Transcripts For BLOOMBERG Bloomberg Markets European Open 20240711

Forecast. We will bring you that interview with the ecb president. And the ax falls again at goldman. The bank prepares to cut jobs for the second time in three months as the focus returned cost cutting. Very good morning, everybody. Welcome to the program. Lots of breaking news to get to. Lets have a look at some of these numbers coming through. Have the numbers coming through from the shipping business which transports 1 5 of the worlds containers so really interesting insight into the way the Global Economy is spinning and the shipping industry in particular. We are getting the numbers through. We already heard from them last night about how they were upgrading their guidance, raising their fullyear guidance so that already sets a positive tone. They said they will initiate a new Share Buyback around 10 billion danish krone. That program will run for 15 months. E will be speaking to the ceo that is the conversation at 7 30 u. K. Time, so in around 25 minutes time. Let me get to some data out of the auto sector, the car sector. Europe october car sales falling by 7. 1 percent on reimposed virus restrictions so given that many parts of europe have had to reimpose those virus restrictions to some degree, after having lifted them during the summer, that will have an impact on the ability of cars to be sold or a willingness for european car sales falling as countries reimpose those restrictions. Newcar registrations dropping 7. 1 . Sales have been in decline all year. Moss to talk about in cars. The u. K. Bringing forward deadlines around ending the sale of petrol and diesel cars so lets talk about that later with Bloomberg Intelligence and a little bit of more breaking news for you on the macro front. 0. 7 mer prices rising by year on year against an estimated five point having percent. Bloomberg economics tells me we need to look for the Second Quarter here to see a big pickup or a much more sizable pick up in inflation because of base effect to do with tax cuts that came through to fight the pandemic. Just under one hour away from the start of the European Equity trading session. Futures have been looking sluggish as if we are looking for new dynamics to trade around as we have digested a lot of the latest vaccine news, asking what is next. Not far from record highs. European stocks, both pretty mixed. Futures looking a little bit sluggish, pointing to the downside. In the asian session, we have seen japanese stocks dropping. Record covid cases, part of the story. The gmm sees where we are seeing this coming through in the asian session. Chinese stocks looking resilient despite the fact that we have seen the threat of further regulation coming through from the United States in the shape of the sec. Lets get to our conversation with mark cudmore from the markets live lets not do that. Here are your top stories we are covering this morning here at bloomberg. The senate blocked the nomination of judy shelton to the Federal Reserve board. Its a step back for Mitch Mcconnell and President Trump with senators in quarantine. The republicans fell short of the votes needed. The senate can reconsider her nomination, but time is running out. The u. K. Is announcing a 12 billion pound plan to tackle Climate Change. In a blueprint, Boris Johnson says the move will create support for as many as 250 thousand jobs. Sales of new petrol and diesel 2030,ill be banned from earlier than anticipated, and the government will invest in electric vehicles and renewable energy. Three former lawmakers in hong kong have been arrested over a scuffle in the Legislative Council chamber earlier this year. They have been detained for allegedly trying to disrupt a vote banning criticism of the Chinese National anthem. The arrests are the latest blow to hong kongs Democracy Movement after the passage of a sweeping security law in june. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Now, we will get to our conversation with my colleague, mark cudmore. U. S. And european futures edge and lower. Investors taking a bit of a pause after sending stocks to alltime highs in the waco progress towards a vaccine. Thats get to mark cudmore from the markets live team, who can give us his perspective. Looking for a new catalyst and direction. Do you see anything that moves us drastically away from these levels . Mark im not sure we are necessarily getting a new catalyst. Its just the thinking around the catalyst the last week is evolving and that is that this whole debate about whether the threat of the virus now and the next few weeks is more important than the optimism around vaccines next year, essentially how forwardlooking are investors, and part of the problem making the calculation is we dont know exactly when that vaccine will make a material difference to many first world societies, which had the biggest impact on global economies. The thinking is turning more negative and one of the things we are seeing is that last week after the pfizer announced in, we saw the s p 500 bike to a record high, intraday record high, and even after the results from moderna, we did not reach that high again. The intraday high was still the highest level in stock and im of the view that that will not be broken again in 2020 even though we are not far off of it because every day that goes by, we get more material negative headlines on the virus, and yet the vaccine does not get any closer. We have a Global Health crisis now. Interesting to listen to what the central bankers are saying about the Global Economy at this point. We heard from Jerome Powell talking about how he sees the solid pace of recovery in the momentum risks losing as the virus surges. I wonder what evidence of any you saw in the u. S. Retail Sales Numbers yesterday. In a sense, they look more normal. Sales is theil stuff of normal times and yet times are anything but normal. Theres two different ways you can spin this. One is how we hit mystic the headline number we missed the headline numbers and we have not seen a rapid pace recovery and therefore it is running out of steam and that is the more negative take. The more positive take is we are seeing an improvement from a year ago and overall, we a more normal world and that is a positive thing so i think it gave a little bit for the bulls and the bears but it gave a little bit more for them given that we did miss expectations and we have definitely run out of steam. Whether we see that as a good thing or not, we are no longer getting the rapid recovery we were seeing earlier this year. We might be heading towards a second downturn. Anna and what do you make on the latest on the Brexit Debate . We have seen lots of reports about landing zones being may be in view and lots of reporting about whether we will get movements monday, tuesday next week, over the next two weeks, depending on if you are listening to the irish or sources in brussels. What do you make of u. K. Assets at this point . The market live team have been asking questions about which ones will get some love from investors postbrexit. What are you hearing . Mark i long ago became muddled by the situation and have struggled to keep up with twists and turns but i think the eventual path has not changed at all and that is that we have set for a long period of time that we expect negotiations to go right to the wire because thats the kind of e. U. Norm and the u. K. Side seems to be doing the same tactic so therefore, it will go right to the wire but we expect it will be made and when the deal is made, we expect some kind of relief rally but it does not necessarily mean the u. K. Economy will be wonderful next year so after that relief rally, the longerterm pitch is one that might underperform. Despite all the headlines and the twists and the turns, im not sure whether that eventual path has changed any different from there that we would have the conversation nine months ago. Maybenine months