1. And funding, expanding testing. Chancellor Angela Merkel says unequivocal proof that Alexey Navalny was poisoned by a military grade nerve agent, causing tensions with the kremlin. A very good morning to you. Welcome to daybreak europe from dubai. It has just gone 6 00 a. M. In london, 7 00 a. M. In paris. November 1, a vaccine is going to be there, going to be in your hands, just before you go to the polls. You look at the equity market, superlatives fly. This is the biggest gain in months. Lets have a look at these markets, because the question is the market . P end the s p 500 down. The biggest gain in two months, yes. It is now very firmly value versus growth. This is what we must debate. Growth, of course, had a runaway train. Is it time to reconsider value on the back of a vaccine narrative . Msci asia up, euro stoxx 50 up. But are we at the start of a in currencies . I have asked this question. The dollar is rising by 2 10 of 1 . Itthis a dollar story, or is the currency that the central bank is putting us in a cold war . All on the rhetoric of pushing back against the fed. In euro dollar did hedge 2017. The curve dropped back from 120, ratcheted to 124. And on a personal level, it is good news for me, but that is not necessarily the case for everybody. 1. 33 is where we are, where they say we have more headroom, and that retraces the sterling trade. So this years hottest trade is the United States. Investors in two of the biggest high growth funds withdrew records amount of cash despite the historic rally, and some are being shunned in favor of less loved stocks. Dani burger can discuss. You. Good to see i love this chart. Take it away. Dani you have been talking about it already this morning, growth versus value, and part of what is happening here in my mind is investors have looked at what has happened in growth and are taking profits now, where there are high valuations, and are now searching for the next leg of the rally, so, again, these two, if you go to the next chart, you can see the flip of that, and that is the blackrock equivalent of value and growth. They had the biggest amount of growth. This is where the money is going, out of growth. If we are going to get a vaccine, if these are expensive, you want to go where it is going to rally next, and that could very well be the cheaper stocks. Part of that might be that investors just want tech. They do not want growth as a whole but want to narrow in on the market winners like tesla and apple, and we sawtek etfs etfs. We saw tech discerning in a parabolic move. Dani, thank you for putting it into context. I guess joins me. Good to have you with me. Is it time to take profit on growth and to hedge more judiciously into value, and if so, where . Good morning. Yes, when you look at the growth in august, the nasdaq up around 11 , the s p more broadly up around seven percent, the manus, andince 1986, this is amazon, google, and facebook, again, about 13. 5 . They are up about 6 year to date they are up about 66 year to date. In china, the rally has been different. Industrials and materials all doing well, signs of domestic recovery. Business constants has improved, and car sales are up, as well. That is really what we want to start seeing in the u. S. The caveat in the u. S. Is the election risk and this vaccine euphoria. I guess on the election risk, biden has a lead of around 8 , and that is narrowing. On the vaccine, it is really interesting. There are a number of vaccines in phase 3. Remember, vaccines normally take about 10 year to come to market, not one year, which is what is proudly being targeted touted. Manus lets just jump in here, yogi. You are right. Cke stoxx on biden the sto s on biden. You can call me oldfashioned, right, but telling the world that you have a vaccine coming two days before you go to the polls is like slightly strange timing. Fauci andchang others have said do not expect 100 on this. Are we a bit too far ahead of ourselves on what a vaccine delivery can do . Is a highlyine politicized event with the u. S. Elections. Vaccine to see a market in november. It is just too soon. You have got a lot of phase 3 contenders. The market is looking at it very, very carefully. There is a lot of euphoria we are justnes, and not convinced it will happen so quickly. Politics seems to have taken over, manus, and from our perspective, we would expect to see vaccines later year. Obviously, the sooner the better. We all want to see a vaccine. Manus you know what . Part of the narrative here is lets go with the bid environment. Stocks higher, efficacy moderately good. That could reprice the market, and this is what our team have been looking at. If you saw yields go up, that gives you proximately drawdown. Ly an 8 this could be the catalyst for repricing. You get above 300 basis points at the moment on equity is, on equities, but that is symbolic. Remember key thing to is the equity markets are driven by sentiment and you 40 and euphoria. When you look at the valuations, they are just super stretched. 