Happyorning everyone, monday. Pmis are coming in. Those numbers and go straight to the market and have a look at the positive news out there and how market traders are taking this. Falling. Area a touch worse than expected. Is a touchng pmi better than expected. Interesting to see the difference between services and manufacturing. What thek at the market wants to focus on, its after that vaccine says preventing 70 of cases. Global stocks are advancing. Focusing on the encouraging news from vaccines across the world. The astrazeneca one done with oxford is not as efficacious as the other one but you have to keep it at a much higher temperature which distribution could be that much easier. Not at all discouraging. Good morning. Over in the u. S. , president elect joe biden is aideing for his longtime as secretary of state. Thats according to several bloomberg sources. Former Hillary Clinton aide Jake Sullivan is expected to be National Security advisor. Could come ast soon as tomorrow. Richey soon act is committed to increased sunak seeks to shore up the economy from the effects of the pandemic. They are not ruling out a pay freeze for Public Sector workers. I can tell you its a very difficult picture, with the economy is experiencing significant stress. We have seen that in the labor market with peoples jobs. We know three quarters of a Million People have already lost their jobs with forecasted more to come. Record peacetime levels already and more stress to come. Africa deeper into junk territory after moodys lowers their credit rating. The is a coronavirus hits countrys finances. Coronavirus hits the countrys finances. 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. Im leighann gerrans, this is bloomberg. Thanks so much. Astrazenecas Covid Vaccine event 70 of covid cases according to the initial results. That falls short of the bar set by pfizer in moderna whos vaccines found to be 95 effective. Joining us is Bloomberg Intelligence emea. Im confused by the difference between 70 efficacy by this dosese when you get two but 90 when you get half a dose and then another dose. Is that how they will administer it . I dont think we should assume anything like that. Im surprised the company put the numbers in there. We will have to see what the statistical design of the trial was. I would caution a run with the 70 number. That 90 where it comes from was a much Smaller Group of patients. It doesnt make sense by half a dose should be more effective. Lots of questions without hurting with that. For now, we ignore that and stick with 70 . Francine what does it tell us about how this vaccine will be , will there be less people wanting to take this . Thats a problem. He turnedffered up at the doctor and said its your lucky day today will get a vaccine, its the astro vaccine, go home and come back in four weeks time. Chance. Y its a 70 thats a problem. Then youve got the issue on the other hand vaccines dont get , vaccinationscs do. So getting a 70 vaccine, which is much easier to transport and many more doses available, may actually be a useful thing while we are managing the pandemic. Who is going to get what . Are countries trying to negotiate or has that already been done with whats available and how soon can we get these . A lot of that is already negotiated. Frankly you are and have enough for any Single Company to deal with the problems of every single country. We look at who is dependent on the astro vaccine to get there pandemic under control. They need this vaccine to work better perhaps, and of course, many of the other countries not part of the developed nations rely a lot more on it. Francine joining us this morning to talk about the impact of the vaccines on the market is days gardner, it seems outcome of the market either focuses on a vaccine and the encouraging news or focus on the fact in the short term we can still see another case. Today they are focusing on the vaccine. I think the market has difficulties pricing and what to expect for 2021. Will increase its bets on procyclical industries. I remain optimistic we will get this vaccine out very broadly next year and see a massive effect on the economy. We could see more support coming from monetary authorities, but also on the fiscal side. Tightwe think is running conditions on the monetary side and we think china will move the needle on the others of the new year. That will give a bigger boost to asia which will have a positive impact on the world economy, especially europe. I am optimistic. When i look at the gold equity market, we are having a big cash flow yield, i think thats very attractive given whats offered in many other asset classes. What does that, mean for normalization of fiscal policy or Monetary Policy . Have the markets latched onto that . Could we see inflation at this point . Teacher this is the key peter this is the thing to think about as an investor. These lead and the lagging effects. He vaccine uses leading at the same time you are seeing businesses could go up over the next three to five months. Goldman has the lending programs in the u. S. And social transfers in the u. S. , how big they could be under a new biden administration, etc. Because of these lagging as the leading indicators, the vaccines actually normalize faster than expected, then you have made a very big dose of stimulus to the economy and we could get inflation. Its not something we expect until the second half of next year and potentially something for 2022. As we move closer to the new year, in