Transcripts For BLOOMBERG Bloomberg Markets European Open 20240711

10ly plans on spending billion euros a month. Biden uses his first call with Boris Johnson to reaffirm his support for the good friday agreements. A lot to talk about this morning. Under one hour until the start of the European Equity trading session, futures look flat. Ftse futures, dax futures, a bit of a mix. Yesterday europe was up strongly 1. 5 or more on the major markets by the close. We come into today with a continuation of themes of the previous day, selling out on tech, getting back to value. Lets get to u. S. Futures, looking more buoyant and having to do with what we did not see in the u. S. Session yesterday. Things are not as strong across the board. Nasdaq down by 0. 3 . U. S. Futures looking have we seen that rotation playing out in terms of the tech versus value story . It is in play in asia. It is inch deceit a japanese equity market doing well. See the interesting to japanese equity market doing well. Part of this has to do with what is going on in tech, a crackdown on mono ballistic practice in practicemonopolistic in china. The u. S. Dollar weaker, the new Zealand Dollar paring back. No cash treasuries today, it is veterans day. Oil continues to make gains. We will keep an eye on the oil price. Alibaba has kicked off singles day, the worlds biggest shopping spree that will gauge the strength of chinas recovery. The strong sales are overshadowed by a tech selloff. Lets get to the markets with mark renfield who joins us from singapore. I am looking at incredible oneday moves on the tech names in china, down by singledigit percentages, sizable ones. What is the backstory . Investors did not see the extent of this coming . No, it is a surprise to some people, chinese authorities have decided they want to rein in major players. Ofcent and alibaba are two the Huge Companies operating in china, and there shares are to the downside today. Listings on the Hong Kong Market have helped to keep the hang seng under pe. Is down kong tech index more than 5 , which is remarkable. It is a decent day for the nasdaq. The underlying story is that some Major Companies are trying to get into the Banking Sector through the back door. They are lending to small and mediumsize companies and individuals without going through the usual procedures they need to. China figured they need to rein that in. Internetbased companies. That is part of the reason the ant ipo was stopped by chinese authorities. They are trying to bring full control of the Credit Sector back under the authorities in china. You are seeing a big selloff in tech stocks because of that. Anna shadow banking is something china has wrestled with for many years. This is a different flavor of shadow banking coming from a different place. Let me ask you the question of the day, i was looking at the oil price that is continuing to , Oil Prices Continue to pick up. We are not back to march levels . I am wondering what you are hearing when you ask this question today . Are saying of people until you see a more sustained Global Economic breakthrough, it will be tough for oil to get anywhere close to where was. Although asia is reasonably open, though travel you cannot travel where you like but the economies are doing fairly well. That is not the case in europe and the united states. While people are stuck at home under lockdowns, business restricted, none of these are favorable for oil. There is not a lot of agreement among the countries for how much they should be dumping. Demand is below the levels opec would like, and they are not united. The whole picture is not conducive to oil staying strong for long. There may be sporadic rallies, but it will be sometime before oil prices sustain prices we saw at the beginning of the year. Anna european stocks look flat, looking for momentum, perhaps that will not come from the big story, the agreement around the european budget. What are you looking for next in terms of adding momentum back into the markets . Mark it looks as though we are heading toward the central banks. Christine lagarde does speak today, and we had one of the spanish central banker speaking today saying the ecb needs to address deflation. That is another way of saying they would like more easing or bond buying, something along those lines. When we do not get enough in terms of fiscal policy or there are locked downs, we go down to the central bank. The ecb needs to come up with something. Maybe well get something today what they will do in december to help out. Also a spike in bond yields the ecb may not be keen to see that is caused by new zealand withholding rates today. There is uncertainty in the bond markets that will cause distress in europe. We will be looking toward Christine Lagarde to calm everything down and reassure them she will do what she needs to to keep everything on track. Anna thank you so much, Mark Cranfield joining us from singapore. 53 minutes until the start of the trading day. Laura joe biden uses his first News Conference as president elect to criticize Donald Trumps refusal to concede the election. Haydn says he is moving forward despite legal challenges from republicans and lack of cooperation from the white house. I think it is an embarrassment. And frankly the only thing how can i say this . Not help the will president s legacy. Laura italy may need to spend 10 billion euros a month and virus a. The lockdown measures are estimated to cost the government 3 of italys gdp if they last until march. The aid bill will be 6 billion euros a month. The u. K. Is planning sweeping powers to intervene in foreign takeovers it deems a threat to national security, that includes retroactive action on deals completed after the bills publication. That is the controversial instance, but the u. K. Is with similar roles with france, germany, and italy. 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. This is bloomberg. Rotation. Ext, risk on we will talk about the move out of defense of tech names. If you are waking up in london, this is the sky that will greet you on november 11. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Lets look at the European Equity markets. Futures fairly mixed for london, perhaps more momentum than a halfhour ago. Euro stocks futures to the upside. S p futures up 0. 6 . Nasdaq futures ulcer moving up. The Chinese Market under pressure because of heavy selling in big tech names. Rotationthe regular connected to the virus. The story out of china is about regulation. Lets get a Bloomberg Business flash. Laura italian Payments Company is nearing a deal to buy its rival. The companies have agreed on details of the all stock transition. It is valued at 7. 