500, forwardhe s p around 27, and the election is adding to the mix. But you have other things going on, like in europe, the coronavirus cases rising, a in the u. S. Cases very mixed in the u. S. , not really improved. The focus is just on politics at the moment. Looking the vaccine market. The hopes are just not realistic at the moment, manus, when you look at valuations. It is quite rightly said that the value trade looks better. The equity markets, the valuations are so stretched, they are doing it based on momentum and not on fundamentals. Ok. S hold that thought. I have thought of a new show. All that politics between now and november 1 all out politics between now and november 1. Do not go anywhere. Yogi. For the first word news, laura wright is with me. Laura . Laura germany says tests show unequivocally that alexey exposed to a military grade nerve agent. Berlin will now consult with european and nato allies to formulate a plan. Chancellor Angela Merkel says the world is waiting for answers from russia. We are expecting that the thisan government explain incident. There are very serious questions that only the russian government can answer, and they must answer them. Laura the white house is to set boundaries for its crackdown on wechat and tiktok. The administration will make their decision public later this month. They are drafting documents to clarify the transactions that will be banned. U. K. Prime minister Boris Johnson is trying to win back trust after a series of policy reversals. His return to westminster has seen a number of facetoface meetings with those who are anxious over his handling of the crisis. They are also promising there will be no horror show with with, no temporary taxes. Global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Manus . Manus laura, thank you. The Brazil Central Bank president on National Poverty hitting record lows. He thinks it is time to stop stimulus. This is bloomberg. Bloombergs is daybreak europe. I am as cranny in dubai. I am manus cranny in dubai. S. Brazil, poverty at low the Bank President , roberto neto, spoke to bloomberg about why spending needs to stop. The market will be better than what they are forecasting, and next year, our growth is better than the forecast. It all depends on a lot of external factors and factors economico the way the situation is seen. Neto, based campos on what you can see now, two thirds through, the Fourth Quarter is going to be, as you said, i think, slightly better than what the market expects. What would you anticipate at this moment for the full year 2020 with gdp . 5 withld be around next year growing a little bit more than 4 . Cases, if i am not mistaken, that is better than well, as you pointed out, some private economists see gdp dropping by less than 5 , but growth in excess of 4 would be substantial for 2020 one, particularly considering where the economy was in the Second Quarter substantial for 2021, but cheekily considering where the economy was in the Second Quarter. The growth of next year, they think the stimulus is stronger this year and that there will be headwinds once the stimulus is out, and there is another group of people that says no. What i am seeing is a strong recovery. I think the assumption in terms of the economy falling due to the pandemic, the reaction has been better, so we have that. Countries, brazil has been handing out cash during the pandemic to support the economy and to help families. Earlier this week, that stipend, the monthly stipend, was cut in 600. To about 55 from what impact is that going to have on the pace of the recovery . Toi think it is important quantify the Overall Group of measures that we are taking in the pandemic. When you look at what the other there areare doing, several parts, monetary policy, done aggressively, liquidity and capital measures, which we also did aggressively, liquidity measuresr 67 around 60 , and then you have taxes, which is either delaying or canceling taxes, and then you have the Bank Transfers and then the credit lines. When you look at the Bank Transfers, that was a huge on the lower part of the population, the poor population, the people who needed the most. Also, we had a bunch of credit programs that are in place right now. Some of them took a little bit longer than we expected, but all of them are in place right now, and we actually had some that started this week. When i look at the amount of money that was transferred with the credit programs, i see that it is Strong Enough to take us between january and february of next year. Some we would tend to phase out and we needed to phase out, because it would be impossible to do that for everybody every month, because then we would get into another dimension, which would be more problematic on the fiscal front, so i think brazil did what it could. Manus the brazilian Central Bank President speaking to my colleague in new york, an exclusive interview for the markets form. Breaking