ago, even four years ago. But yes, we will see. Now, ray dalio, not exactly sure he gets bitcoin, and he was saying this very openly on twitter. Edgewater Associates Founder ray dalio saying he might be missing something when it comes to bitcoin for so for those of us who are missing something, 18,000. What has been the renewed enthusiasm for bitcoin, g10 . Do you think . Completehave seen the shift to extraordinary policy from Central Banks all over the world and that has impacted into oil market. People arethe chasing various different assets to provide some value. You want to diversify. Even if you believe in bitcoin or not, it often a one of the options. Theres even equities, whatever you want. Bitcoin is certainly a very valuable asset in that world where fiat currencies are being devalued by policy, so that is one facet of this. The other part is what we have seen is a real acceptance by the mainstream hedge fund Natural Community this year so when we had the real parabolic move, it was much more of a retail threat and there were big financial names coming into it but they were really the margin. It was a big story. Now, we see most mainstream people say they own bitcoin, we are seeing companies talk about putting some of their Treasury Holdings into it so it has entered the mainstream. Its very hard to put a level on it. Theres no valuation here. It is essentially a greater floor. About a speculative asset. Its about accumulating the next one at some point in the future which means you cannot put a specific value on it. The great news is that means it is unbound on the topside because of how much demand is out there and the bad news is that this means when it starts collapsing at some point, it means there is no floor. In the shortterm, that means this move could go an awful lot further but it a hard time. You so much. We are now fully briefed. Mark cudmore, thank you very much for joining us this morning. We have been talking about what some of the Central Banks have already been telling us has been going on. We have been hearing a lot from Central Banks with regards to the Global Economy, and we will continue to do so. Our newbeen holding economy form so we will be healing from the bank of england, next. This is bloomberg. With the virus now spreading at a faster rate, the next few months may be very challenging. We are not going back to the same economy. We are going back to a different economy. Before we had this great news about vaccines, we had some pretty negative news concerning the second wave that fully came about certainly earlier than anything we had anticipated and that also has an impact on the outlook. May be the change, if you like. Focus and must now push ahead hard with the necessary changes to support our clients. Was Jerome Powell, Christine Lagarde, and Andrew Bailey morning of a tossed path ahead, and escalating berries cases continue to be front and center for investors. Joining us now is the ubs paneuropean economist. Lets pick up on the european ecbs view of the world. We are just hearing from Christine Lagarde, and what is your expectation now for the eurozone and for the level of gdp contraction that we see . Will it be half the size of the spring as a sort of rough rule of thumb or what are using to guide you through this probably this period . After strong bonds, the focus is now on how bad the Fourth Quarter is likely to be. Now, we think that compared to the spring lockdown and gdp contraction, is likely to be smaller. Specifically, we expect a 3 decline quarter on quarter, so close to 12 in the Second Quarter. Factorsmention two which are key in terms of why the contraction this time around should be smaller. First, in terms of mobility restrictions, we are now essentially back to may levels, so less severe than the lockdown in april. This is largely due to the fact that the most recent lockdown measures suggest that across european countries, sectors such as industry, construction, and also the education centers, remain open this time around. Secondly, purely because we are still we start much lower starting point this time around and that means that in terms of numbers, contraction is likely to be smaller. But overall, i would say that taking into account our expectations of 3 quote unquote endcline, we expect gdt to in 2020, so around 7 below this prices level. Really interesting that certain important sectors are able to stay open as you point out, and that might be in comparison to may rather than march and april. How does the ecb respond to this . We were hearing from Christine Lagarde stressing that we need to focus on the quality and duration of the support that the ecb will bring, not just the euro size number is attached to it, but what are you expecting the ecb to do as we head further into winter . At the lastnk back meeting, essentially, the ecb has precommitted to deliver an additional policy stimulus at the next meeting on december 10 and then at that meeting, we expect the ecb to announce an extension and increase in their emergency purchase program, so we expect lasting until the middle of 2022. For the cheap loans for the Banking Sector essentially. What about the Recovery Fund . How much of a game changer has that been in your mind and how concerned are you about it being politically sidetracked by voices in Eastern Europe unhappy with conditionality attached . How much expectation did you put on that Recovery Fund . It, when the about leaders agreed for the Recovery Fund, we knew that this was an agreement in principle and there were a number of issues that still had to be resolved so we did expect some negotiations to continue. Now, the latest news from hungary and poland are clearly coming as a Downside Risk, but our base case remains that a political agreement will be hungaryand poland and will give in and the package will be approved. In that context, its worth mentioning that, when we think about how much funding both countries will receive from them, then specifically, in the recovery and resilience facility, which is the core part of the Recovery Fund, the two countries are essentially entitled to close to 5 of funds in the form of grants, so that quite substantial. In terms of the timeline, i would note that the key date is tomorrow with the summit where we are likely to see more negotiations happening. Anna yes, ok. Thank you so much. She stays with us. We will get further thoughts from her shortly when it comes to the u. K. A quick look at where we are on European Equity market futures, we are expecting to move a little to the downside but we are a little lacking interaction, still trading around alltime highs on Global Equity market. The tokyo market under pressure because of the infection numbers there. Zeroing in on a deal. Brexit negotiators are edging towards an agreement. A breakthrough may come early next week. We will discuss, next. This is bloomberg. Opinion, doin my not own bonds and do not own cash because they are producing a lot of debt and producing a lot of money to fund it, so that is changing the nature of capital flows. Its also changing how those flows go to china in terms of the comparison of that part, particularly as it opens up so i think its behaving sensibly but do not use old multiples as reflections of the limitations of what is expensive. Things not to buy from ray dalio. Speaking to bloomberg at the new Economy Forum. You can watch more of that conversation at 8 00 a. M. U. K. Time or anytime on the terminal via live. Lets turn to the u. K. And the brexit conversation. Officials are reportedly planning to strike a deal early next week. Sources told bloomberg the two sides are making progress on the biggest sticking points. We know the paneuropean economist is still with us. What difference does a deal make do you think for europe if it is a very skinny deal committed in scope to adjust goods and even only some of those . Case isreva our base that there will be a narrow trade deal covering goods