Stocks into value encyclicals keep up . Havens are bringing back some ground. The Federal Reserve warns there could be major downside for asset prices if the Economic Impacts of the virus is not mitigated. Will a vaccine or stimulus come soon enough . Welcome to the program, happy tuesday. Picking news from the u. K. , jobs data giving us a picture of the damage done or avoided on the u. K. Economy. The unemployment rate, a three month figure, we get an ,nemployment rate of 4. 8 exactly what was anticipated. It was on the rise. Very cushioned by the furlough scheme over the summer, and the end of september. Where we are on the jobless claims number, we have i go to this because we do not have survey data but it is interesting because it is october data, a little more impactful. The jobless claims change down by 29,800. , that looks lower than the prior period. Some of the data seems an improvement on the previous period. I go to that redhead line on the u. K. Unemployment story. 164,000loyment fell ending september. That is a little backward looking. We have had a stop and start furlough scheme. It had looked like it would be withdrawn, but it has been extended to march. Lets look at where we are on the equity market picture. The incredible gains yesterday in europe and the United States, the euro stockss 50 was up, the cac up more than 7 . A little reflection and backtracking on yesterdays enthusiasm. Ftse futures down 0. 8 . Seeu. S. Picture, we may something flatter. We did see some euphoria unwind during the session in the u. S. Nasdaq futures in the red yesterday. Has been highly representative of fastgrowing stocks. M home tech for futures in the u. S. , flat this hour. With stalling in the asian session, some of the hurdles we need to overcome with regards to a vaccine are better understood. Some markets in asia are paring their gains. Gold and the yen see small increases. Substantial moves yesterday. Isbal stocks, the rally stalling in asia. Concerns on largescale Coronavirus Vaccine studies. Yesterday the s p 500 closed at a two month high on the news of a vaccine being developed. Lets get into the markets with mark cudmore. Managing editor in singapore. Give us your reflections. I feel like a killjoy because i did not get to do this yesterday and ask how exciting it is that we have got a vaccine. Mark im the killjoy today. I feel like i am in this world where everyone is very excited about the vaccine. There is cognitive dissonance. I asked people when they thought they would be able to travel, more are pessimistic, thinking 2022, whereas i think by the first half of next year we expect a range of vaccines to be rolled out. I am more worried in terms of markets, we have a crisis right now. We saw the state of emergency. France beingity in used, and adding 41,000 cases a day. All around the world we are seeing coronavirus cases accelerate. From0 deaths last week up 47,000 the week before. Ofhink we are in the middle an extreme Health Crisis. It is great news for the vaccine effectiveness, but it will not change the game on this side of crisis. At the moment it looks like most people are taking a more positive longterm view. Anna the Health Crisis is the big thing and nothing should detract from that. If we look where investors might have become unstuck, it could be the individual asset class level. Will there be some people badly positioned ahead of this . And if we find out who got in trouble yesterday . There is a good point made to me saying it is amazing how markets were priced, given that we have known a virus was coming. Pfizer had an Earnings Call in october where they said they expect results, and they would have 40 million doses by the end of the year. We knew this news was coming. We knew we were going to get updated news on the vaccine, and yet the lockdown portfolio was outperforming up until yesterday. The rotation yesterday was extraordinary, and there will be funds. F pain in macro these extraordinary moves and Commodity Markets and gold and oil. Treasuries are with clashing back and forth. Fx a little more controlled, but some wild moves there. Across a number of assets we have done stop losses, and that will cause a lot of pain. When contending on this Health Crisis, the fragility of the market but people are trading optimistically now even if i am suspicious. Being suspicious, we need to be. What about the fed warning yesterday . I cannot work out if this was awkwardly timed or welltimed. Warningyou make of that given the support the fed is putting into the markets . We have seen high assets because of fed support. Mark i think that is right, and it is part of the rhetoric, keep pressure on the government to deliver stimulus. Maybe with vaccine news, there will be less pressure to reach an agreement on stimulus and that will be worrying for stocks. Fox are pricing stocks are pricing in data,ing to john hopkins one herd of 40 2000 fresh cases in the u. S. Yesterday 14 20,000 fresh cases in the u. S. Yesterday. You are still looking at a situation woerle december you will have north of 1500 people dying in the u. S. Every day. It is an extreme situation and people are getting overwhelmed in certain states. The fed is saying do not get distracted by the fact there is something promising that will come through in 2021. Focus on the real problem right now. Markets should Pay Attention as well. Thank you, mark cudmore. Up next, the u. K. Liens on Climate Policy as a way to reach out to the next u. S. Administration. Markets slide after the euphoria of monday, we bring you across all the major moves. This is what we have on dax futures, pointing to the downside. Into the story about the vaccine,. This is bloomberg. Green gilt will bring in a new class of investor. Partly driven by different investors coming in. That is something we want to tap into. The benefit of launching sovereign curve is it means private companies have the ability to piggyback on that. It will help grow a private green market in the u. K. And give u. K. Investors access to more denominated bonds. Sunaku. K. Chancellor talking about green gilts in an exclusive interview with bloomberg. S p futures flat right now, european futures unwind a little bit of positivity yesterday. U. S. 10year yield shot up yesterday. Biontech have a breakthrough on a covid19 vaccine. 90 of infections in volunteers. The most scientific advance in the battle so far against coronavirus. Some of the dust has been allowed to settle. Everybody has been able to get into more detail on what the company is saying from this press release. Thanu have more concerns you did yesterday about what this means, or more Unanswered Questions . It is an early read, and for what it is, it is as close to the best possible read we could have had at this stage. We knew there would be a lot more questions when you are only looking at people a couple weeks after being vaccinated. We need to know about longterm safety, you are not know about the longterm durability and the terms of how long it protects people. Basically to be able to analyze that. Anna on how long it gives people immunity, we will have to go ahead and immunize people not knowing that . Is that an uncertainty we have to accept . Yes, you have to do that because the alternative is that you hang on for another year trying to figure out if this vaccine has a years worth of protection or six months. At this point, you have to do that and figure it out as you go along, otherwise you end up with people being infected or dealing with lockdowns until you get that answer. Anna what about Global