8 billion euros. Owner is asking u. S. Courts to intervene to prevent the Trump Administration forcing a sale of the video app. Bytedance is asking for more time before it faces a ban. It plans to sell 20 of the entity. In the gaming sector, epic has won the dismissal of two apple claims on its app fornite. D new userse downloading it. The main fight goes on. That is your Bloomberg Business flash. Investors have been rotating out of defense of tech names into shares more exposed to Economic Growth. A new dimension is china. ,e are joined by nick nelson managing director hed of global European Equity strategy, ubs. Very good to speak to you. You have been looking in detail at european sectors and their response to the vaccine news. It seems that gap between stocks sensitive to the vaccine and stocks that are not closed substantially. Does that mean we have done a lot of pricing in the vaccine . Is there anymore we could do on this . It, yes, when you look at the case where we have seen going back to the market low around marchapril, we saw a surge in the percentage gap between the stoxx most sensitive stocks most sensitive. After the move this week, that gap has closed from 30 Percentage Points to 10 Percentage Points. Thirdsk we are about two the way through pricing in a vaccine. The news this week was positive, but there are more stages to go, more to do in terms of how the vaccine is approved and transported and administered. We are not out of the woods yet, and there is more to go as the vaccine gets priced. We took a big step forward in terms of pricing the vaccine. In particular on the day the news broke, we saw value outperform growth by nine Percentage Points in europe, a massive move. Anna it suggests in the markets mind, two thirds of the vaccine is worried about efficacy. And assuming other things take care of itself, the distribution. Does this limit the ability of the market to move further positive on vaccine news . Nick naturally as we go through the next stages, the approval is the next big move. It is not just pfizer, we have the oxford process and several others in phase three trials. Other vaccines should be focused on, the progress. It is not actually getting the vaccine and administering it. Once there is a working, effective, safe vaccine, it could change the behavior of governments. It could make Large National lockdowns across the u. K. And parts of europe, those could be less likely, and we could have a more targeted vaccine to those who need it, and health care workers. Then allow the rest of the economy to operate more normally. In terms of Economic Growth and corporate profits could be a big game changer. Consumers may well behave slightly differently if they know there is a safe and available vaccine, it may make them less fearful and riskaverse. They may travel more and spend more and enjoy leisure and restaurants. Just having the vaccine, even if you are not vaccinated, it will be helpful. Anna that is fascinating psychology. Let me ask what you see in value stocks . A lot of rotation and growth into value and banks and the like, some of that we have seen. Prepandemic we were talking whether it was time to get into value. Where do we stand on that conversation now . Nick it has been going a long time, more than a decade if you go past to the Global Financial crisis. In 2016 we had the trumpflation trade. Were have been periods are have seen that, but generally it has been brief. The underperformance has been stunning. Year to date in europe value is underperforming growth by 55 . That a percent move we have seen this week is a fraction of the underperformance this year, let alone going back previously. In the shirt torn, given in investorsterm, given positioning, most investors are there ist with growth, a possibility for this to move further in the near term. In the longerterm, it will depend on how effective the vaccine is, and more importantly, do we generate inflation . Can we see Interest Rates rising, yield curves steepening . Im not sure we can see that yet. Anna thank you very much. Stay with us, nick nelson, managing director head of global European Equity strategy, ubs. We have been talking about the vaccine. The Pfizer Vaccine is cooling down on stories of its deepfreeze storage spooking analysts. We will dive into how chinese tech is responding to the latest regulatory push in beijing. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Is what we have in terms of futures, u. S. Futures point higher including nasdaq futures. Nasdaq in with the pack rather than going its own way, selling off as we have seen in the recent rally another stocks in response to vaccine news. Lets talk about tech. Nick nelson, managing director head of global European Equity strategy, ubs is still with us. Lets jump briefly to china. A lot of market moves we saw overnight are picking up on the global trends. There is another reason to sell tech in china having to do with the regulatory clampdown. How do you view that action by the Chinese Government . Part of aink it is broader process where big tech becomes superpowerful, operating in markets with duopolys and strong Pricing Power and market shares. Clearly at some point that will be an issue for regulators, whether chinese regulators, u. S. Regulars, or european regulators. The lens to look at it through, before the u. S. Elections we googleeing processes on in terms of market share and online advertising, and a u. S. Investigation into that. Big tech is a victim of its own success, with such large market shares. Regulation is may be struggling to keep up with advances we have seen in mega cap tech stocks. The threats of tax has been the case, talking about revenue companiesarge tech that make money across europe and the u. K. It does feel like there is a miss not just in china, but somewhere will get more regulation on large cap tech funds. Away from the chinese story, into the u. S. And european dynamic we have been covering, we see weakness in tech stocks now that futures look positive, which is a change. Where do you stand on tech given the work from home trend . Then the relatively small selloff, and where are we now as we pause for thought on this recent tech selloff . Nick we are affectively neutral when we look at tech across europe. Essentially it feels to us like it is a sector that has over the years done very well. As we move to a world where we see a gradual rise in Interest Rates, slightly higher discount rates, that might count against tech stock. We will have an opening of the economy and we may see more cyclical paths of the sectors, construction, rather than necessarily the tech sector. Is whereneutral stance we stand now, and bear in mind that may change with the interestrate backdrop. Anna if we are looking for further good news around vaccinations and the approval of vaccines or efficacy data on vaccine trials, where would you be looking . Which sector has not closed that gap from 30 to 10 as the average . Where are the sectors you would look to make further gains . Nick when you look statistically at the most sensitive, it is travel and leisure, commodities, the energy sector, the minors, the industrials and broader construction. All of those will move, that is what we have seen this week, a close relationship with that. Ones we feel have a positive consumersas we see recover, massive savings ratios in the europe and the u. K. , more confidence, we will see expenditure. The european area is producing evs transitioning from combustion actions to electric vehicles. And large tax breaks in germany around new electric vehicles for consumers. That may be is part of the market that will continue to do well. Anna thank you for your time, nick nelson, managing director head of global European Equity strategy, ubs. Up next, the euphoria around the withr vaccine, we discuss the ceo of airfinity. That is next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Toopean stock futures point the upside by 0. 