news. This is from china. This is a broadside. China is to give broad chip Sector Support to fight trump. He will grant them the same priority listen to this headline. China will grant the ship plan ship c grant the same support. Some conductors. You will see the European Tech sector and the asian tech sector react on the back of this. These are the latest, breaking headlines. Seeing the whole Tech Movement discussion going on, and we will probably see that translate into the European Markets a little bit later on. We will get the european chips. Some names that may come into play, but that language is the narrative from china in response to donald trump, in terms of tiktok, a put up or shut up deal. Lets go to our guest. Brazil and the headlines from china. Lets rip it all up. The china headlines. These headlines i think is quite strong fighting talk. Strong fighting talk. I am positive china. China trade deal is a very politicized event. We are expecting to see more in the coming months. You made a mention that tiktok was well managed. We expect to see a truce with tiktok in the coming months, and all of this was for donald trump to make progress in the elections, but china is expanding. Manufacturing data is good. The only sector struggling in china is the financials, like the rest of the world, where profits have declined, and things we have to be sensitive to. But we really like china. It is moving in the right direction, a rally. They seem to have gotten covid numbers under control. But brazil, i think manus when you say you like china, does that mean you want to try to trade long yuan . You want to pick up a specific equity valuation . Bonds over treasuries is quite an appealing trade. Do you take a sliver of each, or how do you take advantage . Chase yield. It is a carry over cash trade. From our perspective, if you buy china, you want to buy broadbased chinese exposure. Obviously, anything tech related is good, though valuations are stretched. Manufacturing has improved. If you are very brave, you can start to look at the banks, as well. Suppliedcontinuing to supply support. Manus ok. Yogi brazil. Manus we will pick up on brazil in a moment. Time is a real thing on this show. Hold these thoughts. I need to know. My guest host this morning, yogi. , theg up, brexit coronavirus, and more. The triple threat. The bank of england. This is bloomberg. Currencies are moving on daybreak europe. Where are we on cable . A fairlyading at strong level. Lets go to my guest host, yogi. Several people, the Japanese Deputy governor, everybody now suddenly loosening up their vocal cords in terms of being ready to do more pushback. Where are we . A currency war . We think we are at the start of a big pushback on currencies . Yogi i do not think we are at the start of a pushback. It has been going on for a while. If you look at 1. 33. Is 9 undervalued. When you look at euro u. S. Dollar, similar, where the euro is about 16 undervalued. We tend to see currencies over our projection for the dollar is weakness going forward, and that has been on the table for several months now. On top of that, you have got election risk in the u. S. And stimulus talks in the u. S. , and, of course, you have pandemic risk in the u. S. , all putting pressure on the dollar to weekend. The only saving grace is a massive putting pressure on the dollar to weaken. Is that ving grace it ties in with china, as well. If you see the dollar weaken, eaken, so ityuan w links in with the whole world and supports the commodities market. And youerging markets, start to see u. S. Dollar weakness. That has been for several months now. Manus yogi, how quickly do we get you gave me a couple of numbers. Lets go back to cable. The theoretical. We have got potentially a hard brexit at christmas time. Do you get to a hard number . Average is a longterm that we lean towards, manus, and you are right. On brexit weighs heavily cable. We would expect that to be a lot slower than the euro going forward. Manus ok. Thoughts. Your i give you my word that you will have the last word on brazil. Tensions between moscow and berlin. They are escalating. Chancellor Angela Merkel says Alexey Navalny was poisoned by a nerve agent. We discuss. This is bloomberg. Good morning from bloomberg middle east headquarters in dubai. I am manus cranny. This is bloomberg daybreak europe. The rally for u. S. Equities broadens. The fed beige book says risks remain. Broad chipid to plan Sector Support to fight donald trump. The cdc tells estates to prepare for a vaccine by november 1. Tells states to prepare for a vaccine by november. France unveils a stimulus plan today. German chancellor Angela Merkel says there is unequivocal proof that Alexey Navalny was poisoned by a military grade nerve agent, escalating tensions with the kremlin. 