless claims. and we get construction. all of that data will be published. a modest gain is expected after a big expansion in october. that is a look at what we are looking ahead to this week. it feels like a long week. a lot has happened. too much has happened on the first monday of january it feels. matt: i was walk to go work this morning thinking i'm sure it is wednesday. it has got to be wednesday. but of course it isn't. it was just a very long monday.
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let's get the bloomberg first word news stories here. here are your top hits from the terminal. bitcoin has seen its biggest drop since march before parring back some of the losses. ! morgan says it has the potential to reach $146,000 according to analysts at the wall street bank. a crop in volatility is going to help bitcoin unlock the higher price and compete with gold for invest flows. the era of cost cutting and asset sales may be over for the world's largest cement maker. it is in tukes acquire a roofing unit of bridgestone. firestone building introduction expected to fetch more than $2.5 billion paris tag. and! morgan is seeking to establish another chinese joint venture in wealth management. that is amid-a global rush to
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capture a piece of the market. it is expected to grow to as much as $30 trillion in 2023. sources say j.p. morgan is in preliminary talks with it stranding on the partnership. that is your bloomberg vlasic. anna: secretary of state mike pompeo said he believes china will cliff on its phase one trade commitments. >> you have been fairly tough on china on human rights issues and other things they have been involved with with respect to hong kong and a new security law there. dow have any hope that china will ease up on its constraints on hong kong? > i am afraid it is and fail
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acombli. everything we have seen has indicated that hong kong is going to become nothing more than another communist run city. they committed to that for 50 years and broke the promise. this they are living under three. actions they take posed the risk they have already had. they were doing the acts of doing what we would considered our first amendment right to protest. it is very telling. they were a group of people who chose to flee hong kong. they have now been imprisoned and tried inside of the main land in china. that is a bad sign. we know what happens when countries beginning to jail people who want to leave the country. it is very telling. we saw this history in europe. when people close their
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borders. not from keeping out, but own people in, that is telling about the regimes and the threat they feel from the fact their people may decide their country is not the best play to live. >> you have been tough on the islands that china has been building in the south china sea. dow have any doubt they are for military purposes only? >> david, those islands are islands that have been belt with the sfwenlt of the communist party to have control of shipping lines throughout the east china he sea and around the indian ocean as well. i talked about this region as being an effort to create a chinese empire in the sea. the united states should never permit that to happen. the trump administration has worked diligently with our friends and partner in the area to slow them down. >> china had tough trade
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comborks. the first phase has been completed. in hindsight, do you think we have gotten out of the first phase what we thought we would get, which is more chinese purchases of american products or more access to their market, or it really hasn't happened yet? >> i think they will ultimately deliver on the commitments they made on the phase one trade deal. -- of it was slowed county down by the economy. the big issues and the hard issues in the trade relationship between the united states and china have not been resolved. the issues about select perpetual property, about fairness and reciprocity and fundamental investment rules for a broad range of industries. the protection of assets and property that are american owned inside of china. everything that is essential to have a fair and balanced trade agreement. that work remains to be done.
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>> that was u.s. secretary of state mike pompeo speaking with david reubenstein, the co-founder and host of pier to pier conversations on bloomberg television. >> the norbling stock exchange says it will no longer list the three largest telecommunications companies, backtracking on a plan to de-list that that had threatened to increase tensions beyond the level they already are. gregor, what has been the response to this news in ails ya? >> i am afraid the new york exchange has made itself a bit of a laughing stock today. i am going to read you a selection of comments from analysts and fund managers. they rain from quite expected, to bizarre, to
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pathetic. people are not being coiled. china mobile, union uni come and others have been surging in hong kong today. the same for an oil company that is in that list, but which had been mentioned for a possible listing. on shore in mainland china, the c.s.i. 300 index has rallied above the highs reached during the 2015 bubble. it is any at a 13-year high. he response has been positive. >> good morning. why are these chinese company list inside new york? some of them don't do much business in the u.s. is it just a question of accessing u.s. capital? >> yes. ina is one of the bigger foreign countries in the u.s. exchange system.