Distribution. That has gotten a lot of attention, the temperature you have to store the vaccine. The ceo was talking to my colleagues about how he thinks the Global Distribution effort will be fine and possible. It will be the last mile getting things from warehouses to where they will get administered, that is the challenge. Is that a challenge for you . Sam absolutely. When you want to keep it in a large volume before you start vaccinating people, at that point it can be kept in the fridge for a week. To have it in larger volumes, you need to keep it at the temperatures we are dealing 0 degrees centigrade. That is a challenge because Broad Solutions have not dealt with this before, but it cannot be something we cant solve after we have solved one of the biggest steps, getting a vaccine that does a good job. Anna that is the significance of what was announced this week. What about the issue of the makes minks in denmark, the strain identified there . How quickly can a vaccine be being effective to fit to useful in a mutated version of the vaccine . S askingy nonexpertnes that question. M it is a very good question. Given that it took six months to go from nothing to this stage of a trial, and the technologies at fizer and biontcech, johnson johnson. You can switch to a new version possibly, but you have the logistics of having to revaccinate people. The better thing would be to avoid creating situations where the virus can mutate easily. ,nna thank you very much Bloomberg Intelligence research director. President elect biden and prime johnson warn of a tough road ahead despite the vaccine news. We discussed the market implication, next. This is bloomberg. I must stress these are very early days. It is clear this vaccine even if approved will not be widely available for many months. Rely onsolutely cannot this news as a solution, and the biggest mistake we could make would be to slacken our resolve at a critical moment. We are still facing a very dark winter. That was president elect joe biden and Prime Minister johnson warning the public about a tough winter ahead despite the promising vaccine news that got the market so excited yesterday. U. S. Es fairly flat in the european futures coming back from early losses. Lets get a take on the markets, we are joined by Peter Shapley any. Minister johnson telling everybody to keep things in perspective. The market seemed to make up its mind quickly. Do you think the move to sell momentum and growth, to get into value, was that overdone yesterday . Peter the market prior to the announcement yesterday had already anticipated that on the more immediate term we will have a vaccine available. With positive news on that, we are firming up that resolve over the medium term. It does not change in the near term. Anna what are the prospects if that is your stance and you think vaccines will play an Important Role . What is the prospect of value stocks . Peter one of the things we have seen yesterday is that rotation everythinge, were from the lockdowns and Current System we have, and were everything else, the cyclical stocks were boosted up. The Financial Sector got a good boost. Thatis one of the themes cannot stay with us. Anna what about reflation . That is a slightly different theme, because one of the key ingredients for reflation that we had before hand was whether or not we come out of the pandemic, but how much Government Support and public money will be thrown at it. One of the dampeners out of the u. S. Election was the senate race, which will probably tie down the financial of the public money that can be thrown at the problem. Overall, if we came out of the recession that we currently have, if we can become a situation where we need lockdowns, that should be ultimately not inflationary but reflationary tendencies definitely. Anna do we have to wait until january until we get some certainty around the senate race to get a clearer picture on the fiscal stimulus, to be able to see where the reflation story goes, were treasury yields go . Peter we have to see what the next steps are in the u. S. , and in europe we know what the response has been, and we know it has been lockdowns, therefore gdp compressing. We will have to see what the followthrough is in the u. S. That is not implied in the market to the same degree. The numbers keep rising. We know typically they are three weeks behind europe. If you look further out, it is not necessarily whether or not the senate race goes one way or the other. It is about whether we get further fiscal support, which i am sure we will get one form or another, and if the economy can come out in the second half of next year, which seems likely at this stage. It is likely we see treasury yields picking up slightly, and we do see steepening tendencies. The question is the speed and magnitude. More government spending, you get more of that. Anna we saw interesting messaging around the fed, warning that some assets could face big declines if the virus goes unchecked. Is this part of the narrative, the fed trying to persuade the government to take the responsible choice to do more stimulus . Know and many studies have been done on this if you come to a stage where the virus is uncontrollable, that is bad for the economy. How do you deal with that . The fed is not going to go directly into advising the government what to do, that is not its place, but it is one of the things from the economic point of view that letting the virus go rampant is bad for the economy. Anna where do you stand on havens . They were hit yesterday for obvious reasons. How much focus do you give to haven strategy given what we know about the virus and the vaccine, and what we dont know . Peter if youre referring to haven strategies in terms of bund yields or shorter data treasury yields, it seems too early to let go of them. That is not because i have a bleak outlook, but when you look at what is controlling them predominantly, it is centralbank policy. The Central Banks focus on the here and now stimulus, but in the case of the fed that they have a more longerterm outlook, and what they want to do with policy Going Forward if the economy recovers. Average inflation and that type of stuff. Ecb here in europe, we think they will put easing measures in place. The yield curve in europe seems protected in my mind. Anna thank you very much, peter schaffrik, global macro strategist analyst, rbc europe. Coming up next, we will talk about climate with bill winters, ceo exec. Director, Standard Chartered. This is bloomberg. Businesses today are looking to tomorrow. Adapting. Innovating. Setting the course. But new ways of working demand a new type of network. One thats more than just fast. You need flexibility to work from anywhere. And manage from everywhere. Advanced technology. With serious security. And reliable coverage, nationwide. Forwardthinking enterprises, deserve forwardthinking solutions. And thats what we deliver. So bounce forward, with comcast business. Climate change is happening. This needs to be repeated over and over. Whether the transition to a Carbon Neutral economy takes place in an orderly fashion or in a disorderly one, there will be impacts on the financial system. 