Restrictions on the u. K. Looks to repair some of the economic damage in todays Spending Review. Words ofs back, the president elect joe biden as he introduces his Foreign Policy team. Janet yellen faces a tricky start, as Steven Mnuchin puts funding beyond her reach. Good morning. 6 00 a. M. In london, 10 00 a. M. Across the emirates. A jampacked show for you, including emirates president tim clark. He spoke to manus cranny about a host of issues in the travel sector. Also, likely an appearance from manus himself. What a day it was and a 24 hours it was, as chris weston put it, a nirvana has dissented over the scended over the market. Dow jones topping 30,000 for the first time. S p 500 index, we do have closing at an alltime high. We are losing a bit of momentum. Flat across the asian market and flat across u. S. Equity futures. We are seeing a steepening of the yield curve, not at the highs we saw recently, but we are seeing it steepening. Jp morgan this morning also saying 10 year yields may hit 1. 3 by the end of next year. Oil on an absolute tear. 45 handle. Brent closing in on potentially 50 per barrel. Lets take a look deeper into the markets. Joining us now for more on that is dani burger. Good morning. Dani it is really crazy to think about. In 2017, i was at the dow jones, s p headquarters. Everybody was putting on their hats. Three years later, we are at 30,000. One of the most remarkable things about this rally is the volume picture, which is what i have up your. More than 60 million shares have traded hands in the past two days. The reason that is remarkable is it is the week of thanksgiving. Volume is usually lower. This time, it is 72 higher than it was last year. Perhaps a sense of conviction behind these trades. The other sense you get is that retail is unrelenting, dare i say perhaps even leaving the rally. Vanguardill lynch and confirmed that their brokerages online experienced outages. Not even the infrastructure can keep up with the demand. Retail has been trouncing not p, but doing better than the hedge fund picks and made equity benchmark. That by two dip attitude buy to dip attitude really paying off. As we see the dow cross over 30,000, continue to see new records, the dow will get comparisons to the dotcom bubble. It is chockfull of cyclicals. This time, the rally is much more broadbased, value driven. We are seeing under love shares pick up and meet that tech rally. It certainly is a completely different atmosphere than that bubble. Annmarie yes, certainly is. Our thanks to dani burger at our london hq. Joining us now is joseph little, global chief strategist at hsbc Global Asset Management. Thanks for joining us. You talk about this phase we are in and you call it a restoration economy phase. What is your biggest conviction in terms of allocating capital in this economic phase . Joseph hi, good morning to you. Inyou say, our main view terms of where we are in the cycle is that i think we are in a global restoration phase for the economy and business cycle. Thats a phase of healing, a phase of progress. In that environment, you do not want to be underweight on Growth Equity asset classes. Equities still make sense, even after the performance that we have seen. U. S. Equities up 60 since the march lows. At this point, being prorisk still in portfolios still makes a lot of sense to me for many of the reasons you alluded to. We have the vaccine news, which provides a clear sense of around the market of the Growth Scenario improving, diminishes some of those risks we faced. In that environment, it prompt to look at many lag are part laggard parts of the market in 2020 and look if they can be the leader in 2021. Annmarie thats the positive news. What are you seeing in terms of the biggest risk . Joseph that is really the question to wrestle with at this point in time. Because on one hand, as you said at the top of the ship, all data show, at the top of the all of the news about the vaccine is a big positive and thats part of what is behind the recent market action. But it is always important to skepticalit sort of of what is playing out in the market. I think the reality is that it is not plain sailing still. There are some questions and challenges around distribution with the vaccine. Vaccines will primarily be shared and distributed with the u. S. , u. K. , European Union and japan. There is relatively limited supply available to emerging markets. Its the next few vaccines that that would go to the emerging market. At the same time, youve got the virus still in the community, europe facing a doubledip recession, and the legacy of the crisis, abnormally high unemployment, stretched balance sheets. The question remains about whether or not policymakers are become a little complacent about some of the risks at a time when the real economy really does need continued and quite significant policy support from both Monetary Policy and fiscal policy makers. Annmarie thats what i have been thinking a lot about. It has been months for the United States to come around to another fiscal deal. Now, with strong vaccine momentum, doesnt that encourage those that do not want another fiscal deal, like the republicans, to actually double down on the narrative . How dangerous is that to the real economy . Joseph i think that is the danger and the risk. The policymakers, analysts confuse some of the very rapid bounceback in Economic Activity in the third quarter, some of the performance in markets linked to growth optimism around the vaccine with a sustainable recovery on its own footing. We are still at a point where the real economy, the Economic System depends heavily on fiscal support. Advanced economies in the u. S. And u. K. Today, we are really looking for continued signs