sectors specifically and the key difference between that and nodeal at this point is the entire thing. We still expect some barriers to occur at the start of the year, which will be which will affect trade deals from the u. K. Side but the key difference is the two sides are now trying to avoid it. Anna i was looking at savings data in the u. K. , and it has obviously picked up substantially. We see that in a number of developed countries because of an inability to spend during the spring months. How much of a comfort is that as we head into a period of potential disruption . Anna titreva the spike in Savings Rates in the Second Quarter essentially indicates that there is some pent up demand in the economy. We did see some of that coming through in the Third Quarter which supports the growth bonds back in the Third Quarter more broadly. When we think about recovery Going Forward, we expect Savings Rates to remain elevated over the coming quarters and also reflecting the fact that precautionary savings are likely given theite high outlook for the labor markets and there areweak concerns around increasing unemployment. Another point is also to mention, when we think about pent up demand and the services sector, there is a bit less hope for that to come through because if we think about it, the fact that we did not get a chance to go on holiday this year does not necessarily mean that next year, we will be able to go on holiday twice. Just briefly, what do you expect the bank of england to do through this, just briefly . Anna titreva i think if we look back at the meeting in november, they already surprised to the upside, delivering a larger stimulus than we expected. Key is that there is plenty of flexibility for them either to scale up purchases if outlook gets worse or actually the down purchases in case recovery comes through quicker so given this decision, we expect the npc to stay on hold over the coming months. Anna thank you so much. The ubs paneuropean economist, thank you so much for joining us. Coming up on the program, 1. 6 billion dollars Share Buyback program. We will speak to the ceo about the shipping industry, next. 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. Anna welcome back to the European Market open. 30 minutes from the start of the equity trading session. Looking for a little bit of weakness at the start of trading day. Lets focus on what is on the agenda for the di. Later today u. S. Regulators are expected to give their final requirements for allowing boeing 737 max to return to service. On thursday, e. U. Leaders hold a summit by Video Conference to discuss the blocs latest efforts to contain the coronavirus and looking out for rate decisions by the south African Reserve bank and the forum holds its annual workshop for the first time as an online event. Thats a quick look at what we are expecting to see then in term turnovers trading day, week ahead. Some of the details were looking out for. Lets talk about what is going on with regard to merck. They have raised guidance for the second time since october. Going us is soren scou, the c. E. O. You certainlyly have some confidence coming back into the business into the sector. What is the quality of visibility that you have through these winter months . Soren obviously for the rest of the year we have quite a lot of disability. We have basically all the orders for the rest yoft year. Of the year. Thats why we are confidence raising our guidance. It is clear that volumes in our sector has rebounded in the Fourth Quarter. We expect volumes to be in line with 2019 as we are benefiting from the fact that a lot of the money that consumers would have been spending on Holiday Travel and Restaurant Visits and events is being spent on furniture and sneakers and stuff that we can transport. Anna stuff that you can move. Does that mean there is some Downside Risk as we see better news of vaccinations coming through . 2021 we believe that in 2019 or e similar to maybe slightly better and that means that we as a company will be able to the conversation of our network and continue the journey that were in. With this quarter, we have delivered nine quarters of earnings, yeartoyear Earnings Growth with guidance for the Fourth Quarter, we will soon have a 10th quarter. Im confident that we will continue to be on a good trajectory also next year. Anna when you see when you make comparisons back to 2019 and the prepandemic story, give us a picture around volumes and pricing. You see freight prices raising ince the month of may. Oren so right now we have aterial as we have gone through this unprecedented period where volumes are off the cliff in the Second Quarter and rebounded much faster than anybody had expected in the Third Quarter. Had quite a lot of and they have driven up their prices. Think that is a temporary nature. I dont think price also ontinue to rise. That is the event that we have. We think things will continue to normalize in 2021. Nna you said there would be an impact in prices. Were seeing a bottleneck in are s. , panama, the u. K. You at maersk seeing this affect your business . Soren we had to work really hard this year to keep the network open, the warehouses running and inland transportation and so, so on. Iven the pandemic and when you combine that within a surge in volumes and of course we are running into we lead the industry in terms of reliability. The absolute level of rely sblet quite low right now. There is plenty of work for us to do to help our customers move their good. In the coming quarters. Anna you say pricing wont continue to rise but do you think shortage of containers, is that something that you see lasting through next year . How long lasting will that be . Soren no. I think the situation will normalize. What happened in the same quarter was that it fell off a cliff. We had hundreds of cancellations. When the ships are not moving around the world the containers are not moving around the world either. When the volumes rebound much faster than everybody expected, we have the containers in the wrong place. Thats what we are working to rebtify now. Also for containers we expect the situation to normalize next year. Anna ok. You have talked about a Share Buyback. Thats what you had to do with some of the war chests that you have assembled, soren. Hat about m a. Are logistics going to be a target for you . What can you tell us about your m a ambitions . Soren we have a strategy that focuses around the building of bases. Our logistics we are growing dramatically. Due partly to acquisitions. We expect to make more acquisitions in housing and dribs and other types of that. Ses like transformtive where we plan to acquire logistics usinesses. Anna the geopolitical backdrop, President Trump has been very outspoken about global trade as we ready ourselves for President Biden. Do you expect any changes from the white house to have an impact on the sector in which you operate . Soren not when it comes tost to the u. S. China trade relationship, i actually dont think well see much change. Ybe in terms of form but not actually what the policy is. China excuse me, the u. S. And for that matter, the e. U. Both have policies today that where they are trying to reset in terms over the relationship with china after china has grown to become the second largest economy in the world. I dont think that is going to perhaps. Th plt biden perhaps President Biden will be more inclined to Work Together with the e. U. On this agenda but i dont think there will be major policy change. When it comes to the thrans atlantic relationship, that is probably, you know, more transatlantic relationship, President Biden will probably have for of a collaborative approach. Anna we spent a lot of the last four years talking about globalization and how much global trade can grow. What are your longterm expectations for global trade . What kind of longterm, medium term planning assumptions do ou base your numbers around . Soren