Indicating it. We are a few days in december, and clearly we get no respite for the holidays. There is no question about that. An extraordinary 46 minute video from the president last night, hugely commented on in washington. Attorney general barr, you wonder how he gets through the weekend with the president. I agree with you, this french issue is not a small matter. Memory of if in the that macron decided to rip a page out of the textbook from 30 years ago. Francine we will have a lot more on the dynamics of europe and france, but lets get straight to bloomberg first written with with rickets with or take a group with ritika gupta. Nancy pelosi and Chuck Schumer are backing a bipartisan stimulus plan. They see the proposal from house and Senate Lawmakers with a new round of negotiations. The plan calls for 908 billion dollars in spending, less than what democrats want, increased from the number being floated by Senate Majority leader mitch mcconnell. The u. S. Has had its deadliest day yet in the pandemic, according to john hopkins university. The number of fatalities went over 2700 for the first time. Hospitalizations also set a new market, going over 100,000. California posted a 38 surge in the last week of november. The u. S. Has restricted travel visas for millions of members of chinas communist party. The rules will allow Party Members and their families too for one month. Oneo get visas for month. Opec and its allies are making progress in talks on oil output cuts, increasing the chances that todays meeting can salvage a deal after furman negotiations earlier this week. One delegate says bloomberg discussions are focusing on a proposal for gradual out easing of output cuts over several months. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Tom thanks so much. We are going to get to the data check quickly to get to George Saravelos. Im going to leave foreignexchange alone for the moment. Nasdaq futures the nasdaq 100 shows tech resiliency with these record highs. The yield of higher earlier. I will leave it to that so we can get to george. Francine we will get to george in a second. There is some movement when it comes to eurodollar, eurosterling. Im not sure that is the right way around where i wanted it, but these are some of the things we are looking at, and it is really what expectations say failed talksnt of between the u. K. And the e. U. , what that means for eurosterling with the year to possibly above 0. 95, soon to follow. I look at European Assets come off the month highs because they are wondering what comes next and what will support them. Joining us to talk about all of this is George Saravelos, Deutsche Banks head of fx research. And one of the smartest but. Ometimes most controversial thank you for joining us. Out of the blue, the french briefing people in brussels saying they are ready to use a veto if Michel Barnier concedes too much for the u. K. What does that mean for eurosterling . George good morning morning, francine and tom. I think it ultimately depends on whether we can get a deal over the next few days, and it is worth remembering the french have been the most hawkish on brexit over the last couple of years. Remember the days when the lead to extensions, and the french were always threatening not to do so, when ultimately it happened. I think we need to take the visa threats i think we need to take these threats with a grain of salt. We do get there over the next few days. If we do, we can finally take that risk off the table as well. You are absolutely right, that is the critical thing in the markets over the next few days. Francine how much will europound, eurosterling appreciate in the event of a no deal . Is the no deal a 30 probability or 50 . George i would say it is even lower than 30 . We think it is closer to 10 , 20 . That is about what the market is currently pricing. I think if we do get precisely for that reason, because the risks are priced low, if we do get a failure of negotiations, u. S. Sterling could head toward parity. That would be a big move. The hardnot jump brexit, it would be the risk of unraveling the agreement. The u. K. Has the internal market bill that would be a break of international law. They would be sanctioning there would be sanctioning involved. Reaffirmed, you today an extraordinary set of calls. 1. 30 euro, 1. 50 sterling. These are extraordinary moves. I want to introduce a chart now, folks, a tradeweighted euro. We have broken out of the one standard deviation on euro. We dont have the chart up right now. We will get it up at some point. George, we are breaking out. When do merkel and lagarde scream . George it is an interesting question because in some sense i think that has already happened. If you remember back in september, the ecb very much because on fx, that is you had a big appreciation in the euro tradeweighted in june and july. The big difference this time is that the tradeweighted is not going up as sharply. This is a broad based dollar weakening move, and that has been our call over the last six months, that it is a lot more about broad based dollar weakness. As long as that is the case, the ecb will find it more difficult tom i dont mean to interrupt. I take your point on lagarde and i understand lagardes politics here. But your call has been extraordinary. You have been absolutely dead on on this. It is going to come down to nations, as it always does. Withdo you anticipate germany and france, at 1. 