126 governments have includingto net zero, three global giants, china, japan, south korea in the last few weeks. At a minimum, Companies Must disclose whether the assumptions in their accounts are aligned with paris. We need policies that nurture Sustainable Finance and mobilize green investments. Announce june to 2021 next year, [indiscernible] year, we end of this will lay out for our tokeholders how we intend align with the paris accord. The economy challenges of the claimant transition are phenomenal. I ask myself, how much does it cost . A lot. But nothing we cannot afford, because the causes are survival. Our survival. Anna policymakers speaking at the Green Horizon summit in london. A new initiative to flight Climate Change, a task force started by mark carney and chaired by bill winters is building voluntary Carbon Markets to meet the goals of the paris agreement. The private initiative is set up to provide a blueprint for credit markets, allowing companies to offset emissions by financing projects which help the environment. Us now. Ters joins we start with the big picture. What role can they play in getting us to net zero . And talke to be here about a critically important topic. The volunteer Carbon Markets have been around for a while. We have been engaged for over 20 years, but they are not fit for purpose, not standardized enough, not large enough, not liquid enough, not transparent enough. He have not achieved credibility for anybody engaging that market can be certain that their money will go to the right causes. We know that we have committed to reducing Greenhouse Gases to the point where we can limit the temperature increase of the planet to 1. 5 degrees centigrade. The most important effort necessary to get there is for all of us to reduce our Greenhouse Gas emissions. Etc. Fuel efficiency we know we cannot get there without substantial transfer of value from those people who cannot produce reduce Carbon Emissions to zero or negative, but are prepared to pay money to somebody who can take carbon out of the environment. That is where the voluntary Carbon Market comes in. It is an opportunity for banks and airlines are shipping companies that can reduce emissions a lot, but not to zero. Take incremental reasons. Anna to pick up on that point, the criticism leveled on the Carbon Market is that it allows those who produce Carbon Emissions to continue to do s. Iis that a criticism you can accommodate. . Bill yes, we think we can. Everybody has to go about their own reduction plans. The difference between what one can reduce through their own actions and the amount needed to get to net zero can come through the voluntary Carbon Market. We have to have these sidebyside. One of our Core Principles is not to crowd out the requirement for companies to reduce their emissions by buying offset credits. The short answer to your question is yes, they can be managed together. Anna how can you ensure quality offsetting programs . When we used to be able to travel by air, you were never really sure whether that was making you feel better or having an impact on the environment. How do you ensure that policy . Bill you have to have an agreed set of standards, that is the top of the list of our task force. Set up the framework. We have to have ongoing verifications, not just when the begins, but as it continues to operate. Supporting these projects need to be validated by third parties. We want to have a cohesive market, so not just the credibility of the project that matters, but the credibility of the price youre paying. How do you know if you are paying 30 a ton for a carbon credit, as good as your neighbor bought for 15 or 45 . The value of a consistent transparent liquid market. Anna do you think recent political events in the u. S. , with the new president , the political challenges to global actions such as this and Climate Change get a little easier . Bill i hope so. Governments have been at this for decades. While we made Good Progress with good initiatives, it is not enough. We are not on track to hit net zero by 2050, which is what is required to keep her Climate Change under 1. 5 degrees. Other companies have made commitments. We need to have facilities to accomplish this. Having a private Sector Initiative that allows the private sector to exchange these credits with each other for value is a necessary complement to what governments are doing. Response awayyour from climate on the other big story, yesterday, the announcement of the vaccine news. What difference does this make for planning for 2021 . We are delighted at the prospect of having the world returned to Something Like normal and avoiding the dislocation we are experiencing. It does not change our plans much. This disease will be with us for a while longer. It will probably be with us because is much as we would like to think this is the case, it will be harder to get the vaccine and the right hands in the right form in the immediate future. We will carry on as we have, continue to invest in the markets in which we operate to make sure we do so efficiently, and be aware we are in a deep economic quagmire and will have to worker way through it. Anna the Banking Sector put a lot aside for provisions and band losses associated with this. Is it too early to think the sector is over providing, and we could get a early determination than we anticipated . Bill we have been guiding the market each time we give our quarterly results, and we think we are well provided. Judging by what i see from the banking community, it is well provided. The losses have not come through at the pace we might have feared. We are provided but not using those provisions to the extent we might have. If we get a vaccine earlier, or if government policy is such that we get the economies open and running sooner which is pening in many markets then this obviously bodes well for recovering some provisions through time. We are quite cautious, we will have a second or third wave quite dramatic. Lets not get too far ahead of ourselves in the short term. Mediumterm is looking good. Aboutwhere does the news the vaccine leave the work at home policy you unveiled, a permanent move to Flexible Working . Is that dependent on fighting a virus, or the decision you decided to make as a business . Dependent is a decision. It is informed on living with the virus. We realize we can allow flexibility, and our employees want to. In many jobs, it is not impacting productivity. In many cases, it has increased productivity. There is the dimension how we can reef reconfigure the space we have that is useful for collaboration . This is about new ways of working and recognizing the office of the future and trying to get ahead of it. I have been impressed by my colleagues with what they have been able to do. , creativity isd good and we want to capitalize that on the lessons we have learned. Other banks say they will do some working from home and returning to the City Center Office as well. Why not do what other banks are doing . Of theeople have all above. We do a lot of surveying of our employees. Some want to work from home to balance their personal life and workplace. Some because they avoid a commute in some markets it is a tough commute and maybe even unsafe if they are making it on a twowheeler. Install a more easily centralized Office Closer to their home, perhaps allow for meetings of clients and others in a location that avoids a commute, it could be a bit of a winwin. Is not for everybody, some have no interest working at home. Some people want to come into the office every day. Some people want to work at home every day. It is not lend itself to many jobs, but for some we can agree with that work. Our employees are adults, they can make their own choice and work with our online manager, and we can balance these things and have everybody come out better. Flexible, inds worked from home for six months, i miss their conditioning. Bill winters, ceo exec. Director, Standard Chartered. We are 18 minutes away from the start of equity trading. Now, we have a slightly improving picture. Now. Futures are flat s p futures modestly to the upside. An interesting move in the yen, up 0. 