1 percent. Thats get your morning call with dani burger. You have been looking at the calls coming in this morning. Dani it is all about the value rotation, the biggest debate on wall street. The question wall street analysts are debating is how longlasting is this value bounce . Goldman, barclays, they say this is a longterm rotation. Goldman points to the fact that the vaccine news fuels growth expectation, and when you get higher expectation, that can sustain a cyclical bounce. Our cleat says you have the biggest risks for the market gone, vaccine progress and the u. S. Election, and that will help the procyclical growth rotation. On the others of this we will see a shortterm tactical bounce. Those strategists include citi, ubs, they have a Common Thread in that we do not know what the future holds. There is so much macro uncertainty. It and Monetary Policy is not enough to sustain any value bounce. Bernstein says do not forget about growth. We have low yields that will be the case for some time and growth is attractive in that scenario. Anna thank you, dani burger on the value rotation. A lot of this is driven by the latest, the recent conversation driven by the latest news flow surrounding the vaccine. The covid crisis is inflicting lasting damage on the Global Economy and challenging decisionmakers to find new ways to track of elements. High frequency data is indispensable for finding turning points in a fastmoving event such as a covid vaccine. One data point we need to look at lets bring into the conversation, Rasmus Bech Hansen , ceo founder, airfinity. Good to speak to you. Following this weeks news, what is your time horizon for vaccination in various parts of the world . Rasmus first of all it is exciting news, there is good reason to be excited. There is good efficacy data pfizer released. If you look at it globally, this vaccine is targeted for the western world, it is a special vaccine that cannot be distributed globally. When you look at it from a global perspective, you have to say it is a vaccine for certain parts of the world but not a solution for the entire world. Anna you say that because of the temperature it needs to be kept at, and the logistics will be difficult . Rasmus yes, that is the main reason. It requires a low temperature for distribution which makes it difficult to distribute globally. If you look at the timeline, the other big issue is production. In the Pfizer Press Release that not many noticed, they reduced their expected Production Capacity from 100 million to 50 million by the end of the year. You saw spain saying we expect 20 million of those the numbers do not stack up. There will be a mismatch for a long time between the supply and the demand globally. To end the pandemic, we have to see similar progress for the other vaccines and other types of vaccines. The mrna, the other reason to be excited about it, it is a potential groundbreaking piece of medical science that could lead to other vaccinations against certain types of cancers. We might be on the verge of a medical breakthrough, and why you see value across the globe. Ofa in terms of the end this process, once you have worked out how to get the vaccine to where it needs to get to, what do we estimate will be the takeup of the vaccine . In london and europe people are use to vaccination programs, it is commonplace. But what takeup will we get globally or in western countries . Other bigat is the unknown. We have seen a decline in the trust of vaccines across the globe in the west and elsewhere, which is concerning. No matter how good the science is, if people do not want to take it, it does not work. It goes to how messy and difficult science is, we have seen all the uncertainties, and the world has seen that. And there has been political interference in the process. What is absolutely critical that we get is a single voice where big pharma, governments, leading scientists come together with a single voice and communicate the benefits and importance of vaccination. This efficacy data, it will be easier to tell that story. Anna what is the latest information about Global Distribution . When we get these various vaccines and you have made the point some are more suitable to some environments and markets than others say we get a mix, what is the latest assessment of how much that can be spread across the world . Also see a race to be first to get access, and book those vials. Of the that is one political questions we will see in the coming months. We do not know the fine print of these deals. We do not know who gets the vaccines first. Thet based on how big country is, how much they purchased, the Domestic Production of these things . Know. Lly just dont if you look at low and middleIncome Countries, from a timeline perspective, we do not expect readouts on those vaccines until q1. Pfizer vaccines work, you are beginning to see some easing in europe and the u. S. , and you have the low and middle Income Countries lagging behind. That will be a major geopolitical question going forward. Anna we have been looking at the mutation of the virus, it does seem to be happening as we cover the story around the mink farming in denmark and the impact of that. What is the time horizon for turning a vaccine that we know works to a new purpose suitable for vaccinating against a new mutation . Rasmus that is fairly feasible. I am less concerned about the mutations. It is not unusual to have different strains, and we are likely to see the vaccine will work with those. What i am more concerned about, if this is science by press release from pfizer, we do not know critical aspects, we dont know if it reduces mortality or protects against other diseases, we do not know durability of the vaccine. Whether it works with elderly people. Real critical components assessing, some of those are unknown. We have to wait for the full data. He have a small snippet of the data. There is reason to be excited, strong efficacy, 90 . We have to be cautious because there is a lot we still do not know. Anna stopping people from catching it is only part of the task. Thank you for your time, Rasmus Bech Hansen, ceo founder, airfinity. Lets get a bloomberg first word news update. Laura secretary of state pompeo says there will be a smooth transition to a second Trump Administration. The remark may have been in jest, but as to the president unsubstantiated claims of voter thed, he praised what secretary of state said. Joe bidens warning Boris Johnson not to put peace in Northern Ireland at risk in pursuit of brexit. He used his first call with the u. K. Leader to reaffirm his support for the good friday agreement. It is the latest sign biden will not be the backer of brexit that trump has been. Hong kong has removed four opposition leaders. China passed the measure for citizens to be patriots and not support independence. The remaining opposition members pledged to resign en masse. Italy will spend 10 billion euros a month in virus a. The lockdown measures are estimated to cost the government 3 of italys gdp if they last until march. Under softer roles, the aid bill would be at least 6 billion euros a month. U. K. Is planning sweeping powers to intervene in foreign takeovers it deems a threat to national security, including retroactive action on deals completed after the bills publication. It is a controversial decision, but the u. K. Says it is in mind with similar roles in france and germany. 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. This is bloomberg. Anna thank you very much. We are getting chinese response, china hopes the u. K. Will uphold investment. Coming up, one step closer, the eu agrees to a spending plan paving the way for 1. 