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in happier times during the past few decades, many of these chinese companies had gone to the u.s. seeking the top end to the diatchenko els pool of investors in the midwest prestigious capital markets wildcard wide. they ratesed about $144 billion. now that started to change a bit during the trump era, although the fundraising has continue at a brisk pace. the threat that companies may be de-lipsed in the u.s. has kept investors awake the past few years. hong kong has been trying to lure some of these companies back. they weakened some investor protection toss lure them from others s of alibaba and in the paps few years. they have all been moving back east wards recently. matt: thanks so much for joining us to talk about this.
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in the last hour, the most read story on the bloomberg material natural. gregor hunter in hong kong only n.y.c. decision not to de-list chinese telcos. up next, winter of discontent. england goes back into a stricter lock-down in an attempt to stop hospitals being overwhelmed. this is bloomberg. ♪
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matt: welcome back to the open. we are just about 17 minutes away from the start of cash quities trading right now. anna, good morning. how are you?
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anna: yes, i am fine, thanks. we have just been discussing how it was a frantically business monday for early january. harshly so. let's focus on some of the news that we gathered across europe. boris johnson has announced a third lock-down for england. it comes as britain recorded more than 50,000 cases for the seventh day in a row, putting extreme person on hospitals. in an april dress, boris johnson said the weeks ahead will be the hardest yet. adam joins us. good morning. how will this new lock-down, seven weeks at least, differ from restrictions already in place? >> good morning. one of the key differences this morning that england is waking up to, and scotland as well, which is entering a new lock-down, is that schools are shut again for the first time since midsummer, since the
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summer holidays. millions of workers across england are having to deal with their working days under a stay at home, work from home if they can order while at the same time seeing many parenting their children stay at home and having to switch to remote learning. that happened with a very short notice, and indeed yesterday many primary schools across england started the first day of term and after one day they closed. that is putting a huge pressure on workers. and the other main aspect is a general tightening of restrictions. the message is very much now you must stay at home. exercise restrictses have been put in place. one hour per day and no meeting with more than one person outside any one time. it is generally more of a return to the tough lock-down that was put in place back in the spring last year in an effort to curb really steep
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rises in virus infections and hospitalizations. matt: even children are only allowed to go out and exercise for one hour a day. that seems really draconian. how does the u.k. see this lock-down ending? >> well, our prime minister, boris johnson, of course, he is looking at the whole u.k. as this is being dealt with. his regulations apply mainly to england and scotland. northern ireland have their own approach. the main way out of this that he is hoping for is vaccinations. he anoungesed he intends to scale up vaccinations to try to hit two million people per week with a bid that the lock-downs and school closures could end by february. that is half of one term. he put a lot of caveats in there.
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if vaccinations are scaled up and if infections come county. if we look back at the u.k.'s record over the past nine or 107 months, they haven't very often hit very many of those self imposed targeted that boris johnson has put out there. we wait and see whether the vaccination effort which is beginning to ramp up with the approval of the astrazeneca vaccine. if that effort can vaccinate the millions of vulnerable people by the middle of february. anna: that is a key, isn't it? even if they do get to those really stretched targets by the middle of february, there was an acknowledgement by the prime inister yesterday that there would still be things. the focus on keeping the pressure off the n.h.s. we will see if this drifts into march. thank you, adam. thanks very much for bring us
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the update on would is happening in the u.k. off boris johnson spoke, the pound declined sneerly one%. it has gotten back some of the losses. joining us to discuss is dani. renewed lock-downs then now mean we are not going to see the brexit deal rally continue. this was something we talked about a lot with the fx analyst ahead of the brexit deal when it came on december 24th. it was whether gains would be limited by the lock-down measures. >> i think it was thought that any gains we saw would be short-lived. but how short-lived my be more streefment. the moves we saw were extreme, going from 1.367 on cable all the way down to 1.57. it is doing slightly better, but really the only saving grace has been the weak next in the dollar. that is really true for the
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entirety of this year. the pound isn't doing as bad as it had done in march when it hit a 1985 low. of course the economic concerns due to these new lock-downs are what is keeping volatility bid in the pound. if we jump to the terminal, we see that. it still is elevated. one of the important things we are hearing from banks is this isn't just about the new lock-downs. this is also about the brexit deal. we are hearing that more clients are calling up banks and saying we are concerned there aren't things like financial services equivalents reached in the new deal. that continues to keep worry price in here. it is really a minority of opinions that think that u.k. assets be at the pound, be at 100 and an outperformer this year. it is really only the beginning of renewed economic weak next in the u.k.