6 30 in london, seven 30 in paris, as we get to the markets 7 30 in paris. We saw a rally yesterday. A debate between growth now and value as we see a shift in money across the sector. Less just take a look at some of the markets. Lets just take a look at some of the markets. The cdc saying to get ready for a vaccine. Growth shares lost billions since 2016. Do you become more discerning . Do you just want to own tech . Yesterday after one of the shareholders traded out. Europe is set to open up 8 10 of 1 despite a number of headwinds coming from the ecb, and talking about scaling back stimulus. Having a look at currencies, my guest says it is not the beginning of a cold war and that parity will drive the value of some of these potentially higher. Euro dollar is higher. Like 2017, where we dropped and ratcheted up above 25. Two china, they are saying to plan broad chip sector to china, they are saying to plan broad chip Sector Support. For me, using language like this, the same priority of the atomb adam bomb, bomb, fighting words. David this is the stuff that china is good at. When they back a specific priority, and they put in the resources, political, Economic Resources behind something, they tend to get stuff done and get done quick. Battle for the Semi Conductor supremacy. What we understand here is that they are planning a sweeping set of policies to develop this domestically. We still do not know what the specific policies are. We understand that this all has to be fleshed out in the next fiveyear plan. Top leaders are gathering to flesh out exactly that, and we will see. We will see what happens. We know they want to develop their own. They have tried acquisitions over the past years to further their sort of presence in the technology. That has not worked. We will see if this one works. It is strategic. Trying to become the superpower they want to become. Asus when you understand, you said, the narrative is we have a vision, we will deliver, the bloomberg analytics this more,g is who needs who youif after the election have a gaggle or a coalition against china, that is xis nightmare, with countries coming aboard, even if biden or trump, that is a big risk. David are they taking on too much . Are they fighting on too many fronts . Asia are here in packed with chinas tussle with australia, chinas tussle with us, and they are doing it for various reasons. The other point, when you look at what china is trying to do is xi jinping, a couple of days back, in fact, over the weekend, one of his rare appearances, he came out and talked about this concept of dual circulation, them looking at their economy and trying to figure out how to make the economy selfsustaining. In other words, import substitution. Reducing their hightech capital goods. We are starting to see that play out in the currency markets. I will give you an example. If you look at the taiwan dollar, it has been on a tear. A currency that tends to follow the taiwan dollar has not been, the korean won. This is something we will talk about in the months to come, the dual circulation. And a couple of trades, just the broader dollar rally, that is basically it. Manus ok, david, thank you very much. Great context. David, one of our anchors for the china open in hong kong. David, thank you very much. Angela merkel says Alexey Navalny was poisoned by a military grade nerve agent, sending the ruble tumbling. Merkels demanding answers. Do you think she will get them . It is anow, manus, difficult question. I would say the language from merkel yesterday was very severe, just the fact that she did a press conference. She came out herself and revealed these findings, saying there was no question that he was poisoned. She also said he was trying to be silenced, and this is the main opposition to putin in it clearnd she made that there are questions that only the russian government can answer and that this should be brought to justice. Look, there have been incidents like this in the past. Theresa may had a very similar situation in the u. K. She also wanted answers but ultimately did not get any, and to make this even more uncomfortable for merkel and the german government, they have to factor in what may be an uncomfortable transactional relationship but nonetheless very real over gas. The germans like to say for us, the international politics, energy policy, we try to treat this as two different units, that it is becoming hard to separate the politics, the gas, is sheela merkel going to go against a country that is a major Energy Supplier for germany . Ways does this pave the for more sanctions on russia . It could, when you look at the european institutions, the head of the external office for the European Union, they came out to say that the finances that it is very worrying and that whoever did this has to be brought to justice. Ie relationship with russia, am sure you will remember that Emmanuel Macron has been pushing , and the timing for sanctions are more complicated because there are more sanctions coming on ali riske, and the European Union sanctions coming on union, and the european the timing of this is very, very tricky for the eu. Manus maria, thank you