particular we like emergingmarket equities because they center around south korea, china, taiwan and india. How do you protect yourself against possible inflation . I dont know if thats your base case for mid 2021. Believee personally youre not in a hurry to reject yourself against inflation for the next six months. A theme toefinitely build your portfolios around going forward. Historically speaking when weve looked at this from data, equities tend to do quite well unless you get it at sustained inflation of a 4 . Thats where it gets critical. Machine weflationary had in the 70s, the industries that are more prevailing are much different. Ist you have to look for companies you believe have that power against consumers depending on where they are in the in the supply chain. Companies that have a dominant market position. Where to hedge bets against inflation. You could also put on macro bets. We like inflation linked bonds as a balancing portfolio. A bit of gold but also long volatility will be quite critical in the years to come. Francine what do you do with china . There are concerns about possible defaults on a couple of bond stories out there. How do you play china . theres different ways of playing china. What we like about china is the health care, the consumer markets and the technology. Antitrust curves curbs on the companies we dont think will meaningfully affect innovation or the Technology Power in the short term. We prefer those two sectors. You should probably invest and doly in the asias security selection directly. You have to go for high quality in that market. Its a very speculative market. Theres a lot of companies lifted in china which dont have very high quality. You have to do that. We remain very positive on the chinese equity market both in terms of valuation, the Growth Outlook we think is much better and we think china will move on stimulus both on the fiscal side and on the monetary side into the new year. That will lift chinese equities against the rest of the world. More Foreign Investors waking up to the chinese market. It is getting more and more important. Peter, thanks so much. Coming up, we will have more on the european economy. Also a conversation with the french finance minister around 11 00 a. M. London time. This is bloomberg. Francine economics, finance, politics. Theres a lot going on in the markets. A lot to do about this vaccine moments ago. Whatever you need to know today. The efficacy of the vaccine was clearly explained, 70 is exactly what they are looking at and we are also being updated and briefed. He is saying the vaccine will have an impact around the world. This is because of the way you ship it and the distribution which is easier than some of their other vaccines. To theet straight bloomberg the Bloomberg Business flash. As francine just mentioned, the covid19 vaccine from Oxford University and astrazeneca prevents an average of 70 of covid cases, below the high bar set by pfizer and moderna. One of the dosing regimes offers 90 protection. Advantage of this vaccine is that it can be restored it it can be stored at refrigerator temperatures. Raise 5king to billion for its Second Private Equity Fund focused on the region. Thats more than double the size of its first. Regionrs are keen on the as it is recovering faster from coronavirus. Women and finance are much less likely to be promoted unless they actually ask for it. Thats according to a new study in australia that says over three quarters of men have been offered a promotion without asking, that compares to just 57 for women. The report also says male Fund Managers on average earn more than twice as much as women. That your Bloomberg Business flash. That is your Bloomberg Business flash. Francine lets focus on the u. K. In europe. Brexitncellor is hopeful is in a constructive place. Eu officials think a deal is now 95 agreed. How should investors position for 2021 . Bank. With peter from saxo how much time do you look at brexit and the implications . Peter i dont spend much time on the brexit. Our view is that it has become quite a circus over the years and in the end, probably five minutes to 12 they will get a deal done. Theink over time it will be common good thing for the u. K. And there will be more certainty and there will be a big jump in investments and we can all get along. I dont think its a big thing for me. When im looking ahead, im more is this rotation from growth and technology , it isinto value incredible. Which Growth Industries or themes do we want to apply and be exposed to in 2021 . Given the two things, what do you do with treasuries . You focus on equities, but this big rotation we saw will continue. News back to the vaccine and where do Interest Rates go from here, thats the key question. We have the initial response. Maybe we are getting a rotation into value stocks. We are more hesitant, i think we need a more firm break out of the 10year treasury yield above 1. 