22, 1. 24, 1. 26 . George not much, to be honest. If you take a step back and look is,here purchasing parity it is at 1. 25. Historically europe has been in a range of 1. 20 1. 30 at the time. I think all that will happen over the next couple of years, an unwind of the excess Dollar Strength, the driver behind this Dollar Strength has been an Unprecedented Demand of uncertainty. If you think back to the left few years, we have had trade wars, pandemics, monetary tightening. And next year will be a very unusual year because it will be a very quiet year. Worldically when the tightens down, the dollar tends to weaken. Francine i understand this is a dollar story, but the trajectory with the euro must change depending on whether we get a Recovery Fund or not. After all, it changes everything for europe. Will a power ahead without hungary and will they power ahead without hungary and poland . Are they bluffing . How do you view that . George you are absolutely right, the Recovery Fund was an important development. Reallyentives are not aligned for hungary and poland to collapse. There is the extreme scenario thee there is possibility of setting up an Intergovernmental Agreement whereby poland and hungary are excluded, but because they would lose out huge amounts of funding, there is a 10 of gdp, it is unlikely that we end up with that scenario and that they ultimately backed down. If you think about next year, this Recovery Fund money can be very positive for europe, especially for Eastern Europe. The order of magnitude is two to three times as big as the Marshall Plan in terms of the money that can go there. We are very positive on the Eastern Region as well. Francine what does that mean for currencies in Eastern Europe . Is there a pair that looks attractive at the moment . , like i think currencies czechoslovakia, poland, hungary, there is a very good mix. The revenue protection policies that were in place will make it very easy for germany to switch back on, so to speak, after the crisis wants the vaccine rolled out. Once the vaccine is rolled out. If germany can do well, european currencies can do well, the unique Recovery Funds money, too, i think you will have substantial negotiation. Francine george, thank you so much. George saravelos of Deutsche Bank stays with us. We will talk more about emergingmarket currencies as well. Up later, Charles Kantor sceneryrger berman, portfolio manager. That is coming up, and this is bloomberg. Tom bloomberg surveillance. Good morning, everyone. A really interesting news flow today and we will get through that to that throughout the morning. A really interesting correlation up against record highs in equities, the nasdaq 100 now, green on the screen with s p futures at negative five in the early new york hours. The vix, 21. 12. With us is George Saravelos of Deutsche Bank. He has called for weak dollar, strong euro. 1. 50 on poundsterling, we are thrilled to have the outrageous one with us this morning. George, theres a point where this becomes stochastic that is french, folks, for pointy. It becomes pointy. Where there has to be a response. The ecb is an original invention. If we get there, what are the tools that lagarde will have available to force the dollar to reverse strength . Unfortunately, tom, i think they have run out of tools. The one big tool they had is negative rates. If you think back to the decline from 1. 40 down to 1. 10, that is when the ecb went negative while the rest of the world still had positive rates. Now everyone has joined them. The ecb is very close to the lower bound, and what they could try to do is cut rates a bit further. If they are 50, maybe they could take them to 50 or 60. If they do that, the euro could end up rallying. The market will realize it will not be very productive. Tom this is so important what we are listening to with mr. George saravelos, because he is clearly drinking the folkertslandau koolaid. A good friend talked about ken rogoff, courageous on this as well. How do you affect the magnitude you are speaking to have a greater negative Interest Rate and keep commercial banking in europe alive . Think might is 50, you had been able to do it. But if you do try and go deeper, the issues will become more and more important, in terms of negative implications. It is something the ecb has been increasingly recognized. That is precisely why they are not going to cut rates in the meeting over the next few weeks. So what is more likely is credit union measures, more aggressive all of these things, if they help european growth, they will help European Equity inflow and they will help the euro. I think the ecb could in some sense be ok with that as long as the european economy is doing well. I think next year, germany especially can boom. There may be more tolerant there there may be more tolerance of a high euro. Francine if they dont get the Recovery Fund money, is there a danger even if they get the Recovery Fund money, will they squander it . George i think that is important. It is an important question, and a part of why negotiations are very difficult this year in terms of the Recovery Funds was because the northern countries have asked for terms and conditions in terms of how they it may takess