Transcripts For BLOOMBERG Bloomberg Markets European Open 20240711

The u. K. Government sets up discussions with industry as brexit disruption closes in. Negotiations with the eu are set to crash through an informal deadline this weekend. Good morning. Just over an hour to go until the start of cash equity trading. Let have a look at where we are on the futures picture. Futures in europe looked to be a little bit to the downside. Lets break into the futures to talk about whats going on with the u. K. Economy growing in the Third Quarter from the previous quarter. Growing by 1. 1 in the month of september. The estimate was 1. 5. We were hearing that from our colleagues moments ago. They were talking about the estimates for september and the First Quarter. The number i have penciled in from them was 1. 5 gain in gdp for september. It is a little bit below that. The broad theme is the same. That 1. 1 in september adding to strong rebound numbers earlier on in the Third Quarter. The Third Quarter comes up by 15. 5 . That could be a smashing of a record in terms of quarterly growth for the Third Quarter. We know the backstory. We know the big drop in growth that we saw in the Second Quarter. Many places around the world experiencing something similar, if not to the same extent. Normal life is anything but normal right now. We will see where the Fourth Quarter goes too. We will talk about the possibility for w shaped recoveries shortly. Burberry, sales down by 25 . This is for the first half of the year. The estimate was a drop of 27 . Not as bad as and to zepeda. A focus on how the rebound is going, in particular in the u. S. Markets and in china. Things have looked much more like normal life. The company saying they are encouraged by the recovery in the Second Quarter, remain conscience of the uncertainty of the environment. They are going to cut markdowns. This will be revenue headwinds in the second half of the year. They say they are wellpositioned to deliver growth in the medium term. A few lines coming out of burberry this morning. We keep an eye on that stock as it opens up along with all the others this morning. Global stock rally show signs of stalling as investors assess a deteriorating coronavirus situation in many economies around the world. Indicators of overheated equity markets. European futures pointing to a negative open after a muted session in the asian markets. Lets get to laura cooper. She joins us now. Interesting to think about how the market is dealing with the latest vaccine virus news flow. The numbers keep tragically getting bigger in terms of infections and deaths. In places where weve seen tough lockdown measures, belgium, netherlands, there are much more encouraging signs around infections coming down. Even in places with big numbers like the u. K. , france, germany, some sense that these high levels are starting to plateau a bit. How is the market dealing with this on a daytoday basis . The virus story. Laura what weve seen so far is that these forwardlooking markets are looking through these nearterm virus infection risks. The risk of tightening lockdowns. Instead, they are pinning expectations on vaccine hopes. The eventual economic recovery taking hold. That has really underpinned this optimism that we are seeing priced in. What we are seeing today and early price action, just looking at futures, is that investors are reassessing the balance of risk. There is a timing mismatch between the deployment of vaccines. Again, we have nearterm infections. We have yet to see infection curbs bent lower. Instead, they are studying. That does raise the risk of tightening restrictions. Still to come in the u. S. A lot of this optimism that is priced in could still get be challenged, given the fact that theres a great deal of uncertainty that still lies ahead before we see growth hopes take hold. 3 even if we see anna we know what happened last time and time in terms of the lag between europe and the United States. Where does new york go ahead . Lets get back to the u. K. Growth story. We had u. K. Growth numbers out at the top of the hour. Growing 15. 5 in the Third Quarter. A record in terms of quarterly growth. Not much of a comfort when your economy is still nearly 10 9. 5 below precovid peaks in the Fourth Quarter of 2019. The pound retreats a little bit on this news flow. How do you think the market rear will react to this kind of gdp data . Laura the fact that the u. K. Economy rebounded in q3 was really largely expected by the markets. We did see that that is captured in these numbers. That comes after that record contraction we saw in q2. Markets are instead going to focus on what is actually going to happen in the Fourth Quarter. Like you mention, Economic Activity remains at 10 below its prepandemic peak. The u. K. Is clearly lacking. We add an brexit risk on top of that, that is really going to create quite a challenging backdrop to the u. K. Economy. We are likely to see a doubledip recession. The pound has remained relatively buoyant over the past week or so. Thats reflective of markets pricing out bank of england on the back of these vaccine hopes. Clearly, if we see the lockdowns extend given this challenging backdrop as infections surge, that may not yet be off the table. I would expect to see upside for sterling capped from here. Anna weve been focused on the u. K. , what the pound is doing. We just had this data through. Let me stay in the fx space. Let me ask you the question of the day. How will the vaccine affect the doppler dollars trajectory . The dollar is a haven. There are a lot of things pushing at the dollar at the moment. What is the thinking . Laura theres a confluence of factors. We are seeing a tugofwar between the bullish and bearish narrative around the dollar. In the near term, the dollar risks look skewed to being higher in the coming months. This reflects the potential for mobility data to be challenged against the tightening restrictions. Growth challenges potentially heightening in the u. S. The backdrop remains challenged abroad as well, even just looking at europe. ,hen we add in the potential speculators are on the bearish side of the trade. I would expect that that provides some tailwinds to the dollar. I would not expect it to be a broadbased type of move. I expect that we see these challenges arise as equities come under pressure and commodities go lower. It could potentially see the japanese yen gain traction. The weakness could be dominated in those high data pairs. At this stage, its likely that the sharp reversal that we have seen and dollar gains is likely cap for now. I would expect to see some uplift in the dollar in the coming months. Thank you very much. Lets get a bluebird first word news update. Heres laura wright. Laura president elect joe biden is naming ron klain as his chief of staff. He played a leading role during the pandemic and Public Health crisis of the obama administration, leaving the white house response to the 2014 Ebola Outbreak to get he has been chief of staff to two Vice President s. Stomping out dissent in hong kong, disqualifying lawmakers who are not lawmakers. Its a message to joe biden that no amount of pressure will force china to cholla tolerate defiance in the former british colony. The move was met with condemnation. [inaudible] a replica of the surveillance state and mainland china. Im afraid its a reminder of the fact that you cant trust any china promises. Weve seen today, the snuffing out of the last remnants of democracy in hong kong. Laura turkeys president is signaling a cease