1 to be confident thats where we are going. We are still overweight and leaning towards growth and technology. We like that more than value stocks. Value stocks earn Interest Rate play. Of excess oilot inventories and i think theres a lot of concern about how much demand there will be in 2021. We are sticking with highGrowth Industries, including ecommerce and software, something to be exposed to. If you look at the Largest Companies in the world and the equity market, they have been highgrowth Interest Rates so we think its more interesting to look at what will become the biggest trends over the coming decade. Far more interesting than trying to pick the small in the new market. Trend, do we big return back to normal . How much scarring is there in the economy or do we just push ahead with technology . Will be ahink it combination of both. I dont think they exclude each other. I think we will get a normalization of the economy by mid next year. We will still have to see how many people get Flexible Work in the u. S. And europe after we normalize with the vaccine. There is still a lot of uncertainty around that. In terms of growth, that is what we really recommend. In terms of the value stocks, we are looking for that. Its a very big difference where we get a big shot up in Interest Rates or if its more gradual. If its gradual, Growth Stocks wont be hit much by Interest Rates. 2. 5 beforeo beyond its bad for Growth Stocks. Im not worried. Francine peter, thanks so much. With all the insight and analysis. Coming up, joe biden begins to assemble his cabinet. Even though donald trump yet to concede. This is bloomberg. The president ofs legal team has been a national embarrassment. I voted for him twice, but elections have consequences and we cannot continue to act as if something happened here that did not happen. You have an obligation to present the evidence. The evidence has not been presented and you must conclude as Tucker Carlsen even concluded the other night that if youre unwilling to come forward and present the evidence it must mean the evidence doesnt exist. That was trump ally and former new Jersey Governor Chris Christie talking about president trumps string of losses in court as he still fights the results of the general election. More republicans came out and said its time for trump to start the transition to president elect biden. We are getting more breaking news out of astrazeneca. The half dose results came as a surprise. The recordet straight about the efficacy of this. This is bloomberg. Bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get to the bloomberg first word news with leighann gerrans. The u. S. Is hoping to start vaccinations against covid19 in less than three weeks. They head of warp speed told cnn it plans to begin in mid december. By may, he wants 70 of americans immunized. Most people will need the shot before life can get back to normal. The u. K. Made may green light pfizers vaccine in less than a week according to the telegraph. The u. K. Will start vaccinations from december 1. Every adult in the country could get it by april. The paper says Health Officials are warning it is too early to commit to a timetable. A small but growing number of republicans are saying it is time for President Donald Trump to start the transition. The administration set up challenge to the results in pennsylvania is been rejected. The judge, known as a conservative republican, called it a frankensteins monster that lacks evidence. The president is appealing the decision. The country is urged not to lose sight of climate goals due to the coronavirus pandemic. There is hope u. S. President elect Euribor Joe Biden will join the accord. President trump slams the deal, saying it was economy killer. 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, im leighann gerrans. This is bloomberg. Francine . So much. Thank you we are getting data out of the for from a november deck november. Pmi, 65. 2. Better than the number economist were expecting. In the last halfhour, novembers flash pmi shows the country dropping into , coming in at 45. 1. Joining us today to talk about all these things is ilia merle is silvia merler. The big story for the e. U. Is, what is the workaround to make sure that they can still have a polandy fund without and hungary involve the echo sylvia and hunger involved . Invia it is more important light of the pmi data as you mentioned, in the eurozone today. Divergent diversions that we are fearing crisis becamed19 coache a reality. Doubts as to whether this will be successful because hungary and poland do not really need the money from the Recovery Fund that much. Significant net beneficiary from the e. U. Budget even regularly for the countries that really need a Recovery Fund, countries that will either be net contributors to the budget like italy camorra net beneficiaries, significantly less than European Countries like spain. There are a number of options tried without having to from under the e. U. Treaty, there would be an option to go even more nuclear, so to say, and take it out of the e. U. Budget completely and go for an intergovernmental separate treaty. They are both possible options. Ony are not optimal because thepolitical side federalization of expenditures that was beefed up in the full Recovery Fund discussion, but it can be done. So i would not be too worried about the negotiations there. Francine talk to me about the timeline. How important is it that it gets done quickly and how much of a hindrance would be if it doesnt get done fast. Theoretically, the budget that theyre proposing, there is a very specific part of the package that is not necessary for the European Union to go out in the market and issue the new package. This is only needed for the issuance. Theoretically you could actually wait, you dont need it right now to be able to approve the budget. It is just the fact that other countries will want the certainty that this will happen before committing to approving the rest of the budget, which is where hungarians will get the most money. Issue ora sequencing