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matt: thanks very much. she is looking at the effects on the pound. now across europe on the continent, stricter measures are also being introduced or lengthened. germany is poised to extend its lock-down measures beyondth of january. the chancellor, angela merkel is meeting with leaders and will announce results later. here is our german reporter in berlin. what do we expect out of the meetings that chancellor merrick el has been having? >> matt, it is not looking any better over here in germany. it is going to be more of the same. more of sitting at home, connected to computers, tv, not stepping out. no buying, no shopping, no fun. othing of anything actually. merkel and the 16 state leaders are likely to extend the current lock-down by several
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weeks. we have been hearing more and more voices of maybe needing a tightening of those measures. the numbers aren't good. deaths are up to a near record high, 944 today. not much good news coming from here. matt: i was surprised to learn we are not even allowed to play tennis. not even singles tennis yao doors, which i found surprising, especially with the vaccine rolling out. ren't they immunizing 20,000 people a day here in berlin. aren't about getting huge shipments of this vaccine and passing it out as quickly as we possibly can? >> yes, that is not working quite as well as they had hoped. people are becoming frustrated with it. they say wait a minute, german companies helped develop this vaccine. why don't we have more of it? now they are looking at the strategy over the summer, discovering that be maybe merkel herself was involved,
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saying slow down. everybody needs to have the same amount in europe at the same time. people don't like that. all of that is coming to the forefront now. look, you look across the border in france, it was even worse. , things , you know are always relative. but right now the focus is on why don't we have more? what can we do to get it faster? they are looking at opening a new plant for example in february. biotech is going to open up a new plant, but that is weeks away. anna: thanks, ray. thanks for the updates on the german side of things. bloomberg's german government reporter from berlin. minutes away from the mark open. up next well goatee the stocks to watch. they are reporting a solid third fiscal quarter. we will get details on what to watch at the start of tuesday's trading session. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. just about six minutes to go until the bastardo of trading across europe and in the u.k. we are minutes away. let's get our stocks to watch. joining us now, and we are so glad to have her back after a well deserved vacation, dani berger. >> hi, matt. happy new year. a lot of the focus is going to be on the u.k., not just was of lock-downs, but we have earnings as well. next seeing flat growth for the fiscal year of 2022 versus 2020. it says they haven't seen disruption because of brexit, but still a lot of the issue with the renewed lock-downs means they are going to be continually under pressure. morrisons reporting a very solid third quarter and holiday
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period. they are saying that the revenue coming in should compensate for the higher costs they are going to so because of covid. they do say yes, we are forecasting higher costs. at the same time they are maintaining their profit forecast. morrison's is online at amazon. keep an eye on u.k. retail because of the new lock-downs, and the extended lock-downs in germany and italy. anna: thank you. that is your stock to watch. just five minutes until the star of the european trading session. weasel bring you that market open next. european futures point down, and u.s. futures also point downwards. we had seen a diverge enls there, that europe was going to play catch up with one negative day, but it looks like we may be set for more negativity in the u.s. session? matt: absolutely. we will watch out for that. right now we are searching for direction to some enextent.
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we see very little movement in terms of futures on the continent. it looks like that has accelerated. now urena futures are down .75% on the dax. the market seems to have decided. the open is next. this is bloomberg. ♪
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anna: one minutes ago until the start of cash equity trading for this tuesday morning. winter of discontent. england goes back into lockdown in an attempt to stop hospitals from being overwhelmed. germany prepares to extend its strict measures beyond january 10. georgia votes. joe biden and donald trump hold rallies ahead of the critical runoff elections which will decide which party controls the senate. opec-plus talks temporarily suspended after disagreements over raising output. discussions resume today.