fire with international investors. He is pledging to contain inflation and support market fairly policies. Its a uturn from his unorthodox view that lower Interest Rates promotes lower inflation. The odds are out about his change of heart and how long it will last. Global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thanks so much. Up next, alphabet soup. The virus cases surging. Is the economy on track for a w shaped recovery . A doubledip recession. We talk about where that applies and where it doesnt, next. This is bloomberg. Anna welcome back to the European Market open. 45 minutes to go into the start of European Equity trading. Asiapacific looking flat. Losing momentum in the rally we saw at the beginning of the week. That was driven by the promising vaccine news flow. Futures into europe and the u. S. Looked to be a little sluggish. Lets get a bluebird business flash from laura wright. [no audio] [inaudible] laura a slew of antimonopoly regulations. Little about how harshly they plan to clampdown. The Worlds Largest shopping spree has raked in a record 75 billion. Sales for alibabas single day were almost double last years tally after the ecommerce giant added several extra days and services to the count, unlike past years. Alibaba did not provide a detailed breakdown of sales. Sonys playstation goes on sale today and a new spiderman game. Its a key test for the Japanese Company amid the pandemic gaming boom. It goes head to head with microsoft new xbox. 113previous console sold million units. Thats your bluebird business flash. Anna thanks so much. Global daily covid deaths have hit a new record, raising fresh concerns about the spread of the coronavirus. The chief economist at a below Global Management told us the resurgence is creating new worries and the recovery would probably be w shaped. Joining us now is the bnp paribas chief economist. I think about europe as one entity for a moment. Are you expecting to see a w shaped recovery from coronavirus, given what we saw in march and what we are now experiencing in the Fourth Quarter of this year . William yes indeed. [inaudible] now we have a less deep v. It expects the negative impact on french gdp to be about one third of what we saw in the Second Quarter. Once the measures are being eased, we will again have a mechanical rebound, as happened in meme midmay of this year. Anna are you seeing any reasons to be more hopeful . Iss depends on what it precisely that drives economies into contraction at this point. Ive been looking at some of the data. Smaller countries in europe have seen a real dropoff and infections. That has come in part at a high price in terms of Economic Activity. Lockdowns and belgium and measures and then netherlands. Infections coming down. What is it exactly that drives we get week Economic Performance . It is the response of governments. What are you seeing at the moment. William the reasons to be more hopeful than we were in spring is that companies are well. Repared cities and countries have really organized. That is working very well compared to what we saw in spring. Do not forget that china is doing very well. Thats having a fairly beneficial impact. Anecdotally, what you observe is traffic. Sport, highway its very busy. It is anecdotal, i admit. The concern that one has is that it is concentrated in a number of sectors. That mesa crucially important. Downturn. E final not more is going to come. If there was a another cycle in this recovery, the more you have of them, the more negative they become in the long run. Really thinking about issues. Anna thats interesting. If we relax too much over the festive time, around christmas, we can make things worse. What is the limit between the lockdown and corporate solvency . Services industries, such as hospitality or aviation . Is that where you are focused . William indeed. That arecompanies lossmaking during the downturn and then barely getting their head above the water again when the economy recovers. And then a number of weeks later , things are again starting to deteriorate. One should keep in mind that the hospitality sector, a lot of their clients are fairly reluctant, even in normal times, normal times. They are very reluctant to go as much to restaurants, travel, so on. Thats another very important. Important point. It makes it important that the vaccine will be administered sooner rather than later. Anna Christine Lagarde at the ecb said that the ecb will be there for the second wave. Its important to keep stimulus in place. Until the recovery builds in its own momentum. Are you expecting to see what the ecb has put in place long into next year . Ecb needs to do something because of its inflation target. Tothe near term, they want provide more support. You have to be realistic. Is this a problem of insufficient loan demand . Not at all. Its a problem of, do i have the confidence . Does my Balance Sheet warrant that i would . Those are the real issues. Central banks will do more. That in itself will underpin confidence. At the end of the day, its a matter of how you manage the health risk, how do you bring down the number of new infections. What is going to happen on the fiscal side . That is why all eyes are turned towards the u. S. Also why people welcome the year, ats that next premature tightening of fiscal policy in the European Union in 2021. Anna thanks very much. Stay with us. Its all about fiscal policy. We will get to that in our next conversation. The bnp paribas chief economist staying with us. Coming up, the u. K. Economy expanded the most on record in the Third Quarter. We look at the path ahead. We will talk fiscal as we were right rightly alerted to dubai william. This is bloomberg. Anna welcome back to the European Market open. 23 minutes past 7 00 in london. Yesterday, a mixed picture. U. S. Tech stocks doing very well. Europe moves higher. We will retreat at the start of the European Equity trading. Future suggest we will be a touch weaker. The u. K. Economy expanded the most on record. That rebound has been derailed by increase in virus cases. September saw the slowest growth in the u. K. Since april. Bnp paribas chief economist is still with us. A question on the u. K. Weve had data out this morning which gives us the scale of the rebound we saw in the Third Quarter. It raised many questions about where we go in the fourth. The fiscal support that weve seen from the government has been very focused around the furlough scheme. Now extended to march. Was that a big game changer for you . Did that add stability to the u. K. Outlook . William unimportant consequent of that is that it should keep a uneaseuncertainty and from households. It is striking if you look at the surface. Unemployment expectations have seen a big jump in strength. They have barely come down subsequently. What you observe is that when expectations are high, it already has a negative impact on Consumer Spending today. Thats why it was so important to expand the furlough, as was announced last week. Anna you see unemployment jumping. A strange situation. Its not like recessions in the past. Unemployment jumping yet savings going higher. At thegot income disposal of households. How are you analyzing the impact of that uptick in unemployment that we are seeing in various parts of europe . In onm the uptick employment has been rather limited. , thes actually been unappointed situation is more about what happens last year. The jump in on implement expectations. Its bigger. And,the furlough schemes you still have to expect there will be companies out there