3 . Up next, germany calls for a new deal with america as it seeks to repair Transatlantic Relations with the new president. This is bloomberg. There is so much that unites our countries, Climate Change is something i would put at the top of the list. The announcements about the u. K. Wanting to show Global Leadership and progress the Climate Change agenda, hopefully that is something we can work closely on. It is something president elect biden spoke a lot about on the campaign. I remain optimistic about the relationship we will have with the new administration. Anna our exclusive interview, the u. K. Chancellor on Climate Change as the basis of building a relationship with the United States. Germany is looking to strengthen transatlantic ties. The foreign minister called for a new deal with america. Joining us is peter beyer, translatlantic coordinator foreign office, german bundestag. Thank you for talking to us. What do you think that new deal with america should look like . Peter good morning. There are several points we need to address with the priority back to multilateralism, strengthening international organizations. As you look to the past, we saw protectionism across the atlantic comes to trade. Transatlantic trade will be a top priority. Security in nato withdrawal agenda, we need to address that and use the chance of the president elect to address this issue, how to Structure Nato for the new realities and Global Security architectures in the pacific and south china sea. These are three or four points i would label as Top Priorities in a new transatlantic agenda. Toa germany is pushing hard amend the slightly battered Transatlantic Relationship. Are you disappointed the eu is to impose tariffs on 4 billion of u. S. Goods, a escalation, or would you like to see a different strategy . Peter the timing might not be well, but i do not know about the mechanisms. Entitledean union was to do that, as were the americans after the wto decision disputed that. Triggeredans additional tariffs a year ago. The timing might be questioned. Everybody understands germany and the rest of europe, we have good chances to rebuild the relationship, we have shared values across the atlantic. We have to identify where we have common interests. That is an excellent starting point to rebuild the structure. The past four years were not the best transatlantic times. Anna nato was an area President Trump liked to express his dissatisfaction. Those criticisms will still come from the u. S. About the percentage of gdp that members pay in. How can everybody be brought onto the same page . Gdpr that topic, the 2 nato topic will remain in place. But in the past it did not play a role because donald trump was pushing hard it was a self commitment we made in 2014, like all other member nato states. From 20142020, we have increased more than 45 of the defense budget. Robably we waited too long we need to do more for sure. Everybody in germany understood that. We want to be a reliable partner, but spending money is one thing. It is important. But for me, it is too banal. We need to pick our brains about how to prepare nato for the onure, the changed realities the Global Security architecture. Anna peter beyer, translatlantic coordinator foreign office, german bundestag , thank you for speaking with us. 10 minutes until the start of trading on this tuesday. We cut a glimpse of what we see for futures right now, in the United States fairly mixed. S p futures fairly flat. Nasdaq futures retreated touch. Retreat a touch. Time for a workout, we will get stocks to watch, including adidas as sportswear picks up across europe over the summer. We will talk about that next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Eight minutes into the start of cash equity trading. Futures are looking mixed, recouping or giving away the gains of yesterday. Lets get to the individual stocks we are watching. I am fascinated by adidas. We got news of the vaccine, adidas surged. Is that because we may not by as much leisure where, but we might do more Sports Leisure wear, but we may do more sports. growth of sales in europe, north america, even asia declined a bit. It was this region that pushed adidas forward. The outlook is not as bright with coronavirus cases, they see fourthquarter sales probably falling to the low to mid digit percentage with the resurgence of cases. With thet is the deal real estate space . Dana a new Share Offering help to aid with 3. 5 billion euros. It is led by a group of activist investors turning that down and appointing three more members to their supervisory board. These activist investors, what they want to do is sell westfield malls in the u. S. And focus on europe. That is something they say they do not want to do, but activist shareholders with this about getting their way. Anna lines out of Siemens Energy saying the u. S. Moved to renewables will happen even if it were under trump. What else have we heard . Isi part of the story Climate Change, part of it is coronavirus. They swung to a loss in the quarter because some of their operations and plans are delayed because of the pandemic. Climate change is a pending a lot of the industry, and siemens says it will no longer provide new equipment to coal factories. We spoke to the ceo, here is what he had to say. Roughly 50 of our revenue stream is from renewables or transmission technologies. What we decided and communicated today is that we stopped participating with purely coalfired power plants. Important,te change and confirming their 2021 outlook. Anna thank, dani burger. A sense of the broad market picture. Futures, it is suggested to be at the downside. The ftse 100 yesterday was up 4. 5 . 7 . Cac the cac was up look for a little bit of unwinding, but the optimism around the vaccine seems maintained. The open is next. This is bloomberg. Anna a minute until the start of cash Equities Trading this tuesday morning. Market euphoria over a vaccine peters out. Joe biden warns of a tough winter ahead. Futures point to a muted open. The Federal Reserve warns there could be major downside for asset prices if the Economic Impact of the virus is not mitigated. U. K. Unemployment climbed to a fouryear high after the summer. The chancellor faces questions timing of his furlough scheme extension. Futures do look to be pointing to the downside. Hero stoxx 50 futures fairly flat, but dax futures suggest downside. Saw a repositioning around recent momentum trade around the value names around the growth names, and as a result, perhaps we are pausing with a downside bias. This is what the gmm function looks like. A fairly flat picture on the ftse 100 at the start of the trading day but we will wait for to get a full or picture of what is happening across these markets. It is good news what weve heard on the vaccine, but as the time has gone on and more people have had times to tie just what was announced, we will get into some of those questions. Strong gains in yesterdays session. A foodoyce, iag, delivery business, you saw big increases or decreases. Volatility yesterday as we saw work from home bets unwound, some caution around the leisure sector unwound. This, possibly more to come. We will find out if investors agree, but at the moment, cac notcac end dax and dax b,en yet, but the ftse mi fairly flat. U. S. Futures are fairly flat. European mocha and markets