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matt? matt: take a look at european futures. they have moved sharply lower ahead of the open. we do see ftse futures down 8/10 of 1% as lockdown measures will be tightened pretty drastically, i would say. european futures are following them down as we expect our drastic lockdown to be extended. let's take a look at the gmm as markets open up. on the left-hand column, the cash trade. the ftse is typically the first that of the gate as it is today, only down 1/10 of 1%. futures were down much further. we can see those losses accelerate. the ibex in madrid is down 7/10 of 1%. we do indeed see the ftse losses getting steeper now, more than one third of 1%. -- .5%. paris down 1.5%
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they've had real problems with the vaccine rollout there. it would be fascinating to know how they managed to vaccinate so few people, it seems like an effort to do as little as the french have done. so, we do see european markets opening up lower. that is amid concern the accelerating pandemic will crimp an economic recovery. boris johnson imposed the third lockdown across england, shutting schools and ordering people to stay home for at least 23 hours a day. joining us now is ludovic subran, allianz chief economist. what is this do for the economy? this scenario reminds me of minimum-security federal prisons in the u.s., the time you get for insider trading. you've got a whole country including the kids that are not
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allowed to leave their homes for more than one hour a day. how bad is that for the economy? bad as a 3%s is as contraction for the u.k. economy so this is really bad. this is bad because the u.k. is all about shutting down -- sc big part oftually a the gdp of a country. also because they play a role in how much parents are able to go to work. so, yes, this is quite a drastic measure by the u.k. and this is quite a negative outcome for the u.k. economy. this pales in comparison with brexit. brexit pales in comparison with what the virus is doing to the economy right now. anna: good morning. what is your rule of thumb -- when you look at school closures
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and the impact on the economy, and we might see this in other parts of europe through this winter as well, what is your rule of thumb for what kind of impact shutting down schools will have economically? ludovic: if we look at where we had several countries -- in march and april of 2020 when we had several countries actually sitting down. we had in the u.s., a second wave of school closures in different states. 15%now it is costly between and 30% of the gdp. in because of what it plays government spending of an economy. third, depending on how much for people to go to work to visit have to care for the kids at home. it is not only the schools that close. you have all the things of a limitation. you get into 20% of 30% activity total. so i drop of 70% to 80% of
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activity. matt: we've embraced -- we've all embraced the magic money tree. governments just borrow as much as they want because rates are low. then spend it like water from a firehost. how long can that last? are you concerned about any western government's debt levels? ludovic: i'm not concerned about debt -- about a liquidity crisis in europe, for example. i'm not concerned about solvency. otherncerned about the inequalities people talk about. the sacrificed use. some emerging markets where debt levels and reimbursement of primary deficits will be very high in 2021. for europe, the u.s., i think it is quite concerning to have 20 percentage points additional of covid-19 related debt.
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just remember, i think the biggest issue is corporate the value. the issue is there but it is an issue for 2023, 2024, 2025. politically, we've decided to postpone this issue dealing with debt. it will cause a lot of issues politically in europe with fiscal rules. the crux of the discussion about monetary and fiscal policy coordination as the ecb exits the strategy. we have seen the u.s., the choice has been made for the fed to anchor rates for long and for president biden to announce a use of the co-package. i don't think it is the issue right now. it is a political issue, but the bigger issues is corporate debt levels and companies that don't have -- countries that don't
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half of currency like the u.s. or europe has. anna: what is the path to recovery going to look like during 2021 for european economies? how much certainty do you have around european recovery story given the weather first quarter has already started? a little worse than some have anticipated and uncertainties attached. see,ic: well, as you can the big issue is the stringency of the lockdown in europe's economy. the european economy is on very different pathways because of the variance. because of the vaccination campaign. matt was not nice to make fun of the french. i know we are very bad at vaccinating right now, but we have strong states and weak states. the vaccination campaign is going. the structures of the economy are being revealed.
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tourism related economy, france or spain, you will have a bad q1. if you are an industry in manufacturing economies, like germany, it may not be that bad. it could actually derail growth in q1. we think it will get worse before it gets better in europe. we will have a wonderful q2. people will have quite the difficulty in terms of what's went to happen in q2 because it will be so good. q1 is difficult. we see, confidence is the key. go backce, for example, to precrisis levels, we could gain as much as -- consumption. it is what we should look for and we expect we will see that for h2 2022.