is longer to get the money, but i they are higher than under different circumstances. The other point i would like to make is, over the summer period, as the economy is reopened, as the staff is very dependent on tourism, the potential demand, a is veryund in tourism strong. My point here is that the cyclical recovery next year will be very, very strong, and i will do quite well with that as well. Francine when will investors start worrying about that . Do they start worrying about debt in europe, or does it hurt the u. S. First . George i think one simple word, inflation. We only worry about debt when inflation comes back. I have always liked to use the example of japan. Everyone has been worried about japanese debt for the last 30 years. You look at the debt to gdp ratio because of no inflation, what matters is the cost of servicing the debt and Interest Rates. I remain in the disinflationary camp. Even though growth will be strong here, the outlook for the whole is very deep. If you take a look at the u. S. Employment to population ratio, the broadest measure of the labor market, it is still worse than what it was at the peak of the 2008 financial crisis. So good growth but no inflation at no worries around debt. Output gaprstand the dynamic there, but your disinflation ideas fascinating given what i see her and fiveyear, fiveyear breakevens. It is too much for television and too much complexity this early in the morning. I am looking at an inflationary vector in the United States, and i am not there in europe yet, but even europe is giving me an elbow up to a higher guesstimate in inflation. When do you capitulate to an inflationary trend . George well, for me, what is most important is the actual underlying inflation data. The market drives Inflation Expectations higher because Global Growth is good. That is also helping our weaker dollar view, but in terms of sustained return of inflation to 2 , i would need to see it in the data. I would need to see the labor market, wages going up, and i do not see that next year. Tom s has been hugely valuable. Toward sarah bellows, my regards to your team. Has been hugely valuable. George saravelos, my regards to your team. In the next hour, jacob lew, the former treasury secretary of the United States, arguably the most important conversation that we have had with him. Jack lew, on stimulus and is urgency. This will be fascinating. Stay with us. Green and red on the screen. This is bloomberg. Good morning. Ritika this is bloomberg surveillance. Im ritika gupta with your Bloomberg Business flash. United Parcel Service is trying to keep from being overwhelmed i the holiday rush. Ups is temporarily restricting some packages it takes from big retailers such as nike, gap, and l. L. Bean. Company fears that large customers will ship on days when volume is that large numbers of customers will ship on days when volume is not heavy. Macquarrie has agreed to buy read financial for 1. 7 billion. The deal will propel macquarrie into the top 25 actively managed longterm openended mutual fund managers. One by one, the u. S. Dollar is dropping against its peers. This year the euro, canadian, and australian dollar, and the ,ein and the korean won have hit the lowest they have in two years. With the rollout of vaccines hitting the World Reserve currency. That is the latest Bloomberg Business flash. Tom thanks so much. On the data, the pandemic data is what matters today. The deaths in america back to april 29s record deaths in america. In the financial markets, red and green on the screen. The vix, 21. 11. It is all fractional. On dollar and thank you so much, George Saravelos, dxy indicated a weaker dollar fractionally. The euro 1. 20 one level. Francine will talk about the sterling and its different permutations, and on the pacific rim, stronger pacific rim currency. His is an under told story the j. P. Morgan adxy index moves out to new strength today. Francine . Francine there are two or three stories that im watching out for. Investors are focused on a democratic call for in most talks come if they will support talks today. Something that actually took the market by surprise, which is why we are seeing not only sterling change, but actual eurosterling, and cable as well. The other thing im watching out for is oil, oil pretty significant simply because of opecplus. We are expecting some things to be a bit more positive than two or three days ago. But still, something that concerns market. Up next, thomas gift. This is bloomberg. Tom bloomberg surveillance. Claims coming up at 8 30. Extremely important statistic before tomorrows jobs report. A lot of focus on the pandemic, on the markets. But also the politics. Yours gift, director said of u. S. Politics. The royal family completely stopped, not from watching the crown, but the federal government of the United States of america, which everybody i listen to it. It was very good as you were explaining away this craziness. Yesterday, professor gift, we had a 46 minute video from a lameduck president. It is why the reported general bar may not make it to the White House Christmas party. I guess it is an original lameduck, no question about it. What do you make of this lameduck of america . Im not sure how to tackle it. Situationmp is in a right now where seems like all the walls are closing in on him. Even