than a definite timeline issue. You could get the budget passed by the end of december, even without a decision in place. However, they are committed with during the budget, so this is basically a discussion with a parallel. In terms of timing, we already know that the first disbursement of the funds was not going to come before spring, 2021, so in itms of the disbursement does not change all that much, even if negotiations were to stretch out a little bit in the decision in the early part of 2021, it would not be, i think, dramatic, in the sense that it would change the problem is the uncertainty that this is going to create for countries that have been hit very hard, probably that are not getting much money from the e. U. Budget if the Recovery Fund is not approved. You make ofat do these vaccines . If we can get a certain percentage of the population vaccinated pretty quickly, is there a danger that the policy is not quite right because Central Banks will still do more . We heard Christine Lagarde already cautious about the vaccine. Bridgee see sudden red rampant inflation in 2021 . Silvia the right Monetary Policy with the ecb, lagarde, but also other governing council members, have been very cautious. Been written and published online, the idea that a vaccine will be there in 2021 is already factored in in the september forecast from the ecb, december,ally changes is taking more into account the effect of lockdowns for the second wave across europe, which is what we are seeing in pmi, especially france. The second rave moves in the direction of the economy service, so i think initially in 2021, considering ofo the logistical issues the vaccination, it is unlikely we will see rampant inflation calling up coming up. Francine do you worry longerterm that when the ecb steps out of some of these programs, yields will kind of go crazy, and that will put a lot of pressure on certain countries . Think the key question there, which we have not really answer yet is, how much of this stock is going to be structural come at how much will be cyclical and be reabsorbed . The big question there is, even if you look at china, which is a country that has the fastest and there is no foreseeable effect, the economy is sent back to this 95 economy that we keep hearing about. It is just like there is a portion of the economy that either you dont get back to unless you have the vaccine or it is definitely lost, meaning there is a structural destruction of the potential output and the potential output becomes lower. Unknown that we havent really understood well about this crisis. , it isre important likely going to be asymmetric across countries. So understanding what will happen in the longerterm i think really requires answering this question of whether there is going to be distraction of potential and how it will be distributed across country and whether it risks divergence and the heterogeneity that we actually have managed to score after the crisis by realigning the financial side of the country. Sylvia, thank you for joining us. Silvia merler there. Coming up, we will have plenty more on the yuan economy, and we will also talk coffee shortly. We will be speaking with andrea illy for announcement over the weekend about a partnership with private equity. This is bloomberg. Francine this is bloomberg surveillance. Lets get to the business flash with leighann gerrans. Leighann good morning. The covid19 vaccine from Oxford University and astrazeneca prevents an average of 70 of covid cases, below the high bar set i pfizer and moderna. By pfizer and moderna. 90 protection, the other is less effective. It can be stored at refrigerated temperature. 120dhabi is investing billion dollars in oil and natural gas over the next five years as it seeks to raise production capacity, even as opec is restricting its output. Last week it even privately floated the idea it could leave the cartel, potentially destabilizing oil markets. Onckstone is doubling down asia. Sources tell bloomberg is a decedent it is seeking to raise 5 billion for a private equity fund focused on the region, more than double the size of its first. Flows are starting to pick up and investors are keen on the region as it is recovering faster from coronavirus. And women in finance are much less likely to be promoted unless they actually ask for it, according to a new study in australia that says over three quarters of men have been offered a promotion without asking. That compares with just 57 of women. The report also says males managers earn more than twice as much as women. That is your Bloomberg Business flash francine . Is italyto cafe cafe is set to sell a minority stake. Its andrea lee has been growing its network. It will be taking on starbucks in its own territory. Illy. G me now is andrea as always, thank you for joining us. Most of us drink a lot more coffee but just differently at home. Is there an option to increase their stake down the line, or is it capped . But the termscap, of the deal are not finalized yet, also because the agreement is subject to authorizing profits, so the details are still unknown. What we can say is that we decided we deliberately decided to open our equity to hone as a preferred partner because roane allows us when we decided to give a mandate when year ago. Is in aame time, rhone capacity to profit allies our that it can facilitate the generation of change. How competitive is the process of selling a stake of illy . Did others want to take a stake . Beena the process has