Yields have continued to fall in italy. Stocks in europe. We will provide the details in a moment. The s p is up around. 5 . A stable day. We are seeing a rotation back towards the tech stocks. The top the stoxx 600 benefiting from the ecb largess, which were now expecting more of. The stoxx 600 up 1. 12 . Aboutyou are talking Christine Lagarde saying the ecb will be there for the second wave of the virus. The Central Banks primary tools will likely stay the same. Lagarde while all options are on the program, the have provenros their effectiveness in the current environment and can be dynamically adjusted to react to how the pandemic evolves. They are therefore likely to remain the main tools for adjusting our monetary policy. Alix joining us from frankfurt is paul gordon, who leads bloombergs western european Central Banks coverage. Bdp is getting the most out of that statement from Christine Lagarde. Yields down. What was your biggest take away about how she said she would support the economy . Single most important thing is the reliance on the pandemic emergency purchase program. The ecb has two purchase programs. The other one is the older asset purchase program. The pandemic one is more flexible and toward stressed economies. Christine lagarde has said that is one of our primary tools and that is why btp is benefiting from that. Guy is this a tacit acceptance we are now in the realm of monetary financing . The bank channel is not working. There is no demand from the private sector. In the public sector, this is the green light for italy and everybody else that wants to borrow as much money as they can at this point in time. The ecb will back it up. It is a similar story in london with the bank and the treasury. Is the ecb firmly on that road . Paul you would have to define monetary financing and obviously the Central Banks would tell you they disagree with that assertion. What they are saying is the ultimate goal is price stability. At the moment you need to stabilize the economy. The way you do that is pumping money into the system. You no excess liquidity has surged. It is not that the banks are not lending it. Bank lending in the eurozone is up strongly because banks have taken on loans to get them through their cash flow crunch through the pandemic. There is a lot of money floating around. What that does is push down borrowing costs, that allows governments to borrow heavily, as you are aware they have done, and spend that money and keep the economy afloat. A point. , up to the crunch comes when inflation starts to pick up and that is when Central Banks have hard decisions to take. Guy always appreciate your input. Bloombergs paul gordon joining us from frankfurt. Joining us to get her assessment of what is happening, geraldine sundstrom, pimco european portfolio manager. The ecb is pumping money into the system. Btps are benefiting. We are seeing peripheral stocks benefiting, and this is backed up by a huge rally over the last few days in european stocks as a result of more positive vaccine news. The combination of all this together, does it encourage you to think europe is a good place to put money to work . Geraldine the way i look at it is when we look at 2021, there are some good things to look forward to. With the vaccine, with support from the central bank, and more spending ahead of us. There is one commonality for this recovery and the cyclicality. More countries have written it on the wall. It is green and digital. You have to look at those companies which will be the enablers of this recovery. We can find a few in europe, but i would think a lot of these enablers are to be found in asia and the United States. Taking a bit of a broad view, it is not necessarily where the money is going to be spent. It is which companies are going to accrue the benefits. Guy alix typically if youre talking about esg or green investing, that is a full on europe play in terms of the amount of money they would give to companies and of element in infrastructure. You do not see it as that . Geraldine not entirely. A lot of this green revolution comes from Renewable Energy and electric vehicles and the system around it. A lot of these things are dominated by Asian Companies when it comes to solar panels or even battery. Where a lot of the value added is going to be made is not on the European Companies. If i generalize, there are exceptions to everything i can say. Guy in the short term, do you think that europe will be a covid . Iary of the end of i appreciate i am talking about the next few weeks but the next six months. As the vaccine starts to kick in. Europe looks like it has a lot of be up companies and economies. The spanish market in particular, i think the last 10 days it is up 20 in terms of the equity market. How do you play europe . Geraldine you have to make a differentiated. A differentiation. There were some sectors impaired by the lockdown and there is some normalization of Certain Companies and valuations. We cannot forget we are in an era of disruption and there are forces at play that were there before the pandemic that got accelerated by the pandemic and are likely to continue going forward. There is a normalization that needs to occur, but ultimately Secular Forces are still around. Because the recovery will be mostly green and digital, i would say government, even active participants in this disruption. I think you need to heed this on the compass and horizon and keep those secular themes on. I would think things that were disrupted before the pandemic are unlikely to see a miraculous recovery. They are likely to remain disruptive. They can be an adjustment in valuation to take into account some of the recovery. The capability and the endurance of producing profitability is what ultimately would make the difference in companies