8 trillion euro aid package. More on that next. This is bloomberg. We are headed in the wrong direction. Quarters i amtwo optimistic we will grow at strong rates, but a downside over the next two quarters is the resurgence getting so bad lockdowns because of overwhelmed Health Care Systems throughout the country. That is what we are watching for is a real risk. Anna that was the dallas fed president , Robert Kaplan speaking to bloomberg. We could hear Christine Lagarde later on. On European Equity markets right now, still 15 minutes into the start of the equity trading session, futures fairly flat. S p futures and nasdaq futures paring earlier gains in looking flat now. At the eu has agreed on a longterm spending plan for the bloc, and brings them closer to finalizing the budget and stimulus plan. It is a major step to make sure aid is available in the first half of 2021. Joining us now is ben give us the significance of the agreement we have seen here . Flagship is the eus policy for boosting the economy. They are in the process of ratifying it. It is a major step forward to release the 750 billion euros of aid in the first half of next year. Anna it takes us closer to the actual distribution of these funds. What is the chance it could face stumbling blocks . We have had agreements on rule of law, but not everybody is happy. Ben we need to see this ratified by the national parliaments, and the real sticking point, they are not happy about the conditions baked into this project. Law, hungary is under investigation into the situation of judicial independence. Re is a risk that hungary it seems unlikely because the hungarians are set to get billions of euros in grants, so it would be a perverse decision if they shot it down. They are making ambiguous noises, and that is what we will be watching the rest of the year. Anna we are getting a sense of the bill for fighting the coronavirus in various countries around europe. The latest data from italy, the latest spending plan, what do we hear about italy in the budget . Ben we heard a story last night that they are looking at maybe 4050,000,000,000 euros of additional spending 4050 billion euros of additional spending. The basic cost of the second lockdown will have another 3 of italian gdp. This is a country dependent on the European Central bank to keep their finances stable. Any significant borrowing from italy deepens the hole they need to climb out of, and opens questions how italy can remain viable as we move beyond the extraordinary measures that have been lamented in the crisis. Implemented in the crisis. You, ben sills. Laura alibaba kicked off the biggest shopping spree, its so cold singles day was off to a brisk start, topping 56 billion in its first hour. The previous record was 38 billion in 24 hours. Italian Payments Company is nearing a deal to buy its rival. The companies have agreed on most details, it would value it at 7. 8 billion euros. It is the second major purchase in a month after buying another competitor. Apple is launching three new macs, kicking off its transition away from intel. The processor was designed inhouse and the change will enable better battery life and faster graphics. Apple has been shipping his first processor in the ipad and iphone. A court owner is asking to intervene with the Trump Administration decision it planned to sell 20 of the new entity to oracle and walmart, but that agreement is in flux after joe biden won the president ial election. Anna minutes away from the market open. Next step, stocks to watch, including the Banking Sector. Bad loan provisions are kept low. We heard earlier from management at the bank, giving context to the guidance they will give to the markets. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Futures now looking mixed. Cac futures look to the upside. Plenty of Economic Data around europe. Lets look at what we will watch out for thursday. Thirdquarter gdp for the u. K. Jumppected to show a 50. 8 . We already hand jobs data for the u. K. , and on thursday we get a reading on german cpi and euro area industrial production. On friday we get french inflation data for october. Minutes away from the market open, lets focus on stocks we are watching. Dani burger has the breakdown. What do we know from abn amro. Beat, andetty sizable other numbers coming in at over 300 million euros, the estimate was 100 10 million euros. More costcutting and money set aside for loan losses. The cfo talked about the numbers they plan to give an update on in november. Targets in the middle of a pandemic, in an environment where there are many things we cannot control, we will be cautious about targets. I hope our investors will be realistic about what they expect at the end of the month. A little bit of a word of caution. Interesting to get that from management there. What about the tech sector, given we have seen it go its own way in the wake of the news out of pfizer, but today looks different. Dani the nasdaq 100 not doing as well as the rest of index futures. It will be an interesting push and pull. Is doing poorly in china, specific news regarding regulation. It will not have a direct effect on europe, but could give information on sentiment around technology. We will see if sentiment continues to sour, or if people will step in and buy the dip. We really learned the extent of the profit squeeze we will see from the auto supplier. Their ceo liquidity end of october. They say their Profit Margins will be 3 . To give you a reference point, before the pandemic they said they would see a margin of 5. 5 6 that is quite a downgrade from what we have seen the beginning of the year. The earnings hit from costs and the company trying to revamp what they are doing to put in a new planned i return to profits includes what may be 30,000 jobs restaffed or completely cut. Anna thank you dani burger with stocks we are watching. We will talk to wolfgang cfo. Fer, the continental interesting for a Company Supplying the auto industry. We will have the market open for you. Futures have been flat. Earlier on we had a move to the upside in european futures and u. S. Futures look buoyant. Nasdaq futures also look buoyant. Now we are back to where we were a couple of days ago, nasdaq futures underperforming, down 0. 2 , losing momentum and looking flat. We will be back to talk about value versus growth, and try to get longterm perspective, talking to j. P. Morgan. This is a report we want to talk to them about, we want to understand the 1015 year horizon on these markets. This is bloomberg. Anna a minute until the start of cash equities trading. Here are your headlines. Risk on rotation, a move out of and aive tech names chinese crackdown wipes almost 260 billion from alley bother and consent. Move a steprs closer to unlocking a 1. 8 trillion euro pandemic package. Considerders spending 10 euros a bump to business. The president elect uses his first call with Boris Johnson reaffirm his support for the good friday agreements. Good morning. 15 seconds until the start of the European Equity trading session. Hurricane futures have been deteriorating as we built up to the start of the european trading session. A lot of that reflects the u. S. U. S. Futures, looking more negative. Nasdaq futures, down. 2 . We see some real outperformance in the spanish market on days weve been getting it to risk assets. We will see whether that continues to be the case. The ibex, opening to the upside. 