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2021 is quite in limbo. matt: we were talking to a cool cat from phoenix, arizona. he was saying, i guess he heard it from charlie monger at berkshire that by the end of 2021, it's not going to matter that france only vaccinated 512 people by january 3. these beginning steps are just a minute shut. do you see that as true economically as well? it's not going to matter the inequality between different european countries' gove rnments' efforts to vaccinate their people by the end of the year? ludovic: i agree with that, but the problem is the steepness of the curve disturbed confidence. right now, the problem is we have elections in germany of the end of 2021, france in 2022. whatever is going to be placed right now is going to be a big
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determinate of what comes out of the election coming up in europe by the end of the year. so, it's not bad in terms of -- even though -- personally, there are some people that will get vaccinated in june or july and september. it's not completely a my new inutia. we could get something close to herd immunity by the second half of 2021 for those major economies. the big question no one has answers for is how do businesses react to it? what type of certification do you need to travel? will we see some conditionality's related to vaccines when it comes to traveling to asia? conditionalities of being vaccinated or going to restaurants. initialplays in, the conditions of the vaccine actually do matter a lot. i think the bigger issue for me is how much of this waste on the government. for vaccines, it is a major
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logistical conundrum. i think some countries are not doing it the way they should do it. r example, the choices that are being made between the u.k. and europe, with between vaccinating everybody or as many people as you can with the first dose or preserving the second dose, it is going to change the speed in which you get to 60% of the population vaccinated. it will certainly change the consent to getting vaccinated. i think that is really where the crux is. i hope it won't change much by the end of the year. but in between, this creates a lot of volatility and entropy in europe. anna: yeah, it is a marathon but not a sprint. but it is setting a tone, as you point out. frankly, what you point out has interesting developments to come. the way you list these measures,
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that seems like a nice problem to have, thinking about the way we might lift these measures. the way we might use immunity and how that might influence our ability to travel around. ludovic will stay with us on the program. 10 minutes into the european trading session. the csi 300 and china, that index pushed above its 3015 peak, closing at a 13 year high. we will find out why ludovic subran is bullish on china. this is bloomberg. ♪
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anna: welcome back to the european market open. 13 minutes into the trading session. we have seen a bit of a deterioration coming through in u.s. futures. we will keep an ion that. chinese stocks, the benchmark index in china has closed above its 2015 peak. it marks a recovery from one of the country's worst equity crashes. the csi 300 has surged more than 50% since a low in march last year. allianz chief economist ludovic subran is still with us. give us your take on china. how much conviction do you have around china? if you thing about risks attached to china, is a debt overhang or dealing with environmental issues? what is the big risk? led forward, china
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massively. they have gained five to seven years of growth out of this crisis. if you look at the content of global imports, chinese imports jumped from 17% to 26%. if you like a global investment fascinating tote see how much china is managing differentlyon very lockdown strategies. it has massively left forward. for us, t-- we were talking about fiscal dominance and the coordination between fiscal and monetary. everybody is saying chinese gains now, for the chinese are best of this game. they have the policy in place. they know exactly how to do managing a private-public partnership between, in the economy between companies and banks and policymakers. we are quite bullish on china
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with the risk of it rising. state owned enterprises in china are leading the recovery and we know china has not indicated they will let go of some of these soe's that were not good enough for productivity and growth. the other issue we see is the dual circulation strategy and mitigation when it comes to creating a moment in china. fromisk that we could have a financial crisis in china is quite likely in our opinion. the last risk that we see is the somehowt china could be in a vortex of growth. what i mean by this is china decided to invest massively in southeast asia to maybe divest from other regions of the world but we don't know how sustainable this choice is because china is such a big country that they are limiting
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growth by focusing only when it comes to exports investments, strategies on the asian continent because of the china sentiment in europe and the u.s.. we don't know how sustainable stuck in if china is southeast asia. that as anou worried investor in china, you are subject to the whims, the regulatory whims and changes of the communist party? i thought i story today about jp morgan looking to expand its wealth management business in china which sounds like a great idea, it is going to be a massive industry for sure but then i thought ant was going to get into wealth management big-time and all of a sudden it is not. in fact, it is being crushed by the communist party. isn't that a concern you have doing business there? ludovic: it is a concern across
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the world. everywhere i see the regulatory backlash because i see the state over welcoming their stay in a series of sectors. i don't know what is the crux now. regulators and policymakers everywhere. i would not pinpoint the chinese. to your point, the big issue on wealth management and asset management in china is the chinese authorities have actually matured a lot and their fear of the regulator is very interested in asset lead management. in value for the shareholder, the client, and risk management much more than before. as a european insurance investor, when we work with the chinese, we bring in a lot of going through solvency and having gone through a series of crisis that help us manage it