that will not survive. In the end, it will cause an increase in unemployment. Its also acting as a drag on Consumer Spending. Meaning slower Consumer Spending growth. Anna yes. William savings have been so important. Will they be tapped into . It depends on how confident people are about their employment outlook. The concern is that it will just morph into more precautionary savings. Much. Thanks very certainly something for us to watch. The bnp paribas chief economist. Thank you very much for joining us. Well position for new covid19 driven demand. Up next, we speak to the cfo. We get the latest from him on the efforts that the business is making, the investment the business has in helping vaccine candidates. We will talk about other parts of the business. Semiconductors and the like. This is bloomberg. You can go your own way its time you make the rules. So join the 2 Million People who have switched to xfinity mobile. You can choose from the latest phones or bring your own device and choose the amount of data thats right for you to save even more. And youll get 5g at no extra cost. All on the most reliable network. So choose a data option thats right for you. Get 5g included and save up to 400 dollars a year on the network rated 1 in customer satisfaction. Its your wireless. Your rules. Only with xfinity mobile. Anna welcome back to Bloomberg Markets european open. 30 minutes until the start of cash equity trading. This is what futures look like, a far cry from excitement early this week, we are retreating a little bit. Futures suggest that weaker opening. We focus on the here and now of the virus. There are plenty of events to look forward to. Tencent will report earnings. Y will seek to reinforce it is in the same boat as ant group. At 9 00 a. M. London time, the iae will release its Oil Market Report as opecplus is considering delaying a plan using production cuts. Could they keep production cuts a little longer . We will get u. S. Jobless claims at 1 30. It will be closely monitored as the second wave is growing or is it the third in the u. S. . Disney will report thirdquarter results after a reorganization that tightened their focus on streaming. Lets get a first word news update. Vaccine trials has had a key goal, it can get data to an independent Monitoring Committee within days. It will decide whether the vaccine is effective, if it does not work or if the trial should continue. The therapy is similar to pfizer so experts expected to be effective. The u. K. Government is trying to avert disruption at that end of the year. Many firms have had their heads in the sand and are ill prepared for changing rules bid companies are facing upheaval even if the u. K. And e. U. Find a trade deal. Opec and its allies are considering delaying oil output by 36 months. There was discussion of cutting production further, but it did not gain widespread support. Ministers are holding an Online Meeting november 30. Global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna merck raised its outlook for the year, and says demand grew for pandemic related products including components used in lab testing and developing covid vaccines. Joining us now is Marcus Kuhnert , cfo member management board, merck. Thank you for coming to speak to us. Let me ask you about your guidance today, the raising of your outlook on pandemic chemical demand. How sustainable is that for the rest of the year and the start of the next . Marcus first of all, we believe we have seen strong growth in our base business throughout the last couple quarters. Admittedly amplified with a tailwind from additional covid19 demand. We have seen the increase of 50 60 , and at the same time with the lead time between 612 months, we have relatively good visibility into the end of the first half of the year 2021 where we project good growth and development. Our visibility goes out 69 months, after that it becomes more foggy, what we see no reason momentum and growth should go down afterwards. A bit moree ask you about this, you are a major supplier of components needed in coronavirus testing, chemical agents and things such as that. Some people say they are in short supply. Are you able to keep up with demand . Marcus we have seen the strong surge in demand. It is targeted to our single use filtration,wnstream so everything needed for diagnostics and production of vaccines and therapies. It is indeed the case, and why the lead times have become longer. Customers are ordering earlier. We ask them to order earlier because we have some capacity constraints, and obviously that is easier for planning. We also have to apply prioritization rules to cope with the strong increase in demand. Anna what message would you give to governments who want to increase testing, because some are talking about scaling up testing in the months ahead. It is part of trying to manage the crisis. What message would you give to them . Marcus we are working together with governments. I mentioned the prioritization rules for everything related to government orders and lifesaving therapies in the context of covid19 is on top of our priority list. Anna let me ask about the assumptions in this outlook today. You talk about not including any potential for widespread lockdowns in the coming weeks. Are we not in that situation already . Marcus i would not say downside, but a slight risk due to an increase in uncertainty. That is november 12, at point in time we have not seen any significant negative effects from the lockdown measures in germany and other european countries. We are confident there will be no adverse effects on our guidance from those measures currently in place. Anna that is useful context. You said in august when we caught up with you that it would be 915 months until we see a vaccine. You work closely with drugmakers involved, you are working on these projects. What is your estimate now of when we see a vaccine being rolled out . Marcus eventually it could be quicker now. Thee we are talking about beginning of 2021. Work closelyyou with labs and drugmakers developing in scaling up promising vaccines and therapies. Give us a sense of what your involvement is in that process. Marcus we have we are in the development of one antibody against covid19, and other than with 50are involved vaccine products where we are predominantly supporting our partners in getting production ready, and scaling this up. And in the scientific work as well as delivering the necessary components like single use products, downstream filtration, etc. Around 50 products we are involved in that have to do with vaccine and therapy development. Anna in other parts in your business, around semiconductors, you spent 6 billion what is driving the success of that business at this point . Marcus marcus very robust market growth. The Semiconductor Market is benefiting from important internet ofike 5g, things, digitization. All of these developments with regards to the covid19 crisis payments, think about the increase of working from home. This is driving digitalization and a driver for our business. We are benefiting from successful integration, it is going well, ahead of plan. Strong and robust market growth, a good combination. Anna thank you very much, Marcus Kuhnert, cfo member management board, merck. Us on the fight against the virus. Coming up, the path to net zero Carbon Emissions is getting closer according to Goldman Sachs. We look into that next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 20 minutes until the start of cash equity trading. A little momentum on the Global