of that policy support continued signs that the policy support is still going to be in place. The u. S. Is in a much better place than other parts of the developing economy. Youve got the macro momentum in there already in place. We saw the significant stimulus earlier in the year still toviding a sense of support household cash flows and the economy more broadly. For europe in particular, i think there is a real challenge. We need to continue to provide policy support. I think there is a danger that in an environment of better news around a vaccine, that creates complacency among policymakers. We are learning that european executives are losing confidence. We saw that in the report. What kind of hedges do you think are needed right now to protect yourself in this kind of environment . This kind of purgatory of time between now and when we actually see vaccines rolling out across the world . Joseph yes. I mean, it is getting harder and harder to find consistent and affordable hedges for our portfolios. In the event of weaker trends, weaker news flow, typically we would look to bonds as an asset class. It is likely that many government bonds are going to disappoint at this juncture. I think investors have got to widen the net, look at a broader range of asset classes. Asian asset classes, asian fixed income continues to perform very strongly. We are looking at a broader range of sort of new diversifying to try and provide resilience to portfolios against some of those downside risks. Its important to bear in mind the news flowhat and expectations around growth are moving, this reflation trade is becoming a big part of what the market is looking at and thinking about. Toohiding away, being cautious is clearly not the right trading strategy at this juncture. Its important to remain with a sort of prorisk strategy in our equity exposures and in our country allocation so we can participate if that reflation trade, that sort of catch up cyclical story continues to play out. Annmarie right. Joseph little from hsbc Global Asset Management is going to be staying with us this morning. One of the stories we have been looking at this mornings treasury secretary Steven Mnuchins plan to put 455 billion in unspent cares act funding into an account that has presumed successor, janet yellen, will soon need authorization from congress to actually use it. It will make for a tricky start for the former fed chair. Here are some of her comments from over the years. We need support for the economy, both for monetary and fiscal policy. Monetary policy has already done a huge amount. I strongly believe Central Banks need to be independent and need to do everything they can. I do see the sentiments and the push now going very much in the direction of deregulation. Reducingnk buffers see buffers reducing authorities. Appropriately designed, tax reform could have an effect on productivity. It depends on the details of what you do. We need Public Policy oriented toward making a big difference on climate change. A very efficient way to price carbon would be to go to the where energye well that creates Carbon Emissions enters the economy and to simply levy a tax. While the tariffs may make goods more competitive, the appreciation of the currency will offset that, so i regarded that as not the proper focus. But let me be clear, i do think the United States has real issues in terms of its trade relations with china. Annmarie former fed chair, soon to be if confirmed treasury secretary of the United States, janet yellen. Coming up, as the virus continues to rage across europe, leaders are grappling with how to keep their economies afloat. That is coming up next. This is bloomberg. From saturday morning, several changes will become reality. I know to what extent the weight has been long and how much this contributes to our daily lives. Our city centers, town centers. Therefore, all shops can reopen and home service can restart, but within a Strict Health protocol. Manus that was french president annmarie that was french president Emmanuel Macron announcing a gradual easing of lockdown measures. Merkelchancellor angela is proposing tightening the rules and extending the nations partial lockdown. Here in the United Kingdom, the rules will be relaxed over the christmas holiday. Joseph little from hsbc Global Asset Management is still with us. You hear it from the european leaders, the fact that they still need to get the virus under control. Very different story when you look at the stock market and dow topping 30,000. There is a debate into positioning. Fidelity sango hard on your. Frank templeton fidelity saying go hard in europe. Do you think markets are getting ahead of themselves . Mean, we felti that way along the course of this past fast recovery in the market. It has felt from time to time that the market is getting ahead of the trends in the economy, where we see the virus and abnormally high levels of unemployment. I think the reality is that a lot of what has been going on in the market has been linked to the policy support that we are seeing, the collapse in interest rates, the drop in the cost of capital has been a big support for markets. The question about what happens next and what region to be in is as much as anything going to be around how we see that pace of recovery coming through. If we do begin to see this sort of reflation trade take hold, that cyclical catch up story, growth expectations moving higher, thats going to favor the laggard parts of the market moving into 2021. There will be parts of the ,arket like europe, u. K. Indeed and emerging markets outside of asia that would do well in that scenario. Parts of the Economic System that benefit most from the release and distribution of the vaccine