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better for our customers, for our shareholders and the people that trust us with their money. that is what the chinese are looking for. it is true, the regulatory situation is hard to navigate, it is tight but it is all about bringing higher value in lessening the risk. this is something we see growing as a concern for china because of surge social stability and the role the sector is playing. and the need for china to control better the risks for the financial sector. there is a risk scenario for crisis in china so the regulators could prepare for that. when it comes to competition policy, regulatory policy, they are becoming very -- they are scrutinizing much more and making it harder. valley for the customer, i think it is a good move. anna: when we think about europe and the extent it wants to leverage with china, what
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assumptions are you making? for many years, it seemed like quite a no-brainer the u.s.. government was going to support china and court emerging asia. under president trump, that looked a more difficult tight rope you now we move to the biden era. how do you see the europe-china relationship playing out so europe can benefit from these positives in china that you describe? i'mvic: well, i guess -- not very concerned about -- we have seen articles about the eu-china investment deal being a big gift to china. i don't believe in this type of story. we can get much closer to china than we are right now. we need a foreign economic policy to do so because right now we have very different relationships with china across european countries which leads the very different interests from bonds in portugal to direct investment in italy to trade
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partnerships with germany. we need ton here is strengthen our relationship with china. we need to make sure that companies across europe find new outlets in china. we need to make sure that we benefit from the interests of chinese investors into europe. the question is how do we do that when we have built such a strong anti-china sentiment? when it comes-- to environmental policies approach. there's a lot of misconceptions about what china is really about and how we can work with china. it is up to us to find common ground. it is all about growing the tide. otherwise we are going to have strong fiscal and self these countries that will supply to china and we will have a big andetition with relocation a strategy that may not work.
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matt: it has been great to spend time with you. thank you so much for joining us this morning. we wish you and yours a happy new year as well, health and prosperity. ludovic subran, allianz chief economist. he will continue the conversation on bloomberg radio at 9:00 a.m. u.k. time so if you are near a digital radio, go ahead and tune in to bloomberg. carmaker, a new mega fiat chrysler is formally merging its business with the french auto group psa, which makes peugeot and citroen. we will talk about that and what to expect. this is bloomberg. ♪
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matt: fiat chrysler is going to formally merge with french auto group psa later this month after shareholders approve the plan yesterday. the company will be called stallentis, which is weird but it will become the fourth biggest carmaker in the world. joining us now is bloomberg european auto team leader, craig trudell. i think this is such a cool
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story because there are so many brands now that are so spread out. you cannot by a peugeot or reinoehl in america. you cannot get a ram truck in europe. they are all over the place. they have the superstar ceo. what do we expect from carlos tavarez? craig: he has done some really interesting things that psa and giving people like you reason to be excited about what's going to happen with this combined company. because you look at what he's done at psa, it was a company that was really struggling when he took over as ceo. he actually left renault and was reporting to carlos ghosn actually before he joined psa. and the job he's done turning that company around a few years m andacquiring opel from g doing what gm was not able to do for decades which is actually make money with those brands. this is coming to your point,
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going to be a huge house of brands. it will be challenging have all those mouths to feed, but it is interesting to watch just how many of them survive after this or whether they do some consolidation. matt: craig trudell there. ♪
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anna: welcome back to "the european market open." in terms of where the equity markets are, up by 1/10 of a percent right now, the ftse 100 getting gains. despiteains in europe futures that suggested we will have to catch up with the united states. u.s. futures down a few tenths of a percent, now they are up 0.3%. some volatility in these markets as we get started on 2021.
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england is entering its third locked down forcing people to stay at home. the measures will last until february 15. boris johnson is turning hopes for a recovery on a vaccine. he wants to deliver 2 million shots a week. stock exchange is scrapping plans to delist shares of china's largest telecoms companies after the exchange said it would remove shares of china mobile and china telecom to comply with an executive order. the fda says any changes to the dosing or scheduling of covid-19 vaccines is premature. commissioner stephen hahn says the agency has been following discussions about extending the time period between doses to vaccinate more people but says
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there is no data to support a change yet. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. matt: joe biden and donald trump --e rally them on georgia rallies in georgia. the senate to runoff elections that will decide control of that body, but really. control of the u.s.. the president revisited his claims that voter fraud robbed him of reelection while his successor to be said the country is looking to georgia to help him implement his progressive agenda. >> we need you to vote again in record numbers. again andvoices heard again to change georgia, to change america.