performance. If we look at the post covid and Cyclical Companies and cheaper valuation, i would think japan is better cyclically and sector oriented than many of the european markets. Alix what is interesting when you talk about post covid is you have Central Banks and fiscal policy, which is what we were talking about earlier with paul gordon. In that respect europe and the u. K. Seems to be ahead everywhere else. You will have fiscal stimulus working together with the ecb as a big backstop, in a way when you have firepower losing steam in japan. In the u. S. You do not have that coming through. Geraldine that is very true. I call it follow the money. Where the profit will accrue is not necessarily where the gdp growth is being created. Growth, butsee gdp the enablers of this recovery and where most of the value added is likely to accrue is not necessarily with European Companies. What advice would you give to european governments who are preparing to embark on massive means spending programs. How do they make sure that money does not leak out of europe . Think thereldine i are certain things being done. The large merkel has battery makers come build factories in europe to help the german auto industry. There are hopes that certain European Companies are getting on the bandwagon, but they have taken a lot of lag in terms of battery come in terms of semiconductor technology, and for renewables, the vast majority, close to 70 or 80 of solar panels are dominated by china. When it comes to the choice, what is going to happen is of course european workers will have to install the solar panel or Renewable Energy in europe, often or nots more made outside of your, and when it is made in europe, it is very often by Companies Whose headquarters are not in your. Alix an interesting counterintuitive view. Geraldine sundstrom of pimco, youll be sticking with us. We will have more on how to trade the rising virus cases. Alibaba single day, their sales billion yuan, double what they did in 2019. 2019 was 38 billion. Estimating between 70 billion and 80 billion in a single day. Unreal. This is bloomberg. Kailey lets check ritika lets check in on the bloomberg first word news. Do not expect any phone calls from Vladimir Putin to joe biden. A senior russian diplomat says the country has no plans to contact the president elect he says moscow was put off by an experience in 2016 when the Russian Ambassador to the u. S. Was criticized for reaching out to the Incoming Trump administration. Florida is bracing for a second hit from eta. The storm is now hurricane with top winds of 75 miles our the storms been in the gulf of mexico since crossing over south florida on sunday. Forecasters say the western part of the state could see up to four inches of rain as well as flash flooding. The brunt virus is roaring back into u. S. Cities the coronavirus is roaring back into u. S. Cities after a couple of months of the disease being a rural problem. Metropolitan areas are now averaging a daily Record Number of cases. That is meant rising cases in and around denver, detroit, and chicago. The virus is also mounting a comeback around boston and newark, new jersey. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Am ritika gupta this is bloomberg. Alix for more on the virus, optimism around the vaccine, joining us is Bloomberg Intelligence director of research. That was the story for 48 hours, and today the story is the u. S. Virus cap rising, you have icu beds filling up in paris. Where are we . Where is the vaccine . Where is the treatment . To say i am not surprised by the way they cases are shaping up. We did write something a couple of weeks ago with the fact we expected it to be a delayed response in terms of hospitalizations, and unfortunately this is exactly what happened. You are not going to be able to control this until people take the right measures, which , weyone has said repeatedly should be masking, social distancing, and trying to remove any opportunities for the virus to spread in places like gyms and restaurants. Guy we will leave it there. Thank you for the update. I want to bring back in our guest, geraldine sundstrom, pimco europe portfolio manager. Lets talk about this week and the journey we have been on. We came in with a big bang in the beginning of the week when we had the pfizer news on the efficacy of its vaccine which got a lot of people very excited. I feel there is a bias built in for a lot of people that they want this to be over. We now find ourselves in a situation where we need to refocus back on what is happening with the vaccine . Do you think we need to trade out some of the optimism we felt over the last few days . Do you think we need to reverse this tactical move towards value , or do you think markets should look through what is going to happen over the winter and love towards that vaccine . How do you play this . Had the pfizer news and we are awaiting the results of further companies with vaccines, some probably before year end. It would help to have more than one vaccine. If the market continues to get positive news on other vaccines with good efficacy, i think the market might be able to look moment, precisely because what Christine Lagarde did today is we are seeing more fiscal stimulus that is supported by central bank purchased. There are more announcements out of japan, and hopefully even in if ssion i think things if things were to get worse, it would probably be small. If we feel the light is at the end of the tunnel and for this year, meanwhile from governments and Central Banks, i would think the market would look through and there is no need for a big pullback from what we have seen. We have seen certain adjustments, certain rotation. Once markets can refocus on what the future brings, what to look for on the horizon, and which companies