very much, tracking the poisoning of navalny. A week before the Central Bank Policy meeting, the bank will need to pare back support. The jump of the euro over the last months has been a headache for the bankers. The ecb Must Withdraw Emergency Support after the economy has recovered from its pandemic shot, one said. Yogi is still with us. Judicious, less forthcoming, perhaps, than the others. The Bond Buying Program is, and i quote, limited in duration. It is early to Start Talking about pulling back when we are just going into the reality, an extended Furlough Program in germany, and we have not even seen the reality of this pandemic yet. This is the risk of policy, isnt it . Be talking with ,his type of language and tone europe needs all of the support it can get. You contrast what is going on there with what is going on in the u. S. , down 19 year to date. Earnings are worse than in the u. S. , and that is things declining on the back of covid. You have got unemployment. Manufacturing data very mixed. You quite rightly ond, the euro is undervalued certain basis. The dollar no longer becomes a safe haven currency. I am guessing the bond markets, you still have negative yields, and that does not help. What do you think we will hear from Christine Lagarde . You work quite clear with me. This is not the beginning of a currency war. I would disagree with you. Willdo you think lagarde do next week in terms of rhetoric on euro strength . Yogi i think she will make comments to try to slow down the pace, but there is Euro Weakness with Dollar Strength that you cannot ignore in this marketplace, and remember what is going on on the broader markets. U. S. Markets are at alltime highs. Everyone is looking to take money off the table. Giphy withd the geography, you will see a lot of pressure supporting euro strength, so any rhetoric she can make to slow down the strength will not stop it but is what we would expect to see in this environment. Backdrop, markets in europe are down. In germany, flat. In france, down about 14 . There is a contrast between some of the players in europe. But that is her challenge. She has got to come up with a statement across the board. Manus ok. Well, you know what . She is a formidable Tour De Force when it comes to telling the way it is. Our guest host this morning, thank you very much. Coming up, daimler unveils an electric vehicle as they try to catch up with tesla. We hear from the ceo. This is bloomberg. This is bloomberg daybreak europe. Daimler has released their latest version of a luxury sedan for the first time including an all electric car that will be sold next year. They are pouring billions of euros into electrifying their fleet and playing catchup to tesla, which has zoomed past them to become the worlds most valued car company. Trends the ceo about the he is seeing in the industry. Ola usda whole host of vehicles coming, and perhaps there will be an additional you will see a whole host of vehicles coming, and perhaps there will be more with the stimulus packages in low carbonncentivize vehicles or electric vehicles. See whatlso that we people have taken for granted, their individual freedoms, individual mobility. Maybe we will also have a bit of a renaissance of that thinking as a result of covid. What kind of a recovery are you seeing now . The ministry of economics here in germany just said the recovery is going to be stronger, that the downturn was not quite as bad as they thought. When are we going to see 2019 levels again at daimler . Ola it is hard to say when we will get back to that level, but the First Quarter affected by the pandemic, hitting china, europe, then the United States, and we see sales are picking up again. China is leading. We are already a couple or three months into quite healthy growth in china. The United States and europe are not on that level, but after that unprecedented run we had in q2, we are starting to come back towards normal levels. You have got some big shareholders out of china, as well. Are you concerned about the rocky relationship between washington and beijing right now . Ola we have very strong partnerships in china. It is our biggest market on the Passenger Card side. For the u. S. , it is our secondbiggest market it is our biggest market on the Passenger Car side, and for the u. S. , it is our second biggest market for Passenger Cars. For us, it is not an either or. We have to be in both of these important regions and are investing in both. Confident you have a solid Battery Supply at a constant supply pipeline in order to build the cars you want to sell . We haveolutely, and added some Strategic Partnerships in the last couple of months, also with an upandcoming player, where we took an equity stake, not only to secure supply, that is important, but really to go into r d together, the deep integration of r d, how we can push on and get costs down, the so, yes, i think we are in a strong position. In terms of the market, we have seen prices come down. To