Equity rally that got a boost earlier this week from vaccine hopes, retreating a touch globally is the theme right now. How will the need to drastically reduce Carbon Emissions reshape the Global Economy . Goldman sachs is hosting a Conference Online this week and says cutting co2 from power and transport is important but not enough. The bank says innovation means the cost of getting to net zero emissions is falling rapidly. Joining us now is sheila patel, cochairman investment banking, Goldman Sachs. Lets start with the cost of getting to net zero. What do you see there . Sheila it is an amazing time to be discussing this, thank you for giving us the opportunity. We are seeing a tremendous amount of capital flowing toward addressing the carbon issue and carbonnomics, that means thinking about what that flow of capital means in terms of developing innovation. You see today countries from the u. S. To china are all innovating , no matter the governmental pressures, environmental pressures, stakeholder pressures to come up with the best idea. That flow of capital means new ideas are coming at cheaper rates and investors are taking notice. Anna when you say investors are taking notice, how much money have you seen taken in this year to sustainable funds . Give us a sense of how investors are reshaping their exposure on this front . Sheila i think the pandemic has been fascinating to the question of Sustainable Investment in esg. The large institutional investors, many asked me at the beginning of the crisis is this the pause for esg and sustainability and climate. The crisis is overwhelming. What we found is people more than ever found a clear focus on just froming, not large institutions but retail as well. Sustainabilitynk is the focus of millennials or the younger generation, but in fact during the pandemic in europe you saw 100 increase in baby boomer adoption and focus on flows into esg funds. It has been a dramatic shift, and it means the pandemic has given people time to step back and question what they value most. Anna it does seem if the pandemic is a testing point, perhaps coming out fighting in its corner. Let me ask about the role of passive funds. You are making pushes into passive etf businesses, buying gold etfs in september. How does the role of passive fit with esg and investors wanting to be more active in the price of exposure . Sheila we are in the early innings of figuring out how esg fits, and sustainability fits across the spectrum of passive and active. Both styles of investing have a role, and we include quant along that and a role in peoples portfolios. A our minds, we focused tremendous amount of energy and work on the quantitative side related to esg. It is not fully active but not fully passive. It comes with a set of rules and factors where we feel there is an impact based on our analysis and history and the analytics that show us those Information Tools and statistics and data gives us an insight and helps us provide an edge. There is a challenge on peer passive when it comes to sustainability over the long haul, and you see everybody trying to address that. Youruestion of how what market cap indices can do in light of the focus on sustainability that most investors have today, and where those indices need to be taken in the future is something that will be the subject of quite a bit of work. That is why our spectrum within Goldman Sachs Asset Management canbeen about how we enhance and be more proactive in the design of an index portfolio all the way to our fundamental equity or traditional active portfolios, where we tried to go out and kick the tires, and have cooperation across the spectrum. Anna when you go out to try to exert pressure and inquire about these businesses and what it is they are doing and taking climate seriously, what data do you use . Do you have confidence in that . A lot of people talk about the Data Available is not complete enough. Sheila it is definitely not complete enough. 71 of esg statistics are about 20 populated now. There is a tremendous amount of data to be had, and that is one of the key things we talk about with management. Team thatstewardship serves our entire complex, whether fixed income to quant, this team when we speak to management thinks about it holistically. What information do we need, and how can we better serve investors, as well as help Companies Get better . You see in earnest effort on both sides corporates come to us and say as a asset manager, what do we need to do . What do you want to know . Which eta set should we provide . In that scenario, the upcoming efforts and focus on european taxonomy and creating a standardization of those data points will come into play of how we think of investors in the years ahead. Anna thank you for your time, sheila patel, cochairman investment banking, Goldman Sachs. We will get more, speaking to the Goldman Sachs international ceo, dont miss that conversation, 9 30 a. M. U. K. Time. Coronavirus levels hit record levels with u. K. The first country in europe to surpass 50,000 deaths. Maria tadeo spoke to the Eu Health Commissioner about the timeline for a vaccine. It was news that was well received. We are following it very closely. Withommission agreed pfizer today. We will have to wait to see when the company will submit its. Pplication for authorization maria correct me if im wrong, the initial order will be for 300 doses applied across europe. Completed 300 million doses across europe, plus an option for 100 million doses. Maria if the vaccine is successful, you would want to execute that possibility quickly . Yes, that will depend on the results we have, and also discussing with Member States, our partners in this process of the eu vaccine strategy. Maria how Many Companies are you dealing with on a daily basis . From the beginning we aim to have a portfolio of six to seven safe and effective vaccines. We signed with astrazeneca, johnson johnson, sanofi and are about to sign with pfizer and biontech. All in all at the present we have a portfolio that has six potential vaccines. Maria a total of 6 we could expand it. Maria you are looking potentially at we will leave no stone unturned. Mentionednow you europe will have to approve it. We have seen in the United States they get done quickly. In europe how quickly could we see that green light to make sure this can be sold and given to people . Any medicine or vaccine that is used in the European Union needs market authorization from the European Medicine Agency. This is important in terms of independent Scientific Study for effectiveness and safety. This will be done as quickly as possible. The European Medicine Agency is already looking at a rollout review for this vaccine, and is ready to receive the application when it comes. There will be no delay, but we will not cut corners with safety and efficacy issues. Anna no cutting corners from the Eu Health Commissioner. Ofutes to go until the start thursdays equity session. We will get your stocks to watch next. Growth picks up post pandemic. This is bloomberg. Matt anna anna European Equity futures suggest the downside. Lets get into the stock specific stories with dani burger with stocks to watch. Sees themselves return to growth in 2021, profit margin rising for the year. It proposed cutting its dividend, but saying it is a tough year but they dont think of a 19 will have a Lasting Impact on the world economy. 