opening slightly higher after pfizer made a breakthrough in their vaccine, but world leader warned people to be cautious over the immediate outlook. I must stress these are very early days. Vaccine,clear this even if approved, will not be widely available for many months yet to come. We absolutely cannot rely on and thes as a solution biggest mistake we could make now would be the slack in our resolve at a critical moment. We are still facing a very dark winter. Us, newtonng Investment Managements cio. We saw in yesterdays session a rotation. The bloomberg showed selling of momentum and Growth Stocks, going into value. What is it you think is going to be sustained from the moves we saw yesterday . The value trade is an interesting one because Growth Stocks have outperformed value for a long time. That spread is probably as wide as it has ever been, so i wouldnt be surprised if we go into a muddled economic environment that value starts to reassert themselves. On the longterm trend, a lot of tech names have been reinforced by the pandemic and the shift in consumer behaviors and if you have a five or 10 year view, it is hard to bet against tech. Anna right, thats important context as we see the nasdaq under pressure in the most immediate session. What about values prospect . How do you navigate the pickup through the winter where we might be constantly reminded that we dont have a vaccine just yet, the virus is still for lockdown need measures of various sorts across europe certainly. Curt yesterday, the s p was indicative. You saw the s p retrace all of its losses on the back of the news. Andre back at highs now, the economy hasnt caught up to it. The equity market has been frontrunning the real economy for almost a year, and we are still going to see a muddled Economic Growth as the real economy begins to recover from the pandemic. I am relieved to hear the news about the vaccine. It is very preliminary, but pointing in the right direction. Yesterdays rally to me feels a lot like it is a genuine relief rally. We are glad to see the end of what has been a dark period of time. As a rational, investor, the real economy is necessarily there yet, but the stock market is front writing it frontrunning it a little. Anna what this means for humanity is on the forefront of everybodys mind and it does seem an incredible step forward, even if not the end of the story. We put up factors to watch, which shows surging in the u. S. I noticed dividend paying stocks were high. Do you think that is something in 2021 we are able to return to talk about, how companies are able to return to shareholders in a generous fashion once again . Curt i think people are going to start to look at companies with sound business models, especially Mature Companies manifest in the form of dividends. Companies that are able to navigate the relatively uncertain economic environment Going Forward should rally. To returning an end of the level lockdowns outside u. K. Those should diminish through time. Should find footing, which means theyll be able to pay dividends. That rally makes a lot of sense to me. Anna what about in the fixedincome markets . Junk bonds, we were seeing the impact of the vaccine and markets everywhere. The news flow was hitting the market and doing what hits does. Junk bond yields hit a record low in yesterdays session. They werent all that high given the amount of Central Banks support that was fourth coming. Are you less concerned about Balance Sheets as we head through the winter . Curt i think the tradeoff here is the pace of Economic Growth versus fiscal policy support. As you pointed out, Monetary Policy has been supportive for fixed income. Going forward, out of the steepness of the fed and other central bankers, i think we see continued support on an ongoing basis, which should cap rise in yield. Market has rallied ahead of news, the junk bond market has done the same. Anna what about the fiscal stimulus side . Six minutes in and we havent talked about the u. S. Election. What are you reading in the detail of the u. S. Election . The win for president elect the tie in the senate that might have to wait until january to be unwound. What are you reading into the fiscal story . Curt a divided government is typically pretty good for markets because it keeps government policy from skewing to extremely in either direction and the market likes stability. If the democrats take the senate after the runoffs in georgia, that would probably prestage a pretty substantial economic package coming through. Both the fiscal and monetary farey side are likely to on the side of hotter than colder on the policy side. The tilt will probably be toward Green Infrastructure and that is important from a thematic perspective. Anna that links nicely into our next conversation. Curt custard stays with us. Newton Investment Management cio. Climate change goals bring the u. S. And u. K. Closer together . We will bring you our discussion with the you ks chancellor next u. K. s chancellor next. This is bloomberg. Anna welcome back to the European Market open. Our. Nutes into hundred, fairly flat. Travel and leisure, rebounding. A bit of a continuation of the rotation we saw sector wise in yesterdays session. Just not to the same extremes. The u. K. Chancellor is making Green Innovation a centerpiece of britains financial future. He spoke to guy johnson about his plan. We want to remain one of the most open places to do business anywhere in the world come on the leading edge of tech logical adoption and we want to be a leader in green finance. We will be issuing a green sovereign bond for the first Time Next Year and the first major economy to mandate the climate disclosures across the economy by 2025. Ourn together, it cements position in being a Global Leader on these issues. Guy lets dig into that and talk about the gilt market. Beingl see green gilts issued. How will a regular gilt differ . Will the green gilt trade at a higher premium compared to regular gilts . And how are we sure that the promises made as part of the green gilts are kept . Chan. Sunak weve been watching this market for a while to make sure it was the right thing and what weve been convinced of looking at the market, a couple of things. Obviously, we can make sure the proceeds go to the areas and types of things people would expect them to. Existing framework we can use to deploy as other countries have, put on pricing, looking at the market, green gilts bring in a new class of investor and we are seeing repeated issuances of sovereign green bonds, which trade at tighter spreads to existing gilts, partly driven by district different investors. The other benefit of launching a sovereign curve is it means private companies have the ability to piggyback on that and it will help grow a private green market in the u. K. Give u. K. Investors access to more denominated bonds. There are a lot of other things issuing a green sovereign bond will help capitalize. Guy you think there will be highyield for a green bond . Chan. Sunak markets will price what wey want to, and are seeing in the experience of other countries is there are green issues that trade at the tighter spread. That is something we have been watching, but the interesting thing is what else it catalyzes. Once you can start creating the sovereign green bond market, that will help private participants issue green bonds and make sure there is more gdp oriented, liquidity. We are trying to attract capital into funding projects that will help us meet our ambitions on that zero and this will be an important part. Guy we