we base our longterm predictions on a number which is going to be very close to global g. D. P. 3 to 44 . To see higher growth, we would need to see more trade than what is currently going on. The Asian Pacific countries have new trade deal which we see of course as being very positive. Anna thank you so much. Soren scou, the c. E. O. Of maersk talking to us about what he sees in global trade in the program. Christine lagarde doesnt see the vaccine as changing her stimulus plan. This is bloomberg. No one wants the Federal Reserve to take over the function of private lending in the economy. These tools are only available when the private lending markets break down and they did in march and april. So we came in and the markets have reopened and and when the right time comes and i dont think that time is yet or very soon,. Anna the Federal Reserve chair Jerome Powell. The e. C. B. Plans to add monetary stimulus. What are the impacts of a vaccine . Christine lagarde spoke to bloomberg at the new Economy Forum. Im not sure there is going to be a major game changer for our forecast simply because what we had anticipated in our baseline was that at some stage in the first half of 2021, there would be a vaccine and that it would be rolled out in the course of 2021. It might be a little bit accelerated given the news that we are receiving from the various horizons, germany, u. S. But i dont think that is going to be a game changer so to speak. I think that our forecast is being as we speak and we will be releasing on december 10 so i dont want to anticipate what outcome will be. We have seen before we had this great news about vaccines, we had some pretty negative news concerning the second wave that came about, certainlyly earlier than anything we had anticipated and together with that second wave, we have also that list of containment measures and lockdown measures that have affected one country at the other in the euro area. We have a combination of developments that affecteded negatively the situation and that also has an impact on the outlook. Anna what kind of economy do you see for europe and the world . Because of the extra restrictions. Is it double dipped . Is it something that is so uncertain at moment. Even if we get a vaccine we dont know what shape it will take or how consumelers behave . I dont want to down play the very good news that the vaccines work but at the central bank we have to be mindful of the not just the shortterm and the news impact. We have to be mindful of the overall situation and in that vein, i think the second wave that we saw presents risks. The first risk that i would think of is the fact that consumers, investors, employers pandemic as a he oneoff, the c shape that we all aspire to. But as something that will recur over the course of time and as a result would lead them to completely change their behavior. In other words, how about if they start saving again for precautionary purposes. How about if they continue to freeze and hold the investment plans because of the uncertainty generated by this situation. And the second risk that i see real financial spillover which we have managed to avoid so far. In other words we have not had amplifying l sector the downside that has weighed on the real economy and we need to really stay clear of that because that could be an aggravating factor. What surprised you the most in the economy in europe but also worldwide . Given the pandemic. Is it wages . Productivity . Is it how quickly people started working again when some of these lockdowns were lifted . What surprised me most from this part of the world where i the elocated is how in face of this massive metric you , all european players know, upped their game. I think that we were first out of the gate putting together a very large package in the first half of march and we were soon followed by the European Commission, the decision to apply the escape clause, the decision to remove the stateaid restrictions and to put on the table a massive package that was agreed in july. That surprised me. Anna that was the e. C. B. President christine laggard peaking with fran seen lacqua. Francine lacqua. Sales of new cars and vans powered by petrol and diesel will be banned in the u. K. From 2030. This is what Boris Johnson calls a green industrial rev revolution. Invest to hey will make energy more efficient. Mikan done joins us now. How is the u. K. Government going to achieve this . I can tell you the electric charging points in my house are often broken. There is a lot of infrastructure that needs to be in place to make this green revolution kick off. It was always going to be a stretch. The electric vehicle emissions n the u. S. The u. K. Is behind france and germany. Anna strange gremlins on the line. Well try to reestablish our line with michael dean. There is lots to talk about. Thank you very much. Well try to get him back. Minutes away from the open. Well get stocks to watch as well including maersk. The worlds big shipping container company. This is bloomberg. Anna welcome back to the European Market open. We are expecting to see a little bit of weakness in trade. Dani maersk yesterday raised their guidance, the second time since october at the high end of their range for the full year. They see as much as 8. 5 billion before the high range had been 8 billion. Today they announced they are launching a 1. 6 billion dollar buy back program. Consider that they used they transferred 1 5 to have worlds containers. It is a unique view of global trade and maersk is weathering the crisis better than expected. Anna what about really interesting conversation with maersk. Interesting to see what he had to say about shipping rates and rolle volume into next year and some of the difficulties of getting containers to the right parts of the world. What about british what are we hearing on that front . The Real Estate Company has fallen on to hard times. The profit loss seems to be widening. They reinstated their gived program after suspending it earlier this year. A sign of their assets. They sold an upscale luxury developed for 176 million pounds. Anna dani, thank you very much. We have managed to reestablish contact with mike. You were about to tell me about the u. K. Move around bringing forward the date for banning petrol cars. How significant is this . It was always going to be a stretch for 2040. Bring that forward to 2030. There is lacking the charging infrastructure. It needs to improve not just in the u. K. But throughout europe. Anna germany announced extra spending on vehicle incentives. What are they doing . They are extending that he is generous incentives out to 2025. S it is what we welcome. It eases the pressure margins. Hybrids loss making at the moment. This will be a positive for the auto sympathy germany. Anna we also have the car stredgetrations number falling again in october. After a slightly better september. To do with lock measures again . Most fully imposed in october being down 7 is disappointing with further lockdown measures in november. I think were going to have a disappointing toned year. However investors are looking out to 2021. Were forecasting a 15 increase in european volumes next year but that would still be below or 15 below the 2019 level. Nna thanks very much, mike. Michael dean with an update on everything we need to know about the auto sector. There does seem to be a lot of governmental support by words or financing for pivoting a Auto Companies are trying to do into electric vehicles and get that into full swing and at a freist price consumers can afford. Futures pointing to the downside here in europe. We have seen some weakness in the asian sector particularly in tokyo as a result of rising virus cases there and the virus continues to be a focus for investors despite longterm, medium term optimism around a vaccine and what that can do to enable us to open up economies and enable us to move freely once again. Coming up the market open. 