4 or so. The ftse 100, fairly flat so we are looking for the cac and dax to give us a sense of where we are. We saw a continuation yesterday of the Strong Performance around the spanish Banking Sector and other value plays. That was a bigger global story but in spain, it is picking up significant momentum. Inening imperativ paris up. 3 . We will keep an eye on those fluctuating u. S. Futures. Opening equity markets slightly higher, but in conjunction with a technology selloff that is incredible to witness in china as beijing cracks down on the internet industry. But speak to j. P. Morgan Asset Managements global multiasset strategist. Broadly, what we have seen this week and your stance on it. Stocks,lloff in tech growth names, a move into value some say is here to say. Others say dont make that call yet. What is your assessment of what weve seen this week. Thank you and good morning to everyone. I think it is very important to be watching this rotation. Weve been talking about it for see an and while we can the economyphase of supporting a rotation, we also see the secular story in technology being very much intact. Come out of our longterm Capital Market assumptions that look ahead for years and the 15 secular story for Technology Remains very much in place, but on a cyclical basis, there is an argument to support value and especially cyclical markets. We dont think about it as tech of theother parts sectorial composition. We think about complements and so we do like cyclical markets, but we are not necessarily expecting tech to be a loser in this scenario. Had, the news flow weve secular s a there is still a lot of open questions, so we are not expecting market volatility to dissipate on a linear basis. We still have concern on the virus, especially in the winter. Time andtion will take we dont think it will be a oneway process, especially given the uncertainty on the virus. It has surprised us on the in the private Market Access to technology and logistics and Green Technology. That has surprised us in its resilience coming out of the covid crisis in march, and that is an area where we expect positive performance alongside cyclical markets. Within our multiasset portfolios, we have cyclical exposure to europe and to markets like japan which are geared to the good cycle of the economy and the rebound there. That remains the positive view we have today. Anna we will keep an eye on the cyclicals. You mentioned tech and the secular trend to tech is still very much intact. Weve seen some heavy selling in Chinese Technology stocks overnight and this has to do with a clampdown by regulators in china. Thats very specific to china. Ingeste trying to businesses that are large and spread into Financial Services. There are chinas specifics there, but in terms of tech regulation, is regulatory stress a big issue . Also in the u. S. , given who is going to be president next year . His tech regulation going to be a big theme for you . Thushka it has been, especially riding up and the election. Is an important theor given valuations, but earning cycle weve had in technology has surprised us positively. Yes, weve had headwinds in the short term for technology coming from potential regulation. There is still uncertainty on regulation, but yeah, the secular theme, especially in emerging markets and especially in Green Technology, the secular theme of distinguishing Green Technology still remains a strong feature in our thinking. When you talk about the election impact on regulation, there are still open questions on how that will be implemented or even possibly if it will be, and tech stocks, they have rallied pretty strongly given the stayathome and they work from home environment, so we are seeing recalibration, but essentially, when we think about the longterm drivers for the sector, we are still expecting Strong Performance. Crucially, it is how you actually access the Strong Performance. We are looking more closely at real assets that are levered to the logistics component of technology, levered to Green Technology and environmental technology, and theyve actually been very resilient and held up pretty well despite regulation. Anna Thushka Maharaj, jpmorgan Asset Management global multiasset strategist. We will get her thoughts shortly. In gilt markets, the u. K. 30 year rises above 1 the First Time Since march, a pickup in gilt yields. A pickup in global yields in the wake of the vaccine announcement. In the wake of the election, to some extent and running into the election with the fiscal stimulus expectations in the u. S. , global reflation part of that story and add the u. K. Specifics. You can see the gentle move upwards in the 30 year yield in recent months. Theng up, planning for future. We will discuss jpmorgans longterm Capital Market. We really get into some of the details when they look ahead at 10 to 15 years. This is bloomberg. Anna welcome back to the European Market open. Tenant in 10 minutes into a positive session, up. 5 on the euro stock 600. Technology stocks under pressure, tying in with an unconvincing futures picture on the nasdaq. It has been fluctuating but now flat. Weve talked about technology with Thushka Maharaj of jpmorgan so lets get into a broader conversation. Jpmorgan, longterm capital assumptions report is in its 25th year. It takes a 10 to 15 years you on more asset classes. Lets get back to Thushka Maharaj, jpmorgan Asset Management multiasset strategist. With the longterm lens, what is the Global Growth story . How do we recover from the pandemic. What kind of assumptions do you make . Said, it is our 21st year and i am excited to talk about it. Ofis a crossplatform jpmorgan Asset Management and weve learned a great deal over the last three cycles in terms of how to build our longterm growth assumptions, and the way to use supplyside factors to build out longterm trend growth, labor growth, productivity, and capital investment. These are the longterm drivers for us and this year, we went through a long stress testing exercise as you rightly highlight coming out of the recession we experienced, the during unusual times. Our growth forecasts are largely unchanged, but that marks a lot of stress testing under the surface. It is too early for us to make any definitive conclusion on the longterm indication of the covid recession weve been through. A modestwe are seeing change is on the inflation front. Our growth forecast remains unchanged. We expect u. S. Growth above 1. 8 on a trend basis so that is largely unchanged. Debatece where there is and the place we are watching for changes is on the inflation front. We are now moving to a more coordinated world in terms of fiscal and Monetary Policy and that increases the risk premium, we should be attaching to higher inflation outcomes. We changed the base case picture for inflation but is more distribution of risk around that. It is an important topic for value rotation we were talking about earlier, to see a sustained move toward value, you need to see Inflation Expectations moving up and realized inflation also moving higher. Anna what do uss is the impact of what you call the fiscal decade . Have conviction we will end up in that place, because delivering that type of fiscal impulse in democratic environments has proved difficult in the past. Do you think we will see the fiscal decade . How substantial will it be . Thushka yeah, so as you rightly point out, politics matter in terms of fiscal spending, but what i would say is the last 10 years, we saw Monetary Policy remain this main support mechanism. Over the next 10 to 15 years, we expect more coordination across Monetary Policy. Already it is actually