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nation ishe whole looking to you. you know it. the seats up for grabs will decide who controls the senate. limited polling shows well both races are very tight, the democrats hold the narrow leads. joining us now is bloomberg's reporter stephanie baker. what is the likely outcome? we cannot rely on polling that much these days and the democrats do not have a history of turning up for elections like this. >> no they don't, but there are a lot of reasons this time might be different. polling averages do indicate democrats, jon ossoff and raphael warnock, have a slightly -- a slight lead. it is too tight to call, but it is worth noting the polls in
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georgia for the november election were fairly accurate. i think this has taken on national significant. -- significance. turnout appears to be high with mail-in voting and early voting, particularly in democrat dominated counties like fulton county and turn out amongst african-americans appears to be high. i think it is all about a turnout game at this point. whether or not democrats can while drive voters out trump continues to argue the election is rigged, how did he turnout republicans if he keeps hammering that narrative that the voting process has been compromised? that is what we are seeing play out. how important is this for joe biden's presidency? if he does win georgia, he gets
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control of the senate. will it be precarious and will that matter for his ability to deliver on his agenda? >> it is hard to overstate how important this is. democrats have not controlled the senate since 2014. the races or even just one, joe biden would be the first president to start his term under a divided government since 1989. it will determine the course of his legislation he is able to tax to everything from to a lot of long-term reforms the democrats wanted to some inough, including the democratic party dismantling the filibuster. it is an incredibly important election.
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important because the democrat majority in the house has slimmed considerably. even if they win these seats, it just means they have control of the senate with kamala harris casting the deciding vote. are fromc senators states that have a lot of red republican voters and have to with much more progressive states. it is not a uniform group by any reallybut it will transform biden's presidency and his ability to maneuver and and getet his agenda legislation passed. matt: we will look forward to the results. these are not results we are
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going to get right away, are they? these could take days or weeks to determine the winners. >> exactly. win, we a decisive should note tonight. most posters are expecting this to be tight. it could take days to count to be sure the results are accurate. we could be facing additional court challenges, legal challenges, that could drag this out for weeks, if not months. matt: thanks so much for joining us. stephanie baker talking to us about critical georgia runoff elections. opec and its allies are going to --t later today to resolve talks will go in to second days after most members including saudi arabia oppose russia's proposal for another output abdulazizith prince
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bin salman warning of a new risk to the market >> at the risk of as a -- in the a new variant of the disease is worrying and unpredictable. ist: joining us now bloomberg's oil strategist. what do you expect from the extension of the meeting? at a verylooking uncertain situation. nobody knows what is going to be if they don't reach an agreement. the interpretation is the russians will concede to rolling over the current output levels in february. that is far from certain.
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we have been in the situation before where russia has taken a different view to virtually everybody else in the group. the end result in march of last the deals fell apart and producers embarked on a free-for-all in april. prices fell below $20 a barrel. i don't expect that again. aware of is much more the responsibilities they have, and i think they will reach a consensus, but i don't think it will be a particularly easy process. i don't think the saudi's will acquiesce to another production increase in february. the entire language of the opening address was very cautious. the --hanks for
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anna: thanks for the update. julian lee with an update. brighten -- brexit threaten london's dominus as a financial center? ♪
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"the welcome back to european market open. 600 hides a multitude of divergence. the cac and the ibex underperform. brexit is pushing most european equity trading away from the u.k.. -- biggest venues holder handling european shares have seen business shift to the eu. now is city u.k.'s ceo. arehould make clear we talking about continental european share trading. spoke to the we boss of one share trading platform, he said europe has won the battle for its own share trading.
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is this lost for the city forever? expected.s all fully the regulators, the officials have worked together for some time to put this in place. as we have talked about before, the industry in the u.k., the industry in europe overall has for -- hoped for a good outcome. what we have had is a smooth transition to a situation that we are seeing at the moment. overrms of what that means the long-term, it is too early to say. --t: it does not seem anna: has it been -- matt: sorry, go ahead. anna: go ahead, matt. i was just going to say --
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matt: alastair haynes on tv -- 99.6% ofid trading in u.k. shares was switched over to paris. he says europe has won the battle and he called the shift a spectacular own goal as britain position ins strong trading of european equities in london. could you have stopped this? the parta failure on of the british government? >> where we are is that for a long time, the focus on the talks has been on goods. when the article 50 process was triggered a phase one of the talks around the so-called divorce bill, citizens rights, the northern irish border, there has been a focus on goods. we ended up with a free-trade agreement.