attorney general bill barr who has been seen as such a staunch and loyal supporter of the president a couple of days ago said there is no evidence of widespread fraud or irregularities in the election. I think that was a big story. I think it has additional force coming from him. Tom tells your thoughts of the treatment of a pardon. I dont know the legal area going back to 1915, the nixon pardon and all, but how does the pardon debate spin this clumsy lameduck period . Thomas some sources say they expect a flurry of pardons, word used often. Names have been floated ranging from Rudy Giuliani to trumps children to even trump himself. One of the interesting aspects of this is the notion of the preemptive pardon, which has been discussed quite a bit. It is unusual. If it did happen, the question is how narrowly or broadly the language would be written. There are questions of it is too broad, prosecutors in the future might be able to claim it does not cover particular charges. But if it is too narrow, it might read like an acknowledgment of guilt. Either way, i think trump will try to frame some of these as saying he is avoiding a politically motivated witchhunt against him and those closest to him in the waning days of his administration. Francine professor, just the gop by that . If he does do some of these pardons commitment to consider questionable, just make the gop less likely to endorse him if he wants to run again . Thomas that is the big question. Ultimately, donald trump will have total purview on whether he wants to pardon although, there are some constitutional questions on whether he can pardon himself. Article two of the constitution grants abroad access in this area. But how Many Republican support him. Based on indications up to this point, it does not seem like a lot of republicans are willing to push back against the president simply because donald trump remain so popular within the gop. At best, i would expect some muted reactions from republicans. You might see some stand up like romney another moderates, but if the best predictor of future behavior is past behavior, i dont think we will see a lot of negative reactions from republicans. Francine how much more will President Trump hammer china weeks before joe biden takes over . Does it mean actually he will be joe biden will be boxed in per what he can do for the first couple of months in trade . Thomas it is certainly the case donald trump has not ratcheted the his tensions with china last few months of his administration. We saw the executive order he pushed through the bars investors in the United States from putting money into chinese tech firms with military links. I think in large part some of the challenges joe biden is going to inherit from the trump administration, including high tariffs, he will not deviate from substantially even if biden himself would not necessarily have imposed some of these policies, i think it will be difficult for him to deviate too much from the status quo. At the same time, i think he will try to reach out to other partners in europe, japan, etc. , to try to offer to make an effort to not introduce so much unpredictably and in market, which has been a huge problem with the tariffs. Tom professor, this goes back to controversial attorney generals. We understand any president can resend or turn around, reverse executive orders done by the predecessor. Ok, fine. How does an attorney general and doj action of the Previous Administration . Are thosele or changes embedded in the system . Thomas i think some are embedded in the system but i think will be a lot of cleaning house, at least at the political appointee level. Some of the challenges that are there now are going to continue to persist. I think joe bidens nomination for the next attorney general will face some big challenges. I think a lot is unknown on that question at the moment. Tom professor, thank you. Thomas gift come interesting politics really about all of the atlantic and worldwide. Without first word news in new york city, here is ritika gupta. Ritika glowed President Trump is expected to sign a bill that can lead to Chinese Companies getting kicked off american stock exchanges. Approved by congress, calls for u. S. Regulators to review the companys financial results. The chinese firms will have at least three years to comply. Baby President Trumps last chance to shape the fed. The senate is expected to confirm the nomination of Christopher Wallaces serve on the board. Germany, Angela Merkel says a partial locked in will be extended by three weeks. Bars, gyms, movie theaters will remain closed until january 10 and the government leaders will meet to reassess. It has not slowed the Coronavirus Spread in germany. France putting pressure on European Union negotiators not to make any more trade concessions to the u. K. The french are one and that ld be taught directed deal a brexit deal if they do not like the terms. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I had ritika gupta. This is bloomberg. Francine we will continue tracking the number of infected and the horrific number of deaths we are sitting in the u. S. Coming up, we speak to jason farley. That interview 6 30 a. M. In new york, 11 30 london. This is bloomberg. Francine this is bloomberg surveillance. I think tom has a great chart on oil. It is always a great time to talk about oil, especially when there has been a postponement of an open deal. Still no good to have a deal but the timing of the deal is very much in question still no guarantee of india, but the timing of agile is very much in question. , how year because he has been chasing his sources he has had about one hour of sleep. I was going to get you on surveillance, so thank you for coming on. Is that almost a done deal but we dont know the timing of when the tapering would come or are we not certain we can get a deal today . I think we will have a deal today. As you understand saudi arabia is reached, proposal that they will develop ministers at 2 00 for full opec conference. It has been delayed already. Nowunderstanding is opec working for proposal that it l be for gradual increase the details of how much and over what period need to be agreed on. That meeting will start later today. At least the outlines of the deal are emerging. That hasere is been elusive for the last three days. Francine has something changed since the u. S. Election . When you speak to a lot of these delegates and officials, are they worried that peak oil will come closer . Does that factor into their conversations or thoughts . the new administration, the Biden Administration is certainly not going to be as informed as opec politics and that may change. Particularly if it is a difficult meaning. We know it is unlikely the white house will be having a Conference Call with the king of saudi arabia trying to negotiate the agreement for them. What trump did earlier this year was extraordinary freddie was president to get absolutely handson involved and brokered an open deal. I dont think that will happen any longer. Tom on oil demand, you know it is the rate of change, dangerous word increasing oil demand. Is there evidence now and with the bet on an end up a pandemic, when do the process of just will demand increases . See will think we will demand increases and go back to the precovid levels probably the end of 2021, the beginning of 2022. I think very importantly, the youre on your increases but the middle of 2021. Jet fuel is going to be the one lagger that will take a bit longer. Tom this is important. We will rip up the script here. We all know aircraft is on their back. At the margin, what is increasing jet fuel do to price . Can getthe moment we jet fuel going up, they bring the whole package of oil demand together and that is when we break the recovery in air travel is what allows oil prices to move from the 50 range we are almost there. Moves prices to probably 60, 65. Are there any countries that are seriously thinking about leaving opec or is it just talk . Javier i dont think anyone is thinking about leaving opec tomorrow or today, but i think the uae has indicated very for theit sees problems uae to remain in opec under the current system. Can the uae stay in opec . I think they can, but it will only happen in the next probably couple of years. We see a reallocation of product within this group. That means the uae will want a higher production quarter that absolutely means so many sit take a cut. How that will fit within opec, it will be very complicated conversation. , thank you soer much, one of our opec stars. Markets, on bloomberg 5 00 p. M. In new york, the transactions with salesforce. This is bloomberg. this is your Bloomberg Business flash. Software maker snowflake lower ay i cluster salesforce appeal the largest in the u. S. This year. The Company Stock has more than doubled since its debut. Another blow to the worlds secondlargest money manager. And guard has lost a mandate to run at least 590 million in taiwan government pension and insurance assets. That is due to weak performance. Vanguard has been overhauling its strategy, pulled out of hong kong and japan to focus on individual investors. The head of the Largest Party in the European Parliament has a warning for poland and hungary. And fred weber says that you can cut out the two countries from the 908 million coronavirus rescue fund. Polident hungry object to try funding to upholding the rule of law. Cooks now is the moment to do it. Now is the moment to do it. If hungary and poland are not willing to do it, do it without them. Ritika that is your latest Bloomberg Business flash. Tom thank you. Long ago and far away, the editorinchief of Bloomberg News sat down with me on a cold winter day and said, tom, you are going to enjoy detroit. Francine lacqua was going to the mediterranean or some fancy caribbean island, and i was going to detroit. Thank you, matthew winkler, for that. He joins us on detroit, on the failure of big auto to the new technology of vehicles. What i love about your new site, it is about technology and engineering. Explain how electric vehicles right now are not just about tesla. Matthew thank you for that, tom. It is good to be with you and francine. Electric Car Companies right now suddenly are worth half of the total market capitalization of the world. 