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. Anna a minute to go until the start of the cash equity trading session. Good morning, here are your headlines. A shot of reality. Equity futures dip. Tokyo virus cases hit a record. Pfizer says its factor seen hit a key safety milestone. Staying the course. Christine lagarde tells bloomberg positive news on the vaccine is not a game chinger for the e. C. B. Forecast. The axe falls again at goldman. They prepare to slash jobs for the second time in three monlts as the focus returns to cost cutting. Good morning, everybody. Moments to go until the start over the equity trading session. Yesterday we saw sluggish moves on european and u. S. Equity markets. Today futures point slightly to downside. Looks like we lost our momentum a little bit. Lost our impetus on the Global Equity story. Having fully digested maybe the positive news surrounding the vaccines. Were not far from record highs. Global eck markets. The asian sector weighed down by news of new coronavirus cases in tokyo in particular weighing down on the japanese market. Just getting things underway here in europe. The stoxx 600 down. The ftse 100 down. 5 . The ibe exopening up down. 1 . We have some strength coming lu the your ee and the pound as that acts as a headwind. The dollar a little bit weaker the dax down by. 3 . Jpmorgan morgan asset management, Global Market strategyst. Very good to speak to you this morning. Let me ask you how you are managing to reconcile. Concern around the shortterm and the virus trajectory through the winter with longterm optimism. Optimism around the vaccine that maybe kicks in in q 2 or q 3 next year. How are you navigating through shortterm uncertainty . Look at the positioning of jpmorgan morgan. Long equities in the portfolio. Hanks to the news of several prominent vaccine providers offering light at the end of the tunnel by the end of next year. Hopefully we should get out of this health crisis. Clearly the news as recently been positive. We were discussing earlier this year the shape of the recovery. I guess for Central Banks, Christine Lagarde, it is clear that in europe in the u. S. , we may have to wait until the on the other hand 2021, maybe the start of 2022 to get back to the 2019 level. The Economic Impact is going slowly recover. For equity markets it is already the end of 2021 and 2022 and it is trying to osition. Anna perhaps getting ahead of ourselves on equity markets. On that subject, the underlying economy and the market sentiment, i talked to the c. E. O. Of maersk. He had some real insight into what is going on in the Global Shipping market. They see 2021, the market in that year equal to or slightly better than 2019. Does that tell us something useful about where the economy is heading . It is quite interesting. Since the start of crisis, we sought deglobalization. E have not seen it so far. It is surprising when we look t global g. D. P. Shrinking. Global export dropped by 13 . This year we will probably see a investigation more pronounced than 2009. It is quite interesting. Bodes well of exporting countries like china and hopefully in the coming months more and more for europe. Anna over the recent months we talked about how companies were going to have to make their supply chains much more resilient. That is a narrative that dropped away a little bit. Do you hear companies talking about that trying to shore themselves up in case we encounter Something Like this again in the future . Is that the kind of thing that will come through post pandemic . There was a lot reference to some part of the value chain in the u. S. And europe. It has not been widespread. The export figures speak for hemselves. Prominent shipping companies also tend to show the led say also that the trade agreement between among Asian Companies over last weekend also bode well for the globalization and for global trade generally speaking. That is quite interesting. Ina exports at the moment, facemasks and protection. As we enter the end of the year, i would expect export and chinese exports to remain in this environment. When you look at it it is actually another case. Anna we talked about a si set that are asia trade the asset for the asia trade deal. Perhaps we are close to a post brexit trade deal. Our reports suggesting early next week, it could be a possibility. On the market live blogs they have been asking today which u. K. Assets will benefit in this post brexit trade deal world . What would you suggest . What would you point to as u. K. Assets that are going to be in demand . The most obvious one, due the brexit uncertainty, maybe for equity markets, although we have some given the fact, obviously it would be a positive story for u. K. Assets due to a brexit solution but in the second stage come back to the sector of composition of the index, energy heavy and bank heavy. These are two things that may continue to struggle a bit in the coming months globally and the u. K. There would be some ind of relief. He u. K. Would likely follow. This brexit discount is huge on u. K. Equities when you look Going Forward, the evaluation discounts one of the that we see in the next 1015 years for u. K. We just released longterm assumption an one of the conclusion, the we have zraun that even though u. K. Assets and u. K. Equities have uncertainty discounts and the exposure to energy and financials, this evaluation discount is a huge tail wind. We have the highest return expectation for the next 1015 years due to the evaluation discount. Anna thank you very much. Global market strategist. We will talk more about the green agenda when we come back. A green Industrial Revolution. Well look at the u. K. s 12 billion pound plan to tackle Climate Change and talk about some of the Investment Opportunities that exist. This is bloomberg. There are original stimulus post covid was not sufficient. It really did not reach those people, either the employee or the Small Businesses that were n the greatest need. Anna not goth the places it is needed. Former secretary of state Hillary Clinton talking to bloombergs new Economy Forum about the first round of u. S. Fiscal stimulus. Lets talk about opportunities to invest in green. Boris johnson has announced a billion pound plan to boost green energy and Climate Change. It will create or support as any as 250,000 jobs. You have given a lot of thought to opportunities around the climate tradition, the energy transition. How do you integrate green bonds into your strategy . Vs. Looking at how they other bonds. Those financing or green transition or carbon transition because of a cheaper way to finance yourself. For investors, it is something which is attractive given the fact that we may see Going Forward more focus from Central Banks on this part of the market. The e. C. B. Already announced it was accepting it in the context of refans toing and we heard over the last couple of months many Central Banks announce they see Climate Change the easiest way, smoothest way for Central Banks to support it and green carbon transmission through their program. For investors, the hope that Central Banks which for this market, from a return perspective, in this context, it is a market this is going to grow massively given the fact that europe decided to leverage recovery and nd it will launch it in the coming weeks. Anna yes. Larry summers earlier this week was skeptical about what Central Banks can do in terms of Climate Change. There seems to be an area where Central Banks are very active. Let me ask you about Carbon Pricing. Dow you see them covering more global emissions . Becoming more expensive . Is that one way the market wakes up to Climate Change . That is one thing were looking at. Europe is obviously leading in this respect. It is one of the most delux globally in terms of coverage and pricing. To be successful, the strategy would need to be widespread globally and we need the likes over the u. S. , u. K. And japan and china