in europe, with the cohesion we pa europeann a basis for fiscal spending and austerityte to an act is lower now than it was 10 years ago. The u. S. Is slightly different in the sense that we need to watch what happens post the u. S. Election, but i think the thesis we are likely to live with higher indebtedness over the next 10 to 15 years, whether from the public side or the private side is a theme that runs across. We expect higher indebtedness and higher fiscal spending. What this means for markets anna we will have to leave it there for today, but congratulations on 25 years of the report. Thank you for bringing us your thoughts on the broader markets. Thushka maharaj, jpmorgan Asset Management global multiasset strategist. Ill get another chance to speak with her on Bloomberg Radio at 9 00 a. M. U. K. Time. I should tell you Credit Suisse s ceo is speaking to bloomberg as part of our bloomberg events. The future of finance. Weve heard a few lines from him saying banks have dealt well with the crisis. Lets listen in for a moment. Im sure there will be similar statistics in european, eu countries. Thats why there is pressure for the industry. Moreedit suisse, we have balanced business model. Banking,rivate business revenues, we are less butndent on that interest it is still very important for us and therefore, the whole industry has this challenge and that is one of the reasons, besides the fact that many countries in europe are over banked. That is why the consolidation will continue francine continue. Francine what part you want Credit Suisse to play in that . You mentioned over banking in europe. If we speak to each other in 10 years, how many banks will be left in europe . One, buthats a tough if you look at switzerland, we went from 2000 to 2020, we made to 250 banks. Under 10 banks have disappeared, that is six banks per year. I think it would rather accelerate across europe and also in switzerland. There will be continued consolidation and it is more domestic. I think transporter consolidation crossborder consolidation is more difficult to execute, but there will also be crossborder consolidation so i cannot give you an exact number, but i am convinced consolidation is needed and will happen. Francine is everything you dofrancine in managing the bank the francine lacqua, future of finance conversation with the ceo of Credit Suisse. Interesting conversation to keep an eye on and we will bring you headlines. Coming up on the program, the green debate. We discussed time at action and the transatlantic relationship under a biden presidency. This is bloomberg. Climate change is happening. This needs to be repeated over and over. 120 six governments have committed connect zero to net zero including three global giants. Must have the firepower of the financial sector. Has a Financial Community Critical Role in driving this transition. That includes Asset Managers like blackrock. The investment industry has the opportunity to further accelerate this phenomenon and demonstrate that we can be a catalyst for change. We are going to lay out for intendkeholders how we to outline with the paris accord. The economic challenges of the Climate Transition are phenomenal. Then i ask myself how much does it cost . A lot. But nothing that we cannot thebecause the cost cause is our survival. Christine woodard ending that selection of comments from policy makers and executives gathered for the Green Horizon summit to discuss, change. Across the atlantic, Climate Change on the agenda. Joe biden has vowed to spend trillions for the transition from fossil fuels. For more on what a biden presidency means for Climate Change and relationships on that front with europe, lets get to our next guest, the Bundestag Green Party member, former chair of the government green German Green Party and founder of the party on green foreign relations. How high are your expectations of the biden presidency when it comes to climate . Well, we lost four years in the u. S. Under the trump wasnistration that the u. S. Practically absent from the fight against Climate Change. Before that, eight years of george w. Bush era where the u. S. Was more or less absent in the fight against Climate Change, so we have to hurry up. There is high pressure, high expectation, europe has taken the lead in between, but we know we are not Strong Enough to do that alone. What are the areas of cooperation you would like to see the u. S. Administration join with europe . Hasow president elect biden said hell go back into the paris accord, but what else do you want to see . Most important step, to go back to the paris accords and the next step would be joint goals. If the u. S. Is taking the lead again on renewables, the , europeation, transport is joining together, we can make a difference. Imagine the u. S. Together with europe goes to china and says we might disagree on so many issues like human rights, hong kong, and other issues but on the fight against Climate Change, we want you to join that fight. That weyou together create a force on this planet of nations that believe there is Climate Change and we have to do something because we owe this to our children. Weve seen tension across the atlantic on a number of friends over the past four years and one has been around nordstr eam ii. Viceriticized it, President Biden did, what would you expect on this path of the European Energy mix . My well, the standpoint of party, the green party, is we want to be energy independent. That includes countries like russia that are not reliable partners. Tosias intentions destabilize the european union, to make us independent from him, we dont want that. This is not a Renewable Energy together with the u. S. , we agree, but the question is whether it is too late when we enter power, hopefully next year. Anna what about the sanctions the u. S. Has in place in relation to nordstream 2. Would you like to see movement . Cem lets face it. In one house or even a family with the Trump Administration. When biden and harris are the next administration, we are family again. Family of nations that believe in liberal democracy, the rule of and everything so sanctions should not be on the forefront. We should settle our problems and agree together jointly. Lets not forget, there are not that many partners in the world to believe in rule of law and democracy, so we should target others who think Climate Change is not existing or they should not do anything, we should target those who believe liberal democracy. The enemy is neither in the u. S. Or europe. The enemy is elsewhere. Do you see opportunity for European Business now given the pivot in policy in the u. S. . Not all companies are in favor of nordstream 2. Only those directly involved in it. There is a lot of money to earn so therefore, it is clear this is not about the european economy, but mr. Putins aspiration. We have good reasons we are against the project, but there is a position taken by parliament. The process is ongoing. We currently are not in the National Government so it is a process of democracy. , green partydemir member. Next, we will speak about results and outlook. This is bloomberg. To theelcome back European Market 30 minutes into the trading session in europe this wednesday. Lets look at where we are on the European Equity future by key sectors we have been tracking. Looks like a reversal of the last couple of days. The European Equity market is moving to the upside, but one of the key features of the value sector ande banking banks moving down so we had earnings out of the Banking Sector and perhaps that is weighing. Not by ay, up. 2 , so great deal. We dont have a great deal of ghting towards technology here. Nasdaq, up. 3 . Lets gave first word news update. First joe biden held his press conference as president elect to criticize Donald Trumps refusal to concede. He says he is moving forward regardless of legal challenges and a lack of cooperation from the white house. I think it is an embarrassment, frankly. How can i say this tactfully. Not help thell president legacy. Laura italy may need to spend as much as 10 billion euros aid. St virus the lockdown measures are estimated to cost the government about 3 of italys gdp if they last until mark. The bill would still be at least 6 billion euros a month. Hong kong has removed four opposition lawmakers due to new rules from beijing. China has passed a measure requiring politicians in the city to be patriots and not support independence. Members of the council promised to resign if any were disqualified. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Wright with your business flash. Next, a tech selloff in china. Beijings antitrust regulations and the impact on the internet industry. This is bloomberg. Anna welcome back to the European Market open, 35 minutes into recession. Banks retreat as Technology Makes modest gains this morning. Technology at the heart of things and what is happening in china overnight. Selloff ineading a chinese tech giants after beijings broadest attempt to rein in its most powerful firms as the Company Holds its annual sales event. Tom mckenzie spoke to alibabas vp. I think the sale performance is within our estimate. Growth,ent overall which links to consumer enthusiasm. The growth number comes from the into the asimov consumers so the overall growth is within estimates. I hope at the end of today, we will see a good sales number when we recap and share it with you. Tom how much engagement are we seeing this year with foreign brands . If youve added Something Like 2600 new foreign brands to your categories. How much demand is there . Liu chinese consumers are fond of foreign brands, those from or from tierass one or tear two cities have a big appetite for shopping. Overseas travel restrictions imposed by the pandemic, we could see higher enthusiasm for online consumption during this shopping festival. Tom when do we get back to prepandemic levels of retail sales in china . Perspective,babas we are not only looking at online sales, but paying attention to offline sales too. The recovery in offline sales has been very good and exceeded many expectations. Reachedhas not prepandemic levels, but has recovered well. Seennline sales, weve stronger growth this time around in both Customer Behavior and brand participation. I think putting everything together, offline sales will recover to a better level in one or two quarters, but if we only look at online sales, i believe it has already returned to normal. New china hasnt failed antimonopolistic regulations. Many see this as a key change in the way that the government approaches technology companies, and attempt to rein in power of Companies Like alibaba. What do you think the impact of these new rules will be . We just noted this new regulation over the past couple of days. I think we will lead to further study the draft. We will see later how we should accommodate the new regulation imposed by the government. I dont think this is a surprise. As you know come of the Chinese Market is in the process of constantly regulating. Tonese government would like regulate markets and engage in more Market Research in all sectors. Kepthinese government has improving its law and regulations. Weve been growing during this process. Scene changes in internet finance, which the ipo was canceled. There is concern this would restate restrict the ability to offer credit and Financial Transactions will be seen and have more oversight. What do you think the impact of that potentially is on your business in the ecommerce space . On the platform, weve been encouraging consumers to be rational with their purchases on the basis of meeting their needs. Anna that was alibaba vp liu bo speaking to bloombergs tom mckenzie. For more, alex webb joins us now. Great to speak with you. With the heavy selling of big thisnames in china in overnight session, why are alibaba and tech peers a target of beijings crackdown . Hearing this had something to do with their attempt to move into Financial Services . Ofx there had been a number things in the past few years, but the scale of these companies, much as they have in europe and the u. S. Has grown at an almost untrammeled pace. In china, there is some concern about the source of power that is conglomerated around the individuals who lead them. Arele like jack ma celebrities in the ron wright and that sits a little uneasily with the leadership in china. If you look toward this part of the world where once companies are a certain scale, it is hard to regulate them. They become as powerful in some instances as the regulators themselves, or they have a huge ability to push back against regulation so whether it is an effort to preempt some of that . They are huge already, but not the likes ofevenue google or facebook or amazon. Europe, aroundo this time yesterday, we got news the latest activity, legal activity against big tech coming through from europe. What is the latest on that particular story . We knew the European Commission was investigating the way amazon used its data in its marketplace. If you are a thirdparty seller or selling on amazon marketplace, amazon has the andity to look at that data see what is doing well and potentially think about introducing its own competing product. Commissioned, the unveiled a statement of objection, which means it wants to possibly impose a fine or behavioral remedies, but to add insult to injury, the commissioner in charge of this extended to the probe. That is a new probe into whether amazon favors its own products and gives them greater prominence and therefore makes it more likely consumers will buy amazon products other than thirdparty sellers. Anna alex webb, bloomberg tech opinion columnist. When we return, we will talk more about what is going on in the car sector. How much visibility do we have through the winter, even ahead of a vaccine . We will get into that conversation that. This is bloomberg. Anna welcome back to the European Market open. 45 minutes into a trading session that looks mixed, but in all to the upside. Euro stoxx 600 up, tech makes gains. Expect a profit margin of 3 this year. This may be a reflection of how much pressure earnings are under as it searches for a new ceo. Joining us is wolfgang schaefer. What kind of visibility do you givenor the winter months the uptick in the pandemic . Wolfgang well, we were encouraged enough to give guidance for 2020 so at least we see more visibility to be in a position to talk about what we see for the rest of the year. It is less volatile than we have seen in the Second Quarter and in the first quarter. There is volatility in our markets and our guidance for the below quarter, four to 6 prior years so ace still still a weaker quarter but we think the numbers shouldnt be too big but volatility is there and predictions are more difficult than a year ago. What will you wait for before taking a more optimistic stance . Weve had news about a vaccine, for example. What would you need to see