look to have a joe biden presidency in the United States. This weekend, talk of the fact there is more that unites us than divides us. Do you worry that calculation has changed . The Prime Minister has a close relationship with donald trump. Will this make a trade deal less likely . Chan. Sunak first of all, enormous congratulations to president elect biden and kamala harris. Andve two little girls it is fantastic to see a first female Vice President of the United States. I agree with the pm. There is so much that unites our two countries. It is a place i have lived and worked many years myself. Climate change is something i would put at the top of that list. U. K. E announcements about wanting to show Global Leadership and progress that Climate Change agenda when it comes to financial services. Hopefully that is something we can work very close on. It is something president elect biden spoke about a lot during the campaign so i remain excited about the relationship we will have with the new administration. Anna u. K. Chancellor rishi sunak speaking with colleague guy johnson. This is what markets look like right now. We have modest gains on european equities. Down. 2 . Europe 600 the ftse is flat, but we see more downside in germany. The pound also makes slight gains despite more gloomy news on jobs, up. 25 . Curt custard, newton Investment Management cio is still with us. We heard about green gilts. How much more convinced are you around investing in climate now that we will have a democratic president , President Biden next year. , does that convince you in the Climate Change direction if you need convincing . Not going toly hurt you clearly, there has been a slip in opinion between republicans and democrats and the importance on how to tackle Climate Change. I think a lot of people focus too much at the federal level. The reality is, the states hold a tremendous amount of power and a lot of states have maintained with thee alignment paris accord throughout the Trump Administration. I expect the federal level to refine, and you could make a strong case that to tackle the challenges, that will be global in nature, you will need innovation. You will need commercial exploitation of the opportunity set that is out there, accorded us by Climate Change and there is a huge profit to be made here. Im pretty hopeful. I think change is one of our big themes and will persist the next decade and to be on the right side of it, you make a lot of money. Anna we talked to bill winters of Standard Chartered who chairs the task force on scaling voluntary Carbon Markets. Is that something that has caught your attention . A voluntary Carbon Market, part of enabling businesses to reduce emissions . Curt i think take combination of a Carbon Market plus, agulatory market that lobbies change in behavior, but clearly, there is public pressure in this space, a simple commercial pressure in the space, so im hopeful as the Carbon Market develops or independent of the Carbon Market, you will seek companies change behavior. A Carbon Market will have to be genuine market for it to be successful, for investors like ourselves to claim it. How youu talked about wouldnt draw too many conclusions about tech from yesterday and still, tech is here to stay on as if that needed saying. What about those online work from home stocks . Where do you think the focus goes for them as we start to look at what life might be like postpandemic . Pandemicare seeing the accelerated a change. You will get some mean reversion from that acceleration. As the world exits the pandemic environment, you will see people going back to their high street shopping because it is new, it is what they know. I expect that to occur. However, the behaviors we learned under the pandemic are also likely to persist so there will be a blend of the worlds. Exclusive online shopping, but we are also not going to see a return to the main street of old. When we surveyed our employees after ae pandemic vaccine, do they want to go back to the office . Betweenaving roughly 60 and 80 expected return rate, which means our footprint will shrink, which means an impact is going to impact everything from telecommunication sales to the commercial Property Development in city centers, so i do think there will be a structural change in behavior. We will see a rebound to what was normal first. Anna interesting stuff. Thanks for your time. Curt custard, newton Investment Management cio. He will continue his conversation with me on Bloomberg Radio at 9 00 a. M. U. K. Time. Lets get a Bloomberg Business flash with laura wright. Talks with the German Government for 5 billion euros in aid for its steel unit, exceeding the groups current market value. Berlin has signaled willingness to provide support to shore up the business. It may be 2 billion illiquidity. Bayer faces cases in front of jurors. Reached general agreement for over 88,000 claims. Adidas is returning to growth in europe after a prolonged slump in the region. Demand picked up for sneakers and casual wear across the continent during the summer months, but less positive around the rest of the world. North america showed a slight decline and businesses in asia slowed down more. That is your Bloomberg Business flash. Anna laura wright, here in london. European equity markets now positive. A little volatility. Rockets not sure which way they are heading. U. S. Futures, pointing higher. Up. 5 00 up 2 , the ftse and the dax, up to flat territory. U. S. Futures point to the upside. Coming up, investor euphoria over a vaccine breakthrough sends value stocks surging relative to their peers. Is a full rotation in the works . We saw some yesterday. We discuss next. This is bloomberg. Anna welcome back to the European Market open, 24 minutes into the session. European stocks, up 4 . A continuation of yesterdays game. Theme. Travel and leisure modestly higher. A covid19ward vaccine pushed investors into the most unloved stocks and momentum names were punished. It gave Value Investors hope as big cap tech gets all the attention. Analysis on what happened yesterday and what this means as we go into the winter. Was yesterday a decisive rotation into value or a glimpse of something that could happen . Dani at this moment, seems like a glimpse and i would argue this was a momentum crash than a move into value. Momentum, continuing to fall as value does a little better. To revisit Market Action yesterday, stw, factors to watch, momentum fell 14. 5 yesterday. If you want to find where value falls on the board, it is not even the topperforming factor. It is the third down, it went up more five more than 5. 