2021 could be better for them with a joe biden presidency. The ceo spoke to Annmarie Hordern and manus cranny. Lets assume joe biden will eventually come into the white house, he has been a big promoter of sustainability. For us, that means Renewable Energies and sustainability will be on the priority list which is good for siemens. Esg they are not the only related company to have increased helps after a joe biden presidency. Burberry reporting sales 20 5 , better than estimated, a drop of 27. 3 . Will be markdowns a headwind for them, they are in a strong position to deliver growth in the medium term. Itv says 80 of productions shut down our back up and running or ready to be delivered. Thirdquarter revenue was down but ad revenue is going back to growth in the Fourth Quarter because they did not see love island. Anna the market open in europe is up next. This is bloomberg. Anna one minute till the start of cash equities trading, good morning, here your headlines. Running out of steam, the global stock rally shows signs of selling stalling. Another grim milestone, global virus deaths jump by the most on record, cases worldwide top 52 million. The u. K. Government steps up discussions as brexit destruction closes in. Negotiations are set to crash through an informal deadline this weekend. Welcome back to the second hour of Bloomberg Markets european. Eat futures are down and increasingly negative. U. S. Futures also pointed to the downside. The expectation is that the rally we saw earlier this week has to do with the Pfizer Biontech vaccine. That is retreating just a touch. We are pausing to think about the winter that lies ahead before any effective mass vaccination. Down by around 0. 5 , there was an expectation on futures that we would be negative. We have seen to some extent even the negativity or stalling in asia, they are cushioned by a rebound with big chinese tech names. Down. C quarante is the ibex has been moving more than other markets. It is down 0. 8 . We are seeing moves to the downside for European Equity market. The pound is under pressure. We have gdp data earlier on this morning which added to our clarity on the rebound in the Third Quarter, but raises important questions about where growth goes in the fourth. European markets open lower as the global stock rally shows signs of stalling. Joining us now is eimear daly, fx strategist, Macquarie Bank. Given what we saw earlier this week, how much Risk Appetite do you have . Eimear i am bullish on the recovery. There will be a little bit of a retreat. [indiscernible] as america is caught up in a isond wave, the market trying to figure out [indiscernible] we are much more optimistic of the trading environment next year. Anna does that mean a downside for the dollar . For a long time the narrative is around the u. S. Election and what fiscal stimulus will come through. That lacks letter ready until we know what happens in the senate. And in the wake of the news around the vaccine, that is what is driving the dollar. What is driving the dollar for you . Eimear we have seen a link between u. S. Yields and the dollar, the dynamic driving it over the last few days. [indiscernible] with equities and commodity prices, [indiscernible] we think we will see the reemergence of a yield play. [indiscernible] anna think markets will wait for clarity around the fiscal stimulus in the u. S. . Some publicans are pointing to better data, suggesting we dont need much fiscal stimulus. What is the Market Pricing in in terms of that fiscal boost as we look ahead into 2021 . The market is optimistic some fiscal stimulus will come through. When we get a vaccine and we can reopen [indiscernible] if we see a vaccine authorized, that is a game changer. We will see a more positive environment. We look forward to the economic reopening after the virus. Some investors are nervous about what President Trump might do in the final days of his presidency to shore up his legacy, but maybe to make waves. Our risk factors you are looking at . Other areas you are focused on where you could see his presidency by twitter moving fx markets . Eimear trade is a really key thing where he has used executive power and can cause the most disruption. [indiscernible] markets will likely shrug it off, he is an outgoing president. A lot more attention will be to president elect biden. Anna do you think havens have had their day . How you see the positives at this point . Yen, or areanc, the they not your focus at this moment . Eimear we are looking for them with an upward trajectory. Is europe [indiscernible] if the u. S. Treasury [indiscernible] anna thank you so much. Eimear daly, fx strategist, Macquarie Bank. Thought more this is bloomberg. Anna welcome back to Bloomberg Markets european open. 10 minutes into thursdays trading session, and we are moving to the downside, the European Equity market down 0. 8 . A couple sectors focus on the downside, banks and value names moving lower today in a way they did not do earlier this week when we got the vaccine news. Lets get a Bloomberg Business flash. 5 goessonys playstation on sale along with a new spiderman game. It goes head to head with microsofts new xbox. Both consuls have sold well, the previous ps4 sold 113 million units. Growth,sees a return to but the biggest Engineering Firm is warning pandemic related challenges will remain. It sees customer investment lagging behind, growth, and negative currency effects dampen profit in its core businesses. China is casting doubt on the future of its biggest internet billion sparking a 290 selloff. Investors wonder how bad it will get for alibaba, tencent and other tech giants. Beijing will have new monopoly regulations. Areerry is betting there enough consumers willing to pay more for their trenchcoat and purses, even during the pandemic. It plans to reduce its discount, a move that they hurt sales in the second half of the year. They are looking to improve the quality of its products for millennials and younger shoppers. Telecom is raising its earnings, revenueprint boosted and added new customers. Deutsche telekom says the integration is ahead of schedule and it expects 102 billion of synergy this year. Government is intensifying talks with industry as it seeks to avert brexit disruption. That as Companies Face upheaval as britain and the eu sign a trade deal. With theup to date negotiations. A formal deadline is hanging over these things, how much does that matter . The deadlines for brexit, initially both sides had hoped to come to an agreement by the middle of this month. It looks like talks slipped into next week. Then you get into a compressed timetable because both sides have to ratify any deal they sign by the end of the year. For European Parliament that process takes six weeks, britain is slightly faster. If you go much beyond the middle of this month, the timetable for the European Parliament has to be curtailed. It is getting into the endgame and beyond. Have the brexit negotiations going on, and like many governments around the world, they are coping with covid19. Boris johnsons senior aides resigned. Tension seems to be gripping number 10. What does the Investment Community need to know what is happening behind the scenes . Campaign of the vote and it up in downing street advising boris johnson. He is one of those people close to dominic cummings, who is the mastermind behind the leave campaign. If he goes, and this is a proxy battle between the hard group of ofxiters, and the rest the party, that will have implications from what kind of country we get after brexit. With the negotiations, it looks like frost is staying on, but the big question is how does the country look after brexit . Cummings was very