to join. China has already announced it would merge several of its regional systems next year to form one of the biggest emission trading in the world. China, europe are joining forces. Obviously we need the u. S. To oin. Well see political equilibrium. If Congress Make it easy for the next president to push it through. While dealing with Climate Change, policy makers have the choice between the carrot and the stick. It is easy to deploy. We see it in europe. We see it in china. With announcements like today in the u. K. And an announcement in several countries to get Carbon Neutral by 20 50rks we need to be aware that Carbon Pricing whether you want it or not is going to be part of the equation. That is very important for tin vest for the investors. Carbon prices are going up. Anna indeed. How much are investors talking to you when it comes to equity market portfolios . How much are they talking about the Carbon Intensity of portfolios and how easy is it to establish . Obviously there is an issue of data quality. The requirement to disclose it is there. E see a massive improvement. We are monitoring. The carbon identity of a portfolio is one of the elements which can differentiate one vs. Another. It is more and more important. It is a way to show we have a good Risk Management in place. Next to other Risk Management. Carbon intensity has become one of the important metrix were looking at. In traditional portfolio as well as e. S. G. Portfolio. A very important theme for us at the moment. I will expect it to only gain traction Going Forward with more regular focus. Anna thank you very much. Jpmorgan asset management. He will continue his conversation on Bloomberg Radio with care lined me at 9 00 a. M. U. K. Time. Robin hood is looking into a potential i. P. O. Next year. The Trading Platform is asking banks to pitch for roles in the offering. It could happen as soon it is a First Quarter in 2021. It was valued around 11. 7 billion. No official comment yet. Unilever plans to boost sales to its plantbased meat and Dairy Products amid growing demands for healthier and nvironmentally friendly foods. It wants to harvest food waste aster than previously planned. Canadas impact financial is buying r. S. A. Insurance. It is teaming up with a danish ininsurer on the 7. 2 billion pound deal. It is keeping its u. K. And Canadian International operations. That is your Bloomberg Business flash. Coming up, Christine Lagarde doesnt think the vaccine news will change plans. This is bloomberg. We are looking at the uture. Education, healthcare, hopping. The physical and digital world. Anna that was the indian Prime Minister speaking with bloombergs new Economy Forum. Trading down. 8 on the stoxx 600. The ftse down. 4 despite some m a pushing despite some m a pushing the insurance sector higher. Autos very much in focus. Australia good, the biggest losing sector today. Lets take a look at the e. C. B. The news of a vaccine doesnt change the plans to add monetary stimulus according to Christine Lagarde speaking with bloomberg. She said they are focused on stopping the current economic lump from getting worse. Im not sure that it is going to be a major game changer for our forecast. Simply because what we had anticipated in our baseline was that at some stage in the first half of 2021 there would be a vaccine and that it would be rolled out in the course of 2021. It might be a little bit accelerates given the news that we are receiving from the various horizons, germany, u. S. But i dont think that it is going to be a game changer so to speak. I think that our forecast is being revisited almost as we speak and we will be releasing on december 10 so i dont want to anticipate what the outcome will be. We have seen before we had this great news about vaccines, we had some pretty negative news concerning the second wave that really came about certainly earlier than anything we had anticipated and together with that second wave we have also that list of containment measures and lockdown measures that have affected one country at the other in the euro area. We have a combination of those developments that have affected negatively and also has impacted on the outlook. Francine what kind of economy do you see for europe and the world because of the extra restrictions . Is it a double dip or something that is so uncertain at the moment because even if we get a vaccine, we dont know what shape it will take or how consumers will behave. I dont want to down play the very good news that the vaccines were but i think at the central bank we have to be mindful of the not just the short term and the news impact. We have to be mindful of the overall situation. In that vein, i think that the second wave that we saw presents risks. Anna that was the e. C. B. President Christine Lagarde speaking with bloombergs Francine Lacqua at the new Economy Forum. Goldman sachs preparing to trim its workforce for the second time in three months after ending its moratorium on firings during the pandemic. They are now pushing to improve efficiency and job cuts are part of that story. Joining us is dani burger prm how deep are these cuts going to go . Deep compared to the beginning of the year when the pandemic hit and golede goldman froze job cuts but they say they are not likely to be any more steep than the 400 we heard from goldman in september but executives apparently want to cut even more in steeper cuts the rest of the year so we might see some of the biggest job cuts yet from goldman sachs. They are also likely to continue to move people from financial hubs to places like dallas in order to save costs. Anna you hear from banks and other businesses during tough times. You get focused on the things you cant control and cost is one of them. What sort of costcutting pressure is goldman under . It is hard to say they are having that tough of a time while other banks are suffering because of the loanloss provisions they have been building. Goldman has done pretty well. They are on base to exceed 40 billion in annual revenue for the third time. Still they laid out a goal to cut 1 billion in expenses in january. They are looking at how to continue to meet that goal and one of the reasons they want to meet that goal is because of this chart here. They continue to trade under book value. Their stock continues to best top executives. Perhaps they can fix the disconnect between the revenue goldman is bringinging in and their stock price, anna . Anna thanks very much to dani burger for focus on the Banking Sector. Up next, dont own bonds, dont own cash. That conversation is coming up next. European equity markets just turning flat actually. Ftse 100 down. 3 . Elsewhere things looking flatter approaching back up towards the flat line. U. S. Futures making very modest gains early u. S. Time. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 30 minutes into your trading session and we have got European Equity markets very modestly to the downside. So, not much in it. We saw bigger losses earlier on. The ftse 100 still down 0. 