and lag guard markets can catch up laggard markets can catch up. Asia and the u. S. Are going to be the more defensive parts of the market to focus on. Annmarie you expect a doubledip recession and United Kingdom. You pose this question in your note, what could go right in the . T can go right in the u. K. What could go right in the u. K. . What can go right in the u. K. Right now . The United Kingdom is still a lockdown. Tomorrow, we are going to know which regions go in what tiers. What can go right and United Kingdom . In the United Kingdom . Joseph you are right. As we look ahead to 2021, there is a sort of cyclical catch up story that we can begin to think about. Itt is not a forecast, but is certainly a very clear scenario that is important for investors to be aware of. The developed economy and the have made significant advantage of preordering the main vaccine, the pfizer vaccine, the astrazeneca vaccine. That creates a possibility where the u. K. Could be one of the earlier parts of the Global Economy to achieve immunity, herd immunity within the population. 0hat, alongside of the 202 laggards, could become leaders in 2021 could give rise to a bit of a catch up story in terms of the performance of the u. K. Economy. We have to look through that nearterm doubledip in terms of the growth trend. As i mentioned, i think the key issue really is this worry around a policy error. Policymakers have to guard a gainst being too complacent. On the balance of risk, i do not think we are looking at a replay of the austerity policies in the 2010s. There is a case of being more optimistic annmarie joe, very briefly on the u. K. , rishi sunak will have the Spending Review today. Ft says it will come with 4. 3 billion pounds of new funding. Is that enough . Joseph well, the risk and the worry is a scenario where spending is reined in and deficit reduction is being planned ahead of the, not necessarily the next fiscal year, but over the next few years. I thk that is a positive step. I think the economy needs more support, needs more stimulus. Retrenching are moving back towards austerity would be the big mistake at this point in time. I think what is being suggested and indicated in the press is that is a positive step and exactly the kind of positive policy stimulus and support that the u. K. Economy needs to continue that path towards restoration and recovery in 2021. Your famous restoration phase, healing and progress. We appreciate your time. Global chief strategist at hsbc Global Asset Management. Coming up, moving closer. Carrie lam vows to continue strengthening ties with china, but what is the feeling on the u. S. And joe bidens Foreign Policy team . This is bloomberg. Annmarie good morning. This is bloomberg daybreak europe. Im Annmarie Hordern in london. Hong kong chief executive carrie lam vowing to strengthen continue strengthening ties with china. She spoke against the backdrop of a new wave of virus infections. Lets bring in our chief north asia correspondent, who is outside hong kongs legislative council. For viewers just waking up, give us a sense of these Key Takeaways from carrie lams speech this morning. Well, it was a long speech, for one. It was more than two hours, two hours and 17 minutes, and a lot of it deep into the weeds of local issues like recycling and illegal taxis. The International Audience would not necessarily care about that. The Key Takeaways for our audience would be the shortterm economic pain caused by the coronavirus, and her efforts to contain the recent fourth wave of outbreak. Comparatively, it is not a big outbreak, but it is 80 plus cases for the last two days running. To have an economic recovery in hong kong, you need the border with china open up, because that is such a key component of Economic Growth here. This is an economy that is expected to contract by more than 6 for the full year. Thats the first thing, keep the bars closed, the nightclubs, keep the virus contained, and then get the economy going up, open the border, have the travel bubble with singapore and we can move on. Second is a bigger, longer term strategy outlined one president xi jinping came to shenzhen across the border. That was greater integration of hong kong with mainland china, in particular the southern housence, the power of shenzhen. Even though there was so much angst on the streets in the last was focused on lesser integration with mainland china, less interference with the beijing. But carrie lam, now that the city is relatively calm following the law and agent, says we need to in june, says we need to move forward with a strategy that means greater integration with mainland china. Annmarie thanks to stephen engle. Such a beautiful backdrop in hong kong. Coming up, i odd or calling the iata calling the urgent reopening of borders supported by widespread testing. We speak to tim clark. Manus cranny back with us 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. Annmarie good morning. 6 30 a. M. In london. This is bloomberg daybreak europe and these are todays top stories. U. S. Futures flat this morning, but s ps alltime high yesterday and the dow crossing 30,000 for the first time feeling momentum. It is far from a quite thanksgiving. Risks remain. France will gradually lift the nations lockdown on saturday. Germany may impose tougher restrictions and that u. K. Looks to repair some of the economic damage in todays Spending Review. Americas back, those are the words of president elect joe biden as he introduces his policy team. Hisk for the fed, tough t yellen faces i want to take a look at where we trade this morning after that epic day we had in the equity markets yesterday. Asian markets losing momentum. We are now negative across msc asiapacific. Futures in