interested, talking about scientific research. If that is the kind of country we get after brexit, more traditionally conservative, we still do not know and have to see how it plays out. Anna thank you very much. Sticking with the u. K. , we got data for the economy, it expanded the most on record, but that rebound has been derailed by an increase in virus infections. Eimear daly, fx strategist, Macquarie Bank is still with us. What do you make of the latest data out of the u. K. . We sell weakness in the pound, init gdp data that can be the driving seat for sterling . [indiscernible] optimistic,s [indiscernible] they think a deal will come through. If we get a deal, just on the major reaction we will get much [indiscernible] the bank of england is contemplating negative Interest Rates, it could be a potential game changer. At the moment, the bank of england is in complications with the regulator looking at policy. The market is pricing out possible negative Interest Rates. [indiscernible] do you think it is a binary matter whether we get a deal or not . Is sterling priced around a binary outcome, or does the nature of a skinny deal matter to fx traders . I think the market is looking for that headline that we have a deal. [indiscernible] i dont think the market will pick through what we get. [indiscernible] anna you have some conviction around eurosterling, taking the dollar out of it. How do you play eurosterling through the end of the year . Eimear i have been looking for , with and eurosterling negotiations breaking down. [indiscernible] it is probably a good play at the moment. Anna you were talking about the bank of england and the possibility of negative Interest Rates. We have been watching headlines with Andrew Bailey saying they are in line with the bank saw at the economy, and the gap at the end of last year was huge. We got gdp data earlier on. He is also saying he does not see a great need for yield curve control. Is that something the market had been thinking about, where they pricing out negative Interest Rates thinking yield curve control might be employed . Withr in the u. K. Market the bank of england, we see how h they were purchasing [indiscernible] it was very much the case of negative Interest Rates. If we see that increase come through, it is a question of negative Interest Rates are on the ticket. [indiscernible] that is also an option. We think the market has dramatically priced that out. Anna there is no precise date in mind for negative rates, if indeed they go in that direction. In terms of data on the u. K. Calendar, we think about brexit, no formal deadline, this weekend it looks as if our reporting suggests that that might be cast aside. Do any dates matter . What will you be looking for . These things need approval in various parliaments. Eimear [indiscernible] if the eu decided we will use the longer process, it will allow more time for that. Toare getting close deadlines to get this ratified. [indiscernible] date to watch. Ey we need to get it ratified by the eu parliament. Anna thank you so much for your time, eimear daly, fx strategist, Macquarie Bank. She will continue her conversation on Bloomberg Radio at 9 00 a. M. U. K. Time, around 40 minutes. Coming up, the clock text on tiktok. The deadline for the video app to divest is today, but bytedance says it has not heard back from the Trump Administration. They must have other things on their mind. We discuss. This is bloomberg. Anna welcome back to Bloomberg Markets european open. The trading session looks pretty negative, u. S. Futures pointing to the downside. Arrived for has bytedance to sell tiktoks u. S. Operations or face a ban from the u. S. They are asking for an extension, but the requests have gone unanswered. Joining us to discuss is dani burger. This is increasingly complicated by the election, but what will happen to tiktok when it hits the deadline today . Dani bytedance does not even know. They will not face a ban today, the creators had taken a case to a Pennsylvania Federal Court who put in an juncture on the Trump Administrations ability to ban tiktok. They have asked for a 30 day extension to get the deal done, proposed between walmart and oracle for its u. S. Operations. They say they have no clarity what will happen. Yesterday tiktok filed a petition challenging the white house orders, saying it violated the companys constitutional rights. Anna how does the election play into this . Does it change tiktoks calculations and strategy if the Trump Administration will only be in power for a couple of months . Dani they need to tread carefully at the moment, because in two months trump could do more damage. Mike pompeo speaking yesterday in a public speech said we are not done yet. The pillars of strength and candor are off the foundation toward the world, the number one threat to freedom is the chinese meanest party. Trump can issue executive orders for things like tariffs, he did that with bytedance. He can move quickly. But going forward, biden could cancel the executive orders once in office. Others have bipartisan support like tariffs on steel and aluminum. Anna dani burger with a look at the tiktok story, and how it continues to move along. Your movers this morning, we started with numbers out of burberry, often called a trenchcoat maker. Luxury goods company, luxury apparel maker. Profits declining less than expected, and the share price is currently up. Revenue returned, growth in october, sales to thirdparty retail to cut inventory in the market. That is part of the story. Other stocks we are watching, we had a conversation with siemens on daybreak, that stock is down 4 and that is a heavyweight business. A slight negative picture from on their pirelli numbers. And talking of earnings stories, we will have a conversation with the german Industrial Services provider. We will talk about their m a and whether the business will be taken up by private equity. That conversation is next with the companys ceo. This is bloomberg. Welcome back to Bloomberg Markets european open. 30 minutes into a trading session that looks broadly negative. We have retreated, down around 0. 7 on the stoxx europe 600. I want to get live to an event that is taking place. Sorry, i want to get to the live event taking place with regards to wirecard. One of my colleagues is speaking to the german regulator about wirecard. The bafin president has been saying that wirecard has tarnished germanys reputation. It has certainly tarnished germanys reputation, thats for sure. Lets listen in for a little bit to this conversation. Institution, will your institution be able to handle this . Do you have enough manpower to actually handle this . It goes without saying that if the role of bafin is strongly enhanced and widened by and scope, we would have to enhance the manpower and level of expertise to do that. Thats a given. Woulden then, the way we act in situations like that, of course, would always be a mixture of homegrown, inhouse expertise, people on the payroll of bafin. At the same time, we will always, or in many cases, revert back to outside auditors to instruct forensic scrutiny and forensic auditing of a particular case. It would always be a mixture of both. So,n, if our role, rightly is going to be strengthened, then the manpower to do that has to be strengthened as well. Thats a given. Ok. We are currently seeing that china is cracking down on fintech companies. If you look at that and if you also look at wirecard and what re, should europe as a whole, including germany, regulates fintech firms regulate its