10 most valuable automakers. Theres a reason for that. It is because many managers have sidestepped this convergence of Government Policies and peoples purposes, and climate change, and they made an alternative energy come if you will, their biggest bet. That is what is unfolding right now. That makes a lot of sense. What is the existential threat of our time . Climate change. What is the choice to consumers can make at this moment . Drive zero emission vehicles. Neo in chinaesla, there are three of them, more than 50 of the market cap of the 10 largest automakers. Tom you gave me the honor of , ifiple multiple times Clay Christian 10 saw this, what is fascinating is how big auto has not adjusted. Why havent they adjusted . Matthew first of all, theyre waiting for the internal Combustion Engine and courtly performance. Those two things have deferred, delayed, and prevented big auto whether big auto is in detroit, your favorite city, or stood guard or tokyo, has matter. Big auto is hampered by the fact it is constantly chasing quarterly profit returns and at the same time it is tied to the internal Combustion Engine. So it takes longer for big auto to say and deliver electric vehicle, which is the vehicle of choice in our new century, the 21st century. Francine match, what are these electric Car Companies exactly . Are they Technology Companies or are they going to be valued as Battery Companies . What will they end up being . Matthew great question, francine. They are Technology Companies that happen to be providing automobiles. But they are fundamentally Technology Companies. You are absolutely right. It is about battery technology. It is about a lot of things mobile communication, so many things that had very little to do with the automobile made in two guard or detroit stood guard or detroit. That is why theyre different. Auto analysts generally have missed this. They missed why these are such valuable properties because as you said earlier, tom, they are really changing behavior. They are upstarts and their changing the way we live and work and everything else. That is what technology does. Francine how many of these companies will come from china . How many are in china at that moment that we dont know the name of that will become bigger and even better that tesla in 5, 10 years from now . Mythew that is way above pay grade to answer, francine, but we do know there are two that i mentioned earlier that are definitely in the running to become much Bigger Companies just because they have to vehicles that people want. By the way, the government of china, if you will, this made a commitment to be carbonneutral by 2060. What that means is all kind of incentives in the largest car market of the World Largest market in the world, really, are going the way of electric vehicles. That will benefit those two companies it clearly is benefiting tesla because tesla has made a big on china and it is paying off. Againut up the bar chart for tesla. Matt, the editorinchief of Bloomberg News once tommy dont. The lead. You buried the lead in your essay. You notice danny 3 of institutions dont have 93 of institutions dont have the weighted of tesla. What are they going to do about it . Matthew it is very much a function of all the conventions that go into investing these days. Since the s p 500 is the benchmark and until this month tesla was not in the s p 500, most many managers did not go near tesla. Now that tesla is in the s p 500 and because these Money Managers have to include in their portfolios the stocks in the benchmark, theyre going to be big investors in tesla. What does that mean . If you think tesla represents 1 of the index, which it probably does, that is 47 billion passively managed coming right into tesla from a benchmark. Tom unbelievable. Matt winkler, thank you. Matthew winkler with us this morning. He has been dead on an tesla, pushing against the tesla doubters for months and words with a nice summary on the state of electric vehicles, which are not just tesla. Francine, that was extraordinary. I will tell you, the highlight of my year prepandemic where the electric taxicabs of london. I thought they were extraordinary. My kids will only get in one of those. They are eight and six. Because at school they talk about nothing but renewables if it is a normal taxi that will be like, no, we will walk stop which is great for getting them into sports. London, it is interesting to see that charges not for taxis but private vehicles, and i think that has gone up by 70 the last three years. Tom she told me years ago, im going to write a book about instagram. All of us blown away. Sarah frier mckinsey ft book of the year. Its moving day. And while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. It only takes about a minute. Wait, a minute . But what have you been doing for the last two hours . Delegating . Oh, good one. Move your Xfinity Services without breaking a sweat. Now thats simple, easy, awesome. Xfinity makes moving easy. Go online to transfer your services in about a minute. Get started today. Tom this morning, stocks are resilient, near record highs. The growth surges against the dollar. Your threerating standard deviations. Scream . They pacific rim currencies advance as well. Trump advances against the attorney general. A mr. Bar make it to the White House Christmas party . In america, record pandemic deaths no worse than april. Good morning, bloomberg surveillance. Tom and francine lacqua. If iine, we just saw have a game of thrones something, eu diplomatic headlines about crossing redlines. The whole brexit thing, is the or can thete 12 31 can migrate into 2021 . Francine we used to talk about this over a glass of wine but