are the winner of this recovery. I think at the moment there is a bit of a big boom after the vaccine. There were a lot of Distressed Companies that got a breath of fresh air and oxygen. Now i think youre going to be back to fundamentals and looking at how things pan out for 2021. Alix if you take a look at yields in general, whether we btp orking at bunds or yields in the u. S. Training round 1 , have we seen the top . Yields in the u. S. Trading around 1 . Have we seen the top . Yields go i think if too high the fed will come back. They have a mandate, and certainly we are not out of the woods. I think the market is going to rely and hope the support of central bank is around. , for thosene can do of moremore worried inflation going into 2021 is to move out of the saved ration into inflation protected securities like the u. S. Treasury. We think the breakevens on the , the total is not very high, and it makes sense to move over a part of the nominal portfolios. O longer guy is that the most effective inflation hedge . Do you think commodities could work well. Im curious as to the options investors have. Geraldine there are other ones. Real yields will stay depressed precisely because Central Banks want to help this recovery. The debt burden on corporate Balance Sheet and government is very large and they want to average this inflation target they have consistently failed du. Real yields will remain negative for the foreseeable future. We do not think therell be a huge inflation surprised which has enabled them to remain in their goals which have been depressed of late and less stimulus coming out of the gridlock. Gold still probably has good days ahead. Alix at what point do we get the counterintuitive play, which is we are going to not get the huge amount of supply we were expecting from certain governments like the u. S. And you will have overseas buyers because we do see a rise in yields on the steeper curve . When does that start to play out or is that not going to happen . Geraldine we think there will still be need for quality income. Population aging and pensions needing fixed income assets. Not too much fear of people coming to buy that. If there is not enough demand, the Central Banks at least for certain amount of time will be taking on the difference. Rates will remain lower for longer. This has been our motto for a while there is no reason to think this will change, even though we have one vaccine and hopefully many more and in 2020 there are good things to look forward to. Alix thanks a lot. We appreciate it. Geraldine sundstrom of pimco. Thank you very much. This is bloomberg. Ritika time for the Bloomberg Business flash. A look at some of the biggest business stories. Jp morgan is no longer the world most systemically important accurate the Financial Stability board reduced jp morgan alongside citigroup and hsbc. It recommended a lower capital burden for the bank and several of its rivals. Deutsche bank says working remotely is a privilege you should have to pay for. Strategist are proposing a 5 tax for those who work from home on a regular basis. Not because of the government lockdown. Deutsche bank says that could raise 48 billion a year in the u. S. And could help support low income and essential workers. That is your Bloomberg Business flash. Alix thanks so much. This is a story everyone was trending around a couple of hours ago. The idea is if you work from home you do not have to pay for lunch or travel so your saving money. If your employer does not give you a desk, they have to pay for it, if they do then you have to pay for it and in essence a really interesting conversation about how inequality will play out after the pandemic. Guy i think that is the point of this. I do not think this will go anywhere, but i think it speaks to a wider problem, and that is how to has to figure out balance the scales a little bit when it comes to those that have not been affected by the pandemic, that have not suffered, that have not seen their income affected because they can simply work at home cured they are able to carry on. They can simply work at home. They can simply carry on. It is interesting what will happen with thanksgiving and christmas. There will be a real divide in terms of people who have not had their incomes affected just going out and spending money. Governments will have to figure that one out. We are going to take a brief break. As you can see, we are marking veterans day around the world. We saw a brief ceremony in london. As you can see, the president of the United States at Arlington Cemetery in washington. This is bloomberg. [drumming] alix you are watching President Trump at Arlington National cemetery in virginia participating in a wreathlaying ceremony on this veterans day. President elect joe biden is also honoring veterans day, stopping at the Vietnam Veterans memorial in pennsylvania as well. Guy europe wrapping up its day. We have seen ceremonies across europe to commemorate armistice day. Certainly in london a reduced ceremony at the not without its controversy. Iss talk about what happening in markets. We are near session peaks. These are the numbers we are looking at. The ftse 100 outperforming, up 1. 6 . The dax in germany a significant outperform her throughout this crisis, certainly of late. The dax up. 5 . Madrid up 1. 1 . Madrid over the last 10 days has done 20 , but it is an economy battered by coronavirus and any sign of a vaccine will certainly with itse in spain Tourism Industry flat on its back. Lets talk about what has happened more broadly. Some of the other Asset Classes weve been focusing on. A giveback in eurodollar. 1. 1764. Christine lagarde indicating she will continue to use the programs alongside her colleagues in the ecb, particularly the pepp program continuing to drive yields low