do m a,in a hurry but when you look at some of the iconic brands that have been hit hard, such as england or india by england . Ola we are focused on mercedes benz. That is our core. We know our customer. We are in engineering driven company. We really want to be one of the architects of this transformation, so i do not think we need the distraction on some bigger m a deal at this stage. We will focus on our company, make it financially strong, and also lead transformation. Be inis a good time to the business, financing the auto industry. You have been able to take advantage of that with a big bond offering at the beginning of the year. Do you think you can go back for more . Financing portfolio is substantial on the financing and leasing side, and, yes, we had a very strong subscription when we issued that bond, and the rates in spite of covid have stayed quite reasonable. The spreads have not gone crazy here. I think that is important and also a good sign that Financial Markets in this case kind of stayed rational. When do you think daimler shares will get back to a place where you are happy with them . Ola i think there is a lot more potential. This company has not only a great history but has a great future. In terms of share price, the current share price in my point of view from my point of you should have significant upside. The daimler ceo talking to matt miller about all things electric. More news from our part of the world, a company globally raised , and a quebec pension fund. More investments and scaling up a commitment to one another with billions more. Back in 2016, they got together and committed to billions in investments. That was done. That was achieved. This time, they are targeting new regions, new sectors, including europe, and this is scaling up the ambitions between the two institutions. What is bp worth . They have gateways in london, antwerp, russia, india. It is truly a Global Operating company. And they had action just last year. Andext, back to china sweeping the Tech Semiconductor industry. What is the commitment from china . We discuss here on bloomberg. This is daybreak europe. Bloomberg is daybreak europe europe. Semiconductor the chip industry. Lets get to our executive editor. Good to have you with me so quickly on the back of this. This is a commitment to a fiveyear plan. How much of a step up is this . China, what our reporters have dug out here is that china is planning a much more ambitious effort to build the domestic semiconductor industry. This has been an area of focus for a while for the company, but what they have learned is at a gathering of the China Communist Party next month, they are going to lay out the ambitions specifically for some conductors and thirdgeneration Semi Conductors with major efforts to bolster research, education, facilities that these companies are able to use, and this is directly related to the trump administrations attempts or increasingly tight restrictions on what chips and chip Equipment Companies can buy abroad, and in ei huawei. Uw this has raised alarm bells in beijing, and they are now planning a very broad and sweeping effort to try to build up the domestic chip industry so they are not dependent on american supplies or really any kind of supplies from outside the country. Manus yes, i am looking at some of the notes being sent through, billions of integrated circuits each year. This is about building independence, isnt it . Where does it fit into the trade war . The kind of language that the chinese is using here is that they will use as much as in the b project. That is not exactly constructive language, is it . Peter it is not. It is perceived as a do or die moment there. They cannot fail in terms of building this domestic semiconductor industry, because some conductors sit at the foundation because Semi Conductors sit at the foundation of many items. They are important for computers and for autonomous driving and if the United States succeeds in cutting them off from some of these critical chips, then they will not be able to compete in some of these other areas. Right now, huawei is a very powerful player in telecom technologies, particularly with gaining market share, samsung and apple, the leading provider of telecom equipment. If the u. S. Succeeds in cutting them off, then they will lose out on wide swaths of business. We have already seen that with huawei, but the moves against bells. Have raised alarm r, thank you. A do or die moment for chinese tech. Me for this week on daybreak europe. The European Market open is next. This is bloomberg. You can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save 400 a year on your wireless bill. Plus, get 400 off when you buy the new Samsung Galaxy note20 ultra 5g. Good morning. This is the european open. Today, it is not just about tech. U. S. Stocks hit alltime highs. Futures pointing to a higher open this morning. Lets take a look at your top headlines
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