fintech firms much harder . Felix that is a strong connection you are drawing there. I think the motive anna that is the bafin president , felix hufeld, speaking with the Daniel Schaefer as part of the future of finance event. That is what we are watching before going to those like pictures. You can see more of that using the live go function on the bloomberg. We will keep across any headlines. Interesting to see felix hufeld s comments around wirecard. Lets stay in germany. We had earnings from germanys bilfinger. The Industrial Services provider has confirmed 2021 guidance while performing a 20 drop in adjusted ebitda. The company is said to be exploring a sale after receiving takeover interest from buyout firms. I am pleased to say that tom blades joins us now, the ceo of bilfinger. We will come to some more strategic matters in a moment. In terms of the performance of the business you are performing today, how much visibility do you have around that as we head into the winter . Tom if you look at our results, we are more or less inline with what we said as we got into the covid pandemic. We did a lot of work on scenario modeling in that time in early april, and then we actually came out with a yearend adjusted forecast. Very pleased to see we are actually on track to delivering on that. So, we see sequential topline performance. It is increasing, so the markets are slowly returning. We have done a great job in taking out excess capacity. I think it is reflected in the growth margins, which are the same level as last year. We have been able to reduce sdna to an alltime low ebitda to an alltime low. We are very much on track to what we said we would achieve and very wellpositioned for the time ahead. Anna so, wellpositioned for the time ahead, you say, what lle you open to a fu takeover of the business . That seems to be a talking point right now. Tom yes, i see that in the press. I think it does not take a Rocket Scientist to figure out that when our share price dropped to 15 euros or thereabouts just after the covid pandemic hits, we still stuck to our guns on our 2024 aspirations, so we said we would get to the 5 billion, 5 ebit, but ebit. , this value gap has been a subject of conversation with some of the pes. We had a conversation towards the middle of the year. There have been loose conversations. Nothing has materialized out of that. Bilfinger finds itself in the same position as Many Companies, share price much lower than it was. Longterm, midterm plans very much intact. That attracts interest. Anna do you see ongoing interest from private equity . Is it just a feature of the summer that has now drifted away . Tom no, i think it is a recurring theme. People come and go. They look at what is out there on the market. I would not be surprised if, you know, something came, but right now, there is not an ongoing story. Anna do you think that bilfinger could benefit from continuing its turnaround away from the public spotlight little bit, away from Public Markets . With some time away from would some time away from private equity help . Tom we dont look at that. We are very glad to have shareholders that been supportive. We are still in the middle of our restructuring. The covid pandemic has given us a setback. It is kind of one step forward sorry, one step backward, two steps forward. We on the management side, we do what we have to do. We try not to listen to market rumors. Anna ok, but you do listen to your biggest shareholders. What is the view amongst these large shareholders about private equity interests . Tom we actually do not have a dialogue directly with them on that. Our dialogue is on the supervisory board. We had a meeting yesterday, which is normal ahead of a quarterly relief. They condemn commended us on our results and they commended us on our results and progress and i wish i could give you more, but its just that simple. Anna you do have quite a lot of exposure to oil and gas, as many other companies do. We spend a lot of time speaking to investors who are increasingly cautious of their carbon footprint. Do you think it puts off some investors, might even put out some private equity businesses at this point . Tom our oil and gas exposure is across the spectrum, upstream, midstream, and downstream. The upstream part has suffered. It is returning. Oil prices are firming. I think that despite the energy transition, oil and gas have a role to play for some time yet. I think for interest industry insiders, they understand play the play, and i think they have a different perspective from someone who might like to invest in google, amazon, apple, whatever. I think that if you look at the peer group as well, you see similar performance. We are comfortable with our position, which is a little under 30 . Within going forward, we have enough we think going forward, we have enough to offset any kind of shortfall on the oil and gas side to reach our 2024 aspirations. Anna talking of the energy mix, you work in nuclear as well. When do you expect revenues from the Hinckley Point contract to start coming in . Tell us about that. Tom revenue is coming in. Supplier tor one the project. We announced a commitment on the over 550 Million Euros over the course of the project. That commitment is being called off as we go through the project. We are at about 90 million of that 550. The rest will come as we go forward. It is also not currently reflected in our order backlog. As i said, its a khalaf contract call off contract. We have a fairly confident outlook on 2021 and beyond. Anna tom, thanks so much for spinning time with us today. Good to speak to you. Tom blades, the bilfinger ceo. Lets get a bluebird first word news update. The u. K. Is posting record growth for the Third Quarter but the rebound still leaves it far behind other major economies. The economy is being derailed by rising virus cases and into lockdown. September saw the slowest growth since april. President elect joe biden is naming longtime aid ron klain as his chief of staff. He played a leading role during the economic and Public Health crisis of the obama administration, leaving the white house responses to the 2014 Ebola Outbreak. Klain has been chief of staff to biden and al gore. Opec and its allies are considering delaying next years plan to hike in oil output by 36 months. There was even discussion of cutting production even further, but the idea did not gain widespread support. Ministers are holding an Online Meeting from november 30. Erdogan isesident signaling a ceasefire with international investors. Hes pledging to contain inflation and support market friendly policies. Turn from his unorthodox view that lower Interest Rates promotes lower inflation. There are doubts about his change of heart and how long it will last. Global news 24 hours a day, onair and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna . Anna laura wright in london. Coming up, a defeated donald trump has yet to concede, and he has the backing of many in his party. Next, we discussed the u. S. Transition of power with our u. S. Politics editor, kathleen hunter. This is bloomberg. Anna welcome back to Bloomberg Markets european open this thursday morning, 44 minutes into the trading session. Nasdaq futures actually pulling up a little bit, up around 0. 