3 . In fact, we have seen some moves in british land to the downside. That has been one of the big movers in the london market. The ftse mib in positive territory. U. S. Futures point to the upside. Lets get a bloomberg first word news update, all the big stories we are covering this morning at bloomberg. The senate has blocked the nomination of judy shelton to the Federal Reserve board. It is a setback for Mitch Mcconnell and President Trump. Senators intwo quarantine, republicans fell short of the votes needed. The senate can consider renomination what time is running out. The u. K. Announcing a 12 billion pound plan to boost Green Industries and tackle Climate Change. Boris johnson says the move will create or support as many as 250,000 jobs. Sales of new patch on diesel cars will be baneed from 2030 and the government will invest in electric vehicles and or noble energy. Three former lawmakers in hong kong have been arrested over a scuffle in the Legislative Council chamber that took place earlier this year. They have been detained for allegedly try to disrupt a vote banning criticism of the Chinese National anthem. The arrests are the latest blow to hong kongs Democracy Movement after the passage of a sweeping security law in june. Global news 24 hours a day, onair and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Currency and asset diversification should be driving investor portfolios right now, according to bridgewater Associates Founder and cochairman ray dalio. He spoke exclusively to bloomberg at the new economy form. Forum. Ray every individual, every company, every country, they are good how well they are. It depends on how much their income is relative to their expenses and how much their assets are relative to their liabilities. So, you can see radical differences in the financial consequences of that. Those, the proximity to who are printing and distributing money. Are you a recipient of that . For example, a lot of the third world is not a recipient of the and is not a good financial situation . And then, there is order, political and also social order. Could see it differentiated in the countries that are controlling the virus and behaving orderly and well together. So, you could see those differentiations reflected in the markets behavior and in the political and social conditions. Well, we know that markets are discounting mechanisms, ray. I dont need to tell you that Interest Rates are zero, but i will remind everybody that stocks keep rising to new records, not just in the u. S. But globally. P. E. Ratios have not been this high since the dotcom era, the dollar. Currencies have slumped to a 2. 5 year low. Do asset prices and evaluations make sense, given the economic fundamentals, some of which we have talked about here in this discussion . For that matter, the policy outlook and what we can expect from a Biden Administration . What do you think . Ray you know, when we look at Interest Rate markets, we look at the earnings yield. When we look at stocks, we look at p. E. s, they are basically yields. The capacity of Central Banks to print money and buy Financial Assets has essentially let the bond market to go to multiples that are somewhere between 100 times you know, put a dollar out and you will get your money back in 100 years, its because is ae nature of so it 100 time multiple. You have to compare stock multiples to bond multiples, so the capacity of Central Banks to put liquidity into the system and to have that liquidity go to produce high multiples is very real. It also changes the economics of borrowing. In other words, if you can find something that makes anything zero or you are going to mick money. That encourages make money. The financial flows that we are seeing, the market behavior is reflective of that. And my opinion, dont own bonds and dont own cash, because they are producing a lot of debt and producing a lot of money to fund it, so thats changing the nature of capital flows. It is also changing how those flows go to china in terms of the comparison to that market, particularly as it opens up. I think it is behaving sensibly, but dont use all multiples as reflections of limitations of whats expensive. Anna that was bridgewater Associates Founder and cochairman ray dalio speaking to Erik Schatzker at the new Economy Forum. British airways and American Airlines will begin to offer virus tests on some of their longhaul flights. This is just a trial. We will talk about the future of travel next. This is bloomberg. Inwe are quite confident travel recovery for asia. I think asia will be in the forefront of the recovery for travel, because quite a lot of the markets in asia are already in green. So, you are already seeing green shoots between malaysia and singapore. Thailand already opening back to chinese passengers coming into thailand in a very cadenced manner. And then, hong kong is taking about also establishing a travel bubble. Our business is back in volume almost two 2019 levels. It varies by market. Floridaook at chinas as an example my business is inter there now than it was 2019, because people feel like it is safe to get back on the road. Leisure travel is stronger than Business Travel but Business Travel in groups is also coming back. We have robust demand. If you look at our bookings second half of 2021 and beyond, thery are in the range that they would be precovid, and we dont have discounted prices and all that. While we impact millions of jobs and there are almost half a billion people per year that take holidays, only about 30 million can go on cruise ships. Unlike my colleagues on the full, we dont have vacancies. Anna some of the biggest names in the travel sector speaking about the future of the industry. Lets stick with the theme of travel. Joining us now is Celine Fornaro europeand of Industrial Equity research. Really good to speak to you this morning. We heard from voices about the issues that the sector faces right now. When you look at the way that businesses have adopted to working from home and Conference Software being used instead of travel, do you expect the size of the travel market to be structurally different on the others of the pandemic, or do you not . Celine good morning. Thank you for having me. Yes, i think the pandemic will have an impact. Thever, it will depend on one thing is Business Travel, and i will get back to that. If you look at Leisure Travel, i dont think very much we have changed in peoples behavior. If anything, we are likely to see a super cycle from that perspective from next summer onwards. Of course, you need a few things to happen, wider use of the vaccine, more quick testing. We are starting to see british airways, they announced yesterday. We really see that leisure traffic will come back travel will come back strongly. Business travel, i would say slightly different. Business travel always gets affected after a downturn, even after the Global Financial crisis, for british airways, Business Travel was down 30 . Right now structurally, we see Business Travel down 20 25 . The good news is on the super cycle potentially in the leisure market. Anna how quickly do you think the leisure market can come back . When we look at this news from b. A. And american about the pilot that they want to run on some longhaul flights, test a few days before you travel, test after. They want to see whether it can work, can drive up demand and the leisure sector. How much can that as we wait for the vaccinations to really kick in . Celine i think we have got many examples globally and some of ore were mentioning that. In asia, we have a lot of regions where Domestic Travel is actually back to precovid levels. We have pressure showing really good progress. And then we are starting to monitor very closely the u. S. Market, where there has been semiprogress on the domestic market. I think the initiatives on el starker ine europe. In singapore, they are rolling out a pcr test to be done in 1. 