5 . About the tech names that have been the reliable trade of the pandemic. This trade where they have stronger Balance Sheets and can somewhat survive the effects of trade orfrom home benefit from it. That has started to be unwound. I want to switch the boards and show you a tweet. Nts, the biggest qua his strategy relies on value. Regarding momentum, he says sadly, that is much bigger today in the momentum rotation. It can happen at turning points in the market, that is what momentum bets against. He has been playing doom it terminal on ultraviolence level, the videogame, because he finds it soothing during these market times. If this is the start, can it continue . I want to bring Michael Purvis into the discussion. He really looks at volatility, the vix is stubbornly higher. Anna interesting stuff. Dani burger on whether we continue to see themore on the e return. European equity markets are making modest gains, the stoxx 600 point 25 up. I must stress that these are very, very early days. It is clear this vaccine, even if approved, will not be widely available for many months yet to come. Onwe absolutely cannot rely this news as a solution and the biggest mistake we could make slacken our to resolve at a critical moment. We are still facing a very dark winter. Anna that was president elect joe biden and british prime warning Boris Johnson of the tough winter ahead despite vaccine news. Stocks europe 600 up. 2 . It seems markets are divided. Weve seen a lot of moving up and down around the flatline in either direction. Markets are either convinced this is great, vaccine yesterday, we were convinced but now, a sense people are more concerned around distribution, efficacy, around a mutation of the virus in denmark, all of that part of the conversation. Markets deciding whether they have intention of pushing stocks, risk assets higher. That skinny first word news update with laura wright. Laura President Donald Trump has fire defense secretary mark esper. This, after he resisted the president decided against using to quell protests. s house of lords has rejected government plans to break International Law over brexit. He voted to remove the most controversial parts of the bill, which prompted legal action from the eu. Boris johnson is refusing to back down, valid to push ahead with the new law. The unelected house of lords can only delay legislation, not block it. European union is imposing tariffs on 4 million 4 billion of u. S. Goods as part of the titfortat escalation in the fight over legal aid illegal aid to boeing and airbus. The eu says it will drop the duties if the u. S. Removes levees is imposing 2019. Armenias Prime Minister says he signed an agreement to end the ajerbaijanter captured a key city. Vladimir putin says the agreement will be the basis for long stability in the region. The Federal Reserve once assets facing decline if the virus goes unchecked. Most assets have maintained strong level so far as investor appetite increased and the government intervened to support the financial system, but signs of weakness are showing in commercial real estate. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna thanks very much. The settleing while into a stable narrative. The stoxx 600 up. 1 . The ftse 100, up. 6 but the dax in germany, down. 3 . To see the market seems to remain convinced technology is not where you want to be now. Technology stocks, down 1. 6 . Butel and leisure up. 5 , off of highs earlier in the session. Thanks, up 1. 5 . Perhaps that is a reason we are seeing better performance in the london market given the weightin g two banking. The European Union will impose 4 billion in tariffs starting today, part of a titfortat escalation of a fight over illegal aides aid to boeing and airbus. The commissioner on trade says it has nothing to do with joe bidens victory. The decision related to has notin boeings case to do with the u. S. Election, but links to the fact the wto has given us the award for 4 billion to proceed with our internal procedures. Anna maria tadeo is in brussels with the European Investment bank president. Maria . Maria we are joined by the president of the European Investment bank. Onave to ask for your take the european economy before we move on to anything else. Interday, there was euphoria the markets. Today, the market has taken a step back to reassess what is happening and we have coronavirus coming into play so can we avoid a doubledip recession or not . Mr. Hoyer that is easy to be answered. Since yesterday, we see light at the end of the tunnel and we saw it is real life and hope. It is not a surprise the stock markets reacted so strongly. Overdose so wean are going into durational development in the next hours and days. Are you more optimistic or does the uncertainty remain . You mentioned the vaccine is great news and it is, but when it comes to visibility over the next six months, it seems very clouded . It gives hope and i think it will have a trigger on effect in other parts of the economy and from that point of view, i am optimistic. It was a game changer, which we certainly needed. And we are proud because is that going to go ahead. Werner we are so proud because we had detected more or less this development with biotech and we were the first to commit to that company. It is good news and encouraging for people to see that we have the capacity to discover these treasures. That was my next question. The idea that a vaccine could be coming in the shortterm, is that going to feed through Real Investment in europe . We know companies have been worried about taking on that investment, investment looking forward because of uncertainty. Could that feed into the real economy in any way . I hope so because the development of investment activities over the past month was disquieting. Sometimes, people were acting in a not necessarily rational way because everybody in our opinion polls tell us the weakest part of our development is investment activity. Big companies, small companies, where do you cut first . We need to cut on investment. That is something that worries me a lot. We need to invest in to modernization and development. With big enough hope like biotech and pfizer, there is encouragement to go back into investment into modernization. Rally if you look at the we saw yesterday, one part was led by the vaccine. The other was led by this idea, particularly in europe, that the european budget talks are finally moving and we could get a deal in the next few days. If we get this european budget, if the Recovery Fund goes ahead, how is that going to affect you . How is that going to affect the flow of money into countries that need it and do you see a pickup in investment in the second half of next year . Werner i am optimistic that will take place. Not involved in this, but i think we are very close and it is important for us because we incorporate so closely with the European Union and in particular the commission. For our business planning, it is important that the stalemate is broken. Can i just ask you, when you look at specifically the Recovery Fund and we know that has been driving markets higher for a while now and cap yields low, i do wonder, there are countries that have hinted. Im interested on the ground, but not so much on the loans, the credit. Is that a good idea . Forget about the credit line . A banker, im interested in giving out loans, so i feel the necessity to come up with grant support was given, whether the balance is right or not is not my business to decide. Im sure the needs for financing of investment in the next month will be so enormous that in addition to the grants given by the European Union, a lot of loan activity will be necessary to get the machine rolling. I do wonder, if you look at a country like italy, how will you convince them to do that because politically, there it comes towhen loans in europe and potentially, they would rather not spend as much. How are you going to make a case . It is as far as concerned, we have a good record ofause we are a bank engineers and signs. Investors see that if we go into an investment with a company or branch, this will be a good investment. For our business. As a final question, you could argue the final element we need in europe this year is the brexit deal. What do you hear . Do you hear from the european officials that you are on the phone with that a deal is more likely than a week ago . Werner whoever moves first has lost. We will see that being continued until the very end. In addition to the brexit uncertainty, we