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free-trade agreements historically have tended to focus on goods and less on services despite the growth in economy.on u.k. and financial services, if you look at the political declaration, the illiterate goal -- original political declaration, financial services were not a major feature. the focus was on regulatory autonomy. that is where we have ended up. if that is where the talks were inding, the situation we are , it was ultimately right for regulators to prepare for. fragmentationsly in markets. what our industry wants to see and that is not in the interest of customers, but given where we are, the way this
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has been done, it is absolutely right to congratulate the efforts the regulators, supervisors, and industry and governments on both sides. anna: we have seen a smooth change taking place. is equivalent to something you still think would be a benefit, or should we put aside thoughts of equivalence and think of regulatory divergence as bringing opportunity? have welcomed the joint declaration on financial services that was announced before christmas. structurebout regulatory cooperation between the u.k. and the eu. that is something we have been calling for for some time. it is important there is a relationship built on trust, on mutual respect. obviously regulators on both sides know each other.
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the u.k. was the leading voice. as we go forward it is useful to have structure to ensure transparency in decision-making on both sides. we should be clear what this does not appear to be, which is a mechanism for managing equivalence on both sides. equivalence is a unilateral decision on the u.k. side and a unilateral decision on the eu side. it is important that there is a flow of information as those processes go forward. the u.k. did the right thing last year in granting unilateral equivalence. it would have been extremely well for the eu to do the same. the body of rules on both sides are the same. will they they weren't overtime -- will they diverge a over time? on the u.k.just be
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side, it will be on the eu side. as the industry adapts and changes in the years ahead, things such as fintech, ai, data, become more important, it may be the u.k. and eu will take different approaches. having mechanisms to ensure ongoing dialogue, ongoing exchanges between regulators, hopefully we can manage that process as we go forward. the other key thing is both sides continue to be committed as far as we can tell to high standards. is a commonality we can build on. anna: miles, you think that is a commonality to build on, but how do you make sure that memorandum on financial services leads to something rather than just kind words?
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important a really point. avoiding anf the eu acrimonious exit. ofre is always the risk political acrimony that would have a knock on effect in financial services, in terms of the ability to trade between blocs. even if there is not a huge amount on the financial services , the deal gives a supply from to build on. gives us a platform to build on. this is going to take time. it is going to take ongoing discussions and interaction between governments, between industry. our counterparts in industry in the eu, we have a
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huge degree of interest in how we can operate together. concerns.as of the role of data, of fintech, international standards and challenges and the opportunity -- is something we can work on together. we will see how u.k.-eu cooperation goes after brexit. thank you for joining us. miles celic talking about the financial industry as it stands in london. next we are going to hear from israel's health minister. they have done a good job rolling out the vaccine, may be the best in the world. ♪
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>> i have to say we are prepared in advanced. let us never forget we are just a small country. company will have a ,accine with all the approval pardon me, but they will not be looking our direction. we signed our agreement several months ago.
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there was the possibility to have a vaccine in the near future. be ourl answer would incredible medical teams. the moment we told them the vaccine is available, in no time, they got prepared and they were out there. >> what is the biggest logistical challenge? >> the first one we encountered the set of 1000 doses. we were unable to go to areas with smaller developments. introduced the israeli technology. we can bring as little as 50 doses. this is part of the answer. where we to start with the policy of, everyone who wants to thevaccinated could come,
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population would be at risk. whenis much less possible you get vaccinated at your local clinic. that was israel's health minister speaking about the countries covid-19 vaccination program which has been relative to other countries, a massive success. let's talk about german unemployment. it fell by 37,000 in december. that is good news. you don't want it to be too high. it was estimated to rise 10,000. it has gone the right direction. that is it for "the european open." ."xt it is "surveillance if you are on video you can tune in on -- in london you can tune
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in on dab digital anna: google -- digital. ♪
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♪ francine: winter of discontent. england goes back into a six-week lockdown. holdiden and donald trump rallies ahead of a critical runoff election that will decide which party controls the senate. the new york stock exchange starts plans to delist with little explanation. china mobile among those. good morning and welcome to bloomberg surveillance. i'm francine lacqua in london.

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