5 hours. The pcr test usually takes one or two days. At the airport from january onwards. This is important to convey confidence back to Business Travel but all shall leisure also Leisure Travel. We see strong progress on the narrowbody cycle, so mediumsized planes. Weve got the projection at the s, airbus and boeing going back to pre2019 levels so its levelsin 2023, actually a faster cycle than the longhaul travel. Anna how much can the cycle of her new of aircraft associated with greener and greener technologies, how much can that support any shortterm weakness in the industry . Because we are seeing Airlines Aircraft muchi more quickly perhap than they did in the past. How old are aircraft allowed to get these days . Celine good question and very topical, because its a link between an economic downturn on the green agenda. I think this is the opportunity in a way that covid gives to airlines and the industry in terms of tackling the green agenda on a shortterm basis. Retirements, the we basically expect some of the large white bodies have already bodiesnounced, wide have already been announced. These are more than 20 years old on average. We could see airplanes as young as 18 years old being grounded. You use to fly planes up until 25 years old before. Y, thiswidebod retirement factor is going to be more pronounced. Longhaul, this is where you have more emissions. U know, ad also be, yo factor for the green agenda. Anna how is the green agenda showing up in Consumer Behavior . When we look ahead to the summer , would we expect europeans to jump back on Leisure Travel with great enthusiasm despite concerns around climate . Crucially, how are attitudes evolving in asia, where fast growth of economies has led to faster growth of leisure traffic . Celine i would point to two surveys that have been done during covid and towards the latter part of the year. One was done at ubs, where we do not see more increased concerns from leisure passengers in terms of reducing or starting to covid the air travel for related reasons. It has not really changed. The European Commission ran an extended survey across hundreds of thousands of people in europe, and you see that the european people, population , whereasas come down before it was in the top three. Maybe that is a little bit on the back burner, a little bit while peopler, enjoy the holiday or shortterm hop here or there. I think the industry is really an activehe agenda on basis shortterm mediumterm basis. Shortterm mediumterm and longterm solutions have not been presented. Anna thank you so much for joining us. Celine fornaro, ubs head of european Industrial Equity research, thank you very much for her time this morning. Big topic of conversation, the aviation sector, how it copes and bounces back. Lets get a Bloomberg Business flash. Goldman sachs is planning a new round of job cuts. It is the second time in just three months after it held off during the early stages of the pandemic. In september, it started coffee cutting roughly 400 positions. This time, is not expected to be as many but executives anticipate more layoffs in the coming year. The biggest takeover of a u. K. Company this year. Canadas intact financial is buying rsa insurance. It is teaming up with a dennis danish insurer on the deal. Rsa will keep its u. K. , canadian, and international operations. Elon musk is now the third richest person in the world. Zuckerberged mark with a net worth of about 110 billion and over 80 billion of that is from this year alone. The value of tesla has skyrocketed and is continuing its rally after being named for inclusion in the s p 500. That is your Bloomberg Business flash. Lets take a look at some of the movers. Software rgate boosting guidance for the 2020 financial year. Noting deal also worth ersk launching a buyback, talking to me earlier about normalization. This is bloomberg. Our vision is to be the best open Financial Services platform on the market. We want to make sure the structural changes that we have made, i described before, which is the Global Digital bank and passport will help us drive greater and profitable, sustainable growth. So, no, we are not about to participate in any, lets say, Traditional Bank consolidation. We do not believe that is the right thing for us at the moment. Anna that was santander inecutive chairman ana bot speaking amid a boom of takeover activity in the spanish Banking Sector. Lets talk about the auto sector. Sales of new cars powered wholly by petrol and diesel will be banned in the u. K. From 2030. This is part of what Boris Johnson because a green Industrial Revolution to tackle Climate Change. The u. K. Government will invest in electric vehicles, bleewability renewa energy. Lets get more with my cause mike halls. Good to speak to you. He said this throws up immense challenges, although you welcome some of what the government is doing. Immense challenges. What is the biggest challenge for your sector . About 5 of moment, new car sales are Pure Electric battery or a handful of hydrogen. 100 ve to go from 5 to effectively in 10 years. Considering we have spent the last 100 years predominately making petrol and diesel engines, that shift is major. The big challenge will be making sure the consumer can take up these vehicles, which means making them affordable. It seems they need to be affordable and easy to charge, mike. In terms of affordability, last time i was in a car showroom, it seems the differential pricing was there to incentivize you to buy the old technology, to get that off their parking lot, rather than the new technology. How do we bring the price of the new stuff down . Mike invariably, new technology is always more expensive than the technology it replaces. We are an industry that is highvolume, small margins, so its all about scale. As i said, for about 5 of a new car sales being electric, thats got to increase significantly. Yes, we need to get the price of batteries down, and that will to a certain extent depend on supply and demand and demand will go up. Can we make sure we have access to Raw Materials . We are looking obviously to Government Support to assist this transition. It sends the right signal to customers that these are the types of vehicles, the types of technology we want customers to buy. You know, we have got to start on that matter, but its like everywhere else in the world, everybody is clamoring for these vehicles. Weve got to get as many as possible here into the u. K. Anna yes, to take plugin hybrids and electrics, such a tiny proportion, and to make them a bigger part of the sales mix, what do you need to see from governments . I suppose charging is very much at the heart of that conversation. Mike absolutely. All the conversations we have with drivers, customers, what. Hey are concerned about is availability of charging they are used to going into a petrol station, not even having to worry about, refuel and go another 400 miles. Batteries do not give you 400 miles so you need to have a slightly different mindset about the range of driving youre going to. Most people only do about 250 miles a week and maybe 25 miles a day. This is well within current range. What we need is a massive investment in infrastructure, especially in terms of public charging. Half of the dwellings in the u. K. Do not have their own dedicated parking space. If you do, throats every straightforward it is relatively straightforward. If you do not, where are you going to charge . Is that affordable . Invariably, we look at the cost of running these vehicles, and they are cheaper, but we need to make sure that they continue to be so and that the access to the charging infrastructure is there so you do not even have to think about it. Anna yes, and if youre going to be charging away from them, how quickly it be from the home, how quick will it be . In terms of the cost of manufacturing, what will it cost carmakers to phase out gasoline and diesel cars . Mike well, you are trying to build that into your business putting. As we said, planning. As we said, battery electric vehicles are more expensive to make. We have to get that down. We need to drive down the price of batteries. Essentially, a lot of the other running trains, its the same. Essentially, your replacing a petroldiesel engine with a battery. And electric motor there is still a basic cost that will not come down. Especiallyllenge is in the production and battery production in the u. K. Is all we need. Anna ok. Mike, thanks so much for joining us. The ceo of the society of Motor Manufacturers and traders, thank you for joining us. European equity markets to trade fairly flat this morning. This is bloomberg. Francine staying the course. Ecb president Christine Lagarde tells us there is good news. Since june. L fed chair jay powell because rising inflation rates a Downside Risk. And a nomination to the board was blocked in the senate, a setback for President Trumps