this alsoy covid, and required a reshuffling of business objectives because in the meantime the company suffer the closing of so many restaurants, cafes, offices, and airlines, transportation companies, where we used to have business. We very quickly refocused our business into the home channels thanks to four very large the second in the Digital Trust for consumer. The third in the new compatible capsule, an agreement with gte, the modernizing trade channel. This allows us now to have a solid Business Model in the home. Onsumption, in the channels and the plan is to invest in the largest Coffee Market in the world, which is the United States, thanked our new partner, rhone. Is that why you went for rhone in the end . What was that there vince between rhone and the other contenders . Was tailormade for us because it is advanced inh a cleaner experience minority investments in terms of the business, particularly the italian part of the business, and their strategy is transatlantic, so helping European Companies to distribute to the United States of america. So this is a smaller fund compared to the bigger giants, so also the change of command and the governance is much more accessible and it allows us to have a kind of personal approach with the founder. This is also very positive because it is a relationship similar to one you would have with the office. Would you consider an ipo if it is successful, if you are successful and growing in the u. S. With rhone . Andrea this is part of the details of the deal that we are going to disclose once the authorizing process is finished, it is to ber announced soon. Francine so you will have to come back on soon, or maybe give us a bit of a breaking news glimpse. What will you do with the proceeds what yo of what you doh the stake sale . Andrea it will be used to pay and the single shareholder, which is a group of illy one of the brothers decided to withdraw. Francine how much, going back to the Coffee Market and the fact that i am home, you are at home at the moment, and we are Drinking Coffee from our living rooms how does that make up andlost revenue from cafes the lockdown . Do you expect people to go back to coffee shops very quickly after the vaccine . Andrea i am optimistic. Whenever you have if you remember, when we had september nobody was flying anymore. But since then, the Airlines Business did explode. It is partly due to globalization and the new low cost, but this is because mainly there is more trust in the system. I expect that once the society a waye there will be to prevent contagion, there will a boom iny even outside home consumption. So i am optimistic, although more prudent, to take into consideration less consumption out of the home, things like smart working is more efficient, independently from pan day mia from the pandemic. So this will reshuffle in little bit the world of consumption and the economy. Is your biggest challenge, do you think, and growing in the u. S. . Is it brand recognition, is it something else, and how will you decide whether to ipo or not . Illy is in the United States for nearly 40 years. We are considered to be nearly american, we know the market very well. It is true that we have been capable of working in the niche of the Super Premium part of the business now, and now it is time to penetrate the market a little bit more. More in the premium segment, and this requires more sophisticated business approach, or, let me say, American Business approach. Continuingannot be to do business in the United States. We did ok in wales. There are too they are two different cultures. This is the challenge. Without compromises, without compromising our italian rules. So balancing these two cultures is the challenge. On the ipo, what will make you decide whether to ipo or not . Is aa well, the ipo , you comeod question back. It is a natural decision for a Family Business which ones to be a worldclass organization. Sooner or later, there will be it is, definitely, but , toyet the moment to decide know whether it will be in the mediumterm or in the longterm. So much forank you joining us today, andrea illy, the chairman of illy cafe, with an exclusive conversation. Theup, the dax dax 30 could be the dax 40. Today we look ahead to that. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. A lot of the focus is on what we have seen with the extra zeneca oxford vaccine. Here are some of the other things we are watching. Tomorrow, look out for the results of on wednesday, the on wednesday,also we get the latest minutes from the fed and an update on gdp. And francine the results are in. Astrazenecas Coronavirus Vaccine prevents on average 70 of cases, falling short of the high bar set by pfizer and moderna. Tougher tiers ahead. Boris johnson will outline the u. K. s winter strategy today. The measures are expected to include a big increase in Community Testing and more stringent rules postlockdown. And the new cabinet. Bloomberg learns that president elect joe biden has landed a longtime advisor, anthony blinken, as his secretary of state. Good morning and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. Tom, i know its thanksgiving week, so we look at retail sales and what the fed it is a shorter week for a lot of american traders. The focus in europe is firmly on the vaccines and the fact that we have pretty encouraging news over the last 10 days. First it started with moderna, then pfizer, and astrazeneca is not as efficient as the others but it doesnt need those freezing temperatus