have a huge opportunity with the outcome of the u. S. Elections and hope Transatlantic Relations can be restored. Much forank you so your time. Always a pleasure having you on bloomberg television. Anna thanks very much. Werner hoyer, European Investment bank president. A check on the markets. This is what we have on the equity markets. Stocks europe 600, down. 2 . The Banking Sector remains one bright spot. The dax seems the market succumbing to the downside. Delivery hero down 7 today. We know the tech story. Adidas, down by 3 . That is moving things around. Deutsche bank, moving to the upside in todays session. Next, european leaders reach out to president elect joe biden, seeking to rebuild transatlantic ties after a tumultuous four years. We will discuss the transatlantic bonds. This is bloomberg. The system is in place to consider concerns and President Trump is 100 within his rights to look into allegations of hisgularities and weigh legal options. Anna that was mitch mcconnell, saying President Trump is within his rights to challenge the election results. European leaders have reached out to president elect joe biden, seeking to rebuild ties after four years of dealing with the Trump Administration. France warned europe should not drop its guard, writing in a french newspaper, lets not kid ourselves. The Geopolitical Realities will not change. The u. S. Remains in confrontation with china and europe. Its economic and political sovereignty. The conference, a Meeting Place for Business Leaders and policymakers across the world, is now in its third edition and they will get underway with that third meeting tomorrow. Thank you for joining us. His assessmentth that the Geopolitical Realities in terms of relationships with china and the u. S. And therefore europe will not change as a result of President Biden . I do agree with that statement. We will see a lot of change because the lens through which the American Administration will see the world will be one of cooperation, and progressive ties rather than the last four years, with damage to things like climate, trade, or other global challenges. Anna do you think the liberal world order, rattled by brexit, President Trump, the actions of russia, are we at a turning point with a biden presidency . Deterioration of trump,rld order before covid19 accelerated that deterioration we had seen before with factors like competition, undermining capitalism, etc. Limits because the u. S. Will defend its interests. It will do so more collaboratively, but still will do so. We will have to try to remedy that lack of coordination and that is what the paris forum is all around. Anna if you look at the role of ultimate lateral organizations, and yours is one of them, but there are plenty, what role they can still play, President Trump has somewhat successfully shone a light on some of the inadequacies of those organizations, when the rate is around nato and funding or the influence of one country in the that get stuck for years at the wto. Did you get a sense multilateral organizations will struggle to find relevance . Would takel, i exception to what trump has done. Leaving the paris agreement, for example, instead of trying to americanem and eject objectives into them leaves space for china. That was a loselose proposition. We think the rules of the game and the institutions that serve us well, and are leading space for others. My hope is by rejecting american cooperation, for example into the u. N. , we will be able to make a difference and to make them more effective. Anna how does the liberal world order deal with the fact that we still have tension between the u. S. And china, and many suggest that will continue to be the case . It will be difficult for europe to find its place in that bifurcation of the world. True the world order suffers a lot from the u. S. Ussrnd competition. In some domains like trade, regulation, etc. One, ase, the danger is Biden Administration and Trump Administration which forced europeans to sit back on their heels. With biden, because we will cooperate more, there will be less incentive to push on that european independence. It should do that for the sake of the liberal world order. Anna great to speak with you. Justin vaisse, founder and director general of the paris peace forum. That gets underway in its third edition, its third year in paris. Lets look at markets. Nasdaq futures, a tough time yesterday. Investors decided to sell some of the nasdaq stocks that have done well, tech stocks. We could see a continuation of that today. Eurodollar is 1. 18. A big surge in the yield, piling into risk assets. 92 basis points. Oil, 40. 65 on nymex. Which asset does best on vaccine approval . It is all about aviation and and in manufacture engine manufacturer. This is bloomberg. While weve made Good Progress and there are good initiatives, it is not enough. We are not on track to get the which is what50, required to keep Climate Change to under 1. 5 degrees. Anna welcome back to the program. That was bill winters speaking to me earlier in the program. European banks, gaining 40 in two days. A bit of a gain in todays session. A lot of that yesterday with moving to value names. Lets get to our markets live team. A question on the blog today is which asset does best on vaccine approval . Rollsroyce seems to be a contender yesterday. What were you hearing . Before i came on, we were debating which stocks would benefit from this vaccine story and one of them is the sectors that are in the supply chain of vaccine distribution, refrigeration companies. To the this speaks thought process now that must be , now on among investors that we have this stage of deep pandemic, the vaccine stage or potential for a vaccine, the question would be what companies would be benefiting from that . Thinking about the supply chain of the vaccines is not just the vaccine providers themselves, but every Company Involved in that has potentially to do well. Similar to what we saw this year when people were contemplating which stocks would be benefiting from the work from home era, thus the big techs resurgence this year. We could see something similar for any companies and that vaccine supply chain. Anna interesting to think about the earnings story. It seems disjointed, given the fact we get this big moment in time which makes such a difference, whether the president ial election or news around vaccines. Let me ask about the earnings season, what you are reflecting on. I know youve been giving thought to how the u. K. Did during september. Absolutely. Mostly what weve been looking for in the earnings stories is longevity. Any sign of companies being able to derive sustainable profits, not just from the current situation. I know that it has created bifurcation between different sectors depending on whether they are benefiting from this current pandemic work from home set up or being hurt by it. Looking forward to the future, which sources of revenue can they draw upon . Does that look sustainable, given the current setup . Anna thanks so much. , our marketsno lianting in europe. A fairly mixed open to the European Equity trading session. Surveillance is next. Francine market euphoria. Concern the pfizer study still has hurdles to clear. Joe biden warns of a tough winter ahead. The fed says there could be major downside for acid prices as the Economic Impact of the virus is mitigated. Trump continues his fight to overturn the election results. Attorney general barr authorizes the doj to open an investigation while acknowledge and there is no conclusive. Im france