3 on the nasdaq futures at this point. President elect joe biden named longtime aide ron klain as his white house chief of staff. He played a leading role during the economic and Public Health crisis of the obama admin assertion. Joining us now is administration. Joining us now is kathleen hunter. What we do we know about these early appointments from the biden team . Kathleen anna kathleen, is anna edwards in london. I think we may have lost her, which is unfortunate. We will try to get her back. We want to understand more about what these appointments mean and indeed where President Trump goes next. Lets pause for a moment. That yous budget the eus budget commissioner is quite asfident on the prospects negotiations moved closer to finalizing a landmark euro budget and stimulus deal. He spoke exclusively to maria tadeo. At the same time, its a budget for seven years. This is something which does not exist anybody else anywhere it was sothis is why important to get it. Also to give an answer to the economy, to the capital markets, as it were. Also with the parliament and european council, we have agreed to pursue army political cause our main political cause. Maria now that you mention capital markets, there was a real think zaidi with investors to see whether anxiety to see whether or not the recovery fund, whether or not that would be ready and operational by the start of 2021. Given the fact that we have a deal around the budget, do you say yes, it will be ready by the start of 2021 . Start following only if our nationstates ratify in parliament. This takes a little time. As ive said several times, and have not changed my opinion on this, we will certainly start in ,he Second Quarter of next year the borrowing exercise. Until then, we are still working issuances. Maria i want to talk about that. You had another that tapped into the market. The first one was oversubscribed, very successful. Will we see more options from now until the end of the year, given that Market Sentiment does seem to like your assets . Well, there will be another one. Yesterday was a good day. We had two options, one with eight billions, four or five years majority, the other, six billions for 30 years of maturity. Also altogether, a magnitude billions, so it was not anything, it was, again, a huge success. We will have a third option option in november of this year. Maria same amounts, same type of syndication, almost of the same kind of structure . It will remain the same structure. Serving our Member States, those who are asking for it, who are plenty of them, so this will continue until at least the First Quarter of next year. Maria all of this does provide real momentum for european assets. There is this question which i believe you alluded to, the Member States ratify . Do you will Member States ratify . Do you expect any opposition . Is that a real risk . Look, there are always some who raise their concerns. At the end, i think there is a momentum. If you see all the reaction here in house, but also across europe, there is kind of a relief after this decision yesterday. Thats why i think nobody can really step aside from this dynamics. Maria i know it is difficult to predict what will happen over the next six months, because we are still very much in the coronavirus. We know there is a prospect of a vaccine. There is a deal for the european budget. Do you feel that perhaps we can avoid the doubledip recession that the markets fear and see bigger rebound in the economy . Well, it will also depend how fast this vaccine, i mean, we have received very promising news about the availability of vaccine. Market, ines into the first half of next year, i am very confident that this will help economy to recover faster, and indeed to have, may by the end of the year, a better forecast than today. I am, for the moment, quite confident. Anna that was the eu budget commissioner speaking exclusively to bloomberg. Still to come, how the vaccine has affected the dollars trajectory. We will put that question to the market life team. This is Bloomberg Markets live team. This is bloomberg. Anna welcome back to Bloomberg Markets european open 52 minutes into a trading session that looks negative for European Equity markets. U. S. Futures pointing to the downside. A bit of a change in narrative from the start of this week, when we were so risk on because of vaccine use news. I want to talk about Risk Appetite and where treasuries go here. Treasury yields ramped up in the runup to the u. S. Election. A lot of expectations about a blue wave. We did not get that, or at least we have not quite seen it develop as planned. We will wait for january and the senate. Weve seen retreat from those yields. Yields backup at. 92 because a virus hopes. How are you trading treasure treasuries . The think the news on progress vaccine has had a dominant effect on the rate market, especially if you look at the long end. Of course, we still have lockdowns in many parts of europe and the u. S. , but people have somewhat learned to live with the and the economies have shown a degree of resilience, as we have seen. Its not a new threat to the economy. Theres really no argument for 10 year rates going back to 65 basis points. The economy goes into a tailspin from here. The feds actions have quelled volatility in the markets. With election uncertainty in the Rearview Mirror now, the natural bias for rates is definitely into a bear steepening into 2021. Anna so little reason for those yields to come back down again. We will keep an eye on what happens with the virus and lockdown measures in the United States. The dollar was also being driven around by the election expectations last week and before. What does the dollar move on now . We have the vaccine there as well. There seem to be a number of factors pushing and pulling. Absolutely. There are several factors that are in play. Factors,least four real rates, nominal rates, the Macro Economic and what is known as the uncovered Interest Rate parity, which has been in play for march of 2020. Investors much of 2020. Investors cannot seek to make extra money seeking higher rates , not available in the domestic market. What they lose in Interest Rates will be offset by currency depreciation. With most central banks, any rate approaching the lower end, its hard to make a case for the parity effect to hold into 2021 and give traction to some of the lower rate currencies we have seen happen. We have seen both real and nominal rates rebound in the u. S. , which are bound to be dollar supportive. In other words, i see the dollar making a comeback in the first half of 2021. Anna ok, thanks very much. Thanks for your time. Thank you very much for joining us. Acrossised, we have kept that conference taking place, bloombergs future and finance program, where the head of bafin , the german regulator, was speaking, felix hufeld. He has gone on to talk about the Banking Sector and we want to bring you some of the lines. They are carefully watching the banks approach to provisions, sees a wave of credit losses hitting the banks Balance Sheets, and some banks are set to fail after the pandemic, according to hufeld. He said it deals are one way for banks to deal with covid. Supervisors are not against big banking deals, which might be of interest to some in the corridors of power in big european banks. Stay with bloomberg tv. Surveillance is up next. European equity markets on the back foot this morning after the big rally earlier on this week read this is bloomberg. This week. 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. Milestone,nother big virus deaths jumped by the most on record as markets ahead lower. Recovery derails, the u. K. Economy sees record growth, but the rebound leaves that far behind its peers. The chief of staff is one of the most powerful roles in washington. Says bre pa