to enable you to make more positive estimates for 2021 . Obviously we see consumer demand kicking in and demand for cars kicking in and this is what at the moment we dont see. All the information about a vaccine next year is quite early at the moment. To expect an effect already on what we can see from our customers for cars. Dont forget in addition that we are in a technological transformation area for the car industry, moving from combustion more to electrification, moving toward more autonomous driving cars. We have technology for that, but this has an effect on consumer buying behavior. These two trends, the pandemic and on the other side, trends in the Automotive Industry are there together. Fors true we dont expect the next years to come back to the highest level the Automotive Industry has seen in 2017. We think this will still take a while, some years before we finally reach that point again. Anna give scheduled an investor day next month. What are the key topics you will try to address during that investor day . It must be difficult without a new ceo, as well. The topics we will mainly onhe topics the Technology Change in automotives in the Automotive Industry and our contribution to that to show how well we are prepared to deliver highperformance computers in the car. Can our contribution and system deliveries can be in autonomous driving. This will be the focus out of the rubberding group, building the whole Group Strategy after we did not have an investor day for some years, it is something markets rightly expect from us and this is what we will discuss in this investor day, including midterm targets. Anna in terms of strategy, weve been reporting a bloomberg you are looking to sell part of your business, the turbocharger business. What is the status of those discussions and are you looking to sell other units . You know, we have a Transformation Program running, structuring to the future of our business and weve always said we are starting to announce the transformation c program. Theyolio adjustments where are necessary to make sure we are moving at that direction. He wants to concentrate on electrification and this includes the one or the other unit might not be in the long run right at continental. Continental might not be the right owner for that and do best divestitures might be coming. You can expect something in the next 12 months. Anna are you Contingency Planning around brexit . Buying Warehouse Space and adding to stockpiles, for example . Timeang we have efficient sufficient time to prepare for that. I think we are not so much affected, but we deliver tires. We are delivering tires and they are imported. We are provisioning for that. In the u. K. , we are partly producing even in the u. K. And yes, we are preparing for all these scenarios, which might happen at the end of this year. Anna do you think you are going to have to produce more in the u. K. If there is a no deal to supply those u. K. Producers . Wolfgang that is a decision that is focused on the specific product you are talking about. For some products, even if there would be less favorable trade agreements as we have them in place, it might still not make sense to do a small unit of a product that has economies of scale to produce and u. K. Might have to be imported. This will be true for most products we are selling in the u. K. It might make sense to move production into the u. K. I dont see much of that, though. Anna what kind of impact do you expect this Brexit Process to have on just in time manufacture . Doesere is no deal, where that leave the justintime manufacture process, of which you are apart because you supply parts to u. K. Manufacturing . Realang where it is a tough process, we are already having production in the u. K. To deliver to the carmaker just in time, basically on an hourly basis. Everything else can be managed as it is today, partly with supply chains which are not having the latest production point in the u. S. , but outside and we deliver from there with buffering between the u. K. Anna good to speak with you. Wolfgang schaefer, the continental cfo. Lets get a Bloomberg Business . Is nearing a deal to net. Ival the companies have agreed on most details. It would value net at 7. 8 billion euros. It may be their second major purchasing a month after buying another competitor in the gaming space. Epic won the dismissal of two of apples claims in access to fortnite on the app store. Epic circumnavigated apples payment system. Apple countersued, alleging theft. That has been thrown out, but the main fight goes on. Is battling back from the first part of the year, posting a stronger property and setting aside less money to cover bad loans. The dutch bank is on track to meet its costcutting targets but will miss its cost to income ratio and full return to equity. That is your Bloomberg Business flash. Anna joining us is Heather Burke from our markets live team. Interesting to see where banks and technology are going today. It appears a reversal of the trends. The ibex underperforming. Maybe that is part of the banking story as it had been such an out performer. We are definitely seeing some internal rotation in european stocks in the past half hour or so. Verye had health care, defensive, being one of the biggest performers. Best performers and youve seen banks andring and spanish stocks, so basically, a lot of the more value players we have seen really outperforming the past few days on vaccine news, investors seem to and lookingpausing at defensive factors. Anna looking at stocks today, and banks, it has people asking whether it really was a rotation into value we were experiencing this week. What are you hearing . Heather value stocks have been on a long underperformance versus growth. Boost,ek has been a investors looking for bargains for battered sectors. See a lotch as banks of headwind going forward. Theit loss position and slowdown from the pandemic. Investors might be taking pause and some of the rotation weve seen getting overheated. Anna what about sectors that have been going their own way this week . Everything seems to have been correlated at one level and we saw Oil Prices Get a boost from Risk Appetite earlier on this week and that seems to be continuing, even if some of the moves earlier this week are a little unwound, we see a continuation higher in oil prices. All back to march highs. Should we expect to get back there . What are you hearing on the markets live blog . Oil definitely has been a beneficiary this week. The biggest headwind that it needs to look at is pandemic demand. Is the economic slowdown that weve seen as a result of the pandemic, how much is going to weigh on Oil Prices Going forward . That is the biggest thing that might weigh on them going back to the march prices. Anna Heather Burke from our markets live team. Talking about oil prices and where we might see oil prices settle. 44. 58, up over 2 for the brand price. That is it for the European Market open. Surveillance is next and will take you through the markets this morning. Up. 5 , the ftse up. 3 , the cac and dax modestly positive. Interesting to see the ibex outperform. This is bloomberg. Francine joe biden says trump refusing to concede is an embarrassment, as the white house installs a transition, while secretary of state pompeo talks a second Trump Administration. Calling Boris Johnson to reaffirm his support for friday gains. And risk allocation a move out a tech picks up steam, while chinese crackdown on tech