Priority. Pandemic under control is his top priority. Good morning, everyone. Welcome to bloomberg surveillance. I am Francine Lacqua here in london. A lot of the focus is on the number of infected with covid19. At bond growth, a lot going on, treasuries, for example, rising. Overheated equity markets, the deteriorating coronavirus situation in many countries. Oil demandtting its outlook, saying they will not rescue the market, and then i got a look, not very often, but coming out with figures that were not great but were better than expected, leading to burberry gaining one point half percent. 1. 5 . Now lets get to the bloomberg first word news in london with laura wright. Hey, laura. Laura good morning, francine. The recovery is being derailed by a rise in virus cases and a. Ew lockdown president elect joe biden is naming longtime aide dr. Vinjamuri ron claim as his chief of staff. His leading role during the Health Crisis of the Obama Administration leaving the white house in the 2014 ebola outbreak. Is stomping out dissent in hong kong, disqualifying lawmakers it deems are not loyal enough. Opposition politicians are residing in solidarity. President ssage to that no pressure will tolerate defiance in the former british colony. Iskeys president erdogan signaling a ceasefire with international investors. Supporting market friendly policies, a uturn from lower Interest Rates promoting inflation. Still, there are doubts about how long it will last. 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. I am laura wright. This is bloomberg. Francine . Francine laura, thank you so much. Now, it has been a huge week for news and markets. Joe biden became president elect on saturday, we had the vaccine trial, and now the global stock rally showing signs of stalling. That after a deteriorating situation and many economies around the world. Lueck, chiefartin investment strategist at black mark. Blackrock. Martin, thank you for joining us. When you look at the rotation we see within asset classes, what trends will we see from here until year end . Yeah, thanks, francine, thanks for having me. I think this is trying to price really we are looking at for the first time an ability to look through this pandemic, and now thequestion mark is second wave and may be a third wave that could still build stronger or is the policy response stronger. Revolutionn a policy paving the way for Many Companies into the post covid world, and markets are now trying to get their head around it. A first wave of optimism, especially risk markets, there is now a went of hesitation. The markets have, you know, it and priced very quickly, and now take a look into this new reality. We are probably six months to nine months away from normalization and the economy, so it is probably too early to tell, and there is a lot of uncertainty for markets. So this is why volatility will still stay high for the weeks to into and then we will go 2021 with more optimism, optimism but still some uncertainty. Francine martin, this is a question we are asking today how do vaccines affect dollar trajectory . Are you concerned we will be disappointed by how fast we can get the vaccine, for is it actually, you know, do we need to, i guess, relook at scenarios based on that . Dr. Lueck well, this is a very good question. The answer will lie in the fiscal response in the united is some extent and the further trajectory of the Global Recovery that we are seeing. We must not become too optimistic. We had a lot of optimism around a vshaped economy. Now that we are seeing also indicators, lead the economic recovery was somewhat shallower. I think a lot of the trajectory of the Exchange Rate was down to a relative gain, a comparison between the fiscal reaction in different parts of the world, mainly in europe and the united states. And as we are seeing so far, there is now, you know, lots of expectation regarding c. A. R. E. S. Two in the united states, fiscal easing, monetary easing in europe, so i think this will be more relevant for the trajectory of the Exchange Rate than the outlook for the vaccine. Generally speaking, i am a bit more cautious i think even with a vaccine, it will take longer for the economy to recover and process to normalize than markets are pricing in at this point in time. Yesterday,artin, there was a crunch in technology stocks. This have to do with beijing also cracking down on some of their big companies. Are we underestimating the stocks couldlogy get into, either to regulation in china . Dr. Lueck well, there is one thing we need to look at, and that is china really emerging or likely to emerge from this pandemic Something Like a hybrid. China is no longer an emerging economy. A hybridally become and is using this pandemic to kind of grow its influence. You can see the different path in the South China Sea when it comes to threats to taiwan, and that is one point. So we also see a kind of division in this Technology Space, one Technology Space building round china, the other went building around Technology Companies, mainly in the u. S. And a small part in europe. The second thing is regulation. The question as to whether the new administration, the new administration in the u. S. Can threaten the success of tech companies, we think there is a slightly higher chance now with a Biden Administration coming into power that more regulation will take place in the Technology Space. We think that Technology Companies, at least in the shortterm, will be leaving equity markets, so they are still in the most promising part of cross develop my Going Forward. But there might be a kind of rotation within the technology sector, going away from internetbased Business Models towards more, like, Business Models built on connectivity, built on, you know, growing the kind of hardware space in the technology sector. So that is the outlook for Technology Companies but with different threats from different sides of the world. Francine martin, when you look at, you know, how much hope there is that a Biden Administration goes back to something that looks a bit like multilateralism, a relationship with china and the u. S. Will get better, are we expecting too much from a president that may also not have the senate in hand . If you look at, the behavior of the Democratic Party when it came to regulation regarding trade with china and also china generally speaking, then there has been quite a lot of bipartisan support for stricter measures on china, so my sense is that there will be a change in the way that the u. S. Deals with china, you know, in terms of style and in terms of, lets say, a more civilized approach. There is a growing rivalry between the u. S. And china Going Forward in the Technology Space but i would say also in the strategic space, the military space, so i am not too optimistic with regards to a lot of improvement on the trade process when it comes to the relationship between the u. S. And china. There will be some improvement, though, on the front between u. S. And europe. So whether the Biden Administration will side with europe to confront china, so it will be more of a kind of bilateral world rather than a world that is built on multinational relationships. Francine i feel like we spent most of the summer talking about how europe could underperform, a lot of other regions in terms of economic growth, the opportunity for investors. Given we still do not have a resolution on brexit, given the resurgence of infections in europe, have you changed your view on europe and the u. K. . Yes, we have, indeed. We have actually become a bit more cautious, and we are now neutral on europe in the equity space, and you are absolutely right, and brexit is just one example of the many inconsistencies that we have here in europe. There are a lot of if you talk about the financing of the financing of the european union, financing of human rights issues in Eastern Europe, and many other things, migration, just to name a few. So i think there are too many inconsistencies right now to be optimistic about europe outperforming other regions in the world at this point. So i think being neutral at this point in time, even if we are looking into a cyclical recovery at some point in 2021, we should not be over optimistic regarding the performance of European Companies at this point. Francine martin, we are getting breaking news out of japan, according to nhk, saying japan signed a record of coronavirus. They have these new cases. Is there any part of the world and i know a strategist is not able rally just not a virologist, is there any sector of the world that is being spared, to say i want my money in . Dr. Lueck very, very rare. You were just mentioning these numbers. I think we have many countries wherenow in this period, numbers are really getting worse. If you look at latin america, for example, eight out of 15 companies with the highest debt rate are in latin america. We have very high numbers of rising infections in many of the larger economies. If you look at one country that is doing really well, that is china, and if you look at one region, that is a number of countries around china, some of the agent countries that are doing better than many some countries that are doing better than many other countries in europe. If you want to draw a conclusion and the Market Reaction so far, if you want to increase the share of your portfolio in asia specifically and china, and, aga this do not think after pandemic china will be treated as an emerging economy, i think it will be treated as a hybrid, probably growing its share in growing indices, rather than be invested in china anyway. Francine thank you so much, martin lueck, chief investment strategist for austria, germany, and Eastern Europe at blackrock. Speak to u. K. Will shadow chancellor anneliese dodds, and of course we will talk brexit. This is bloomberg. Exit. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Now, and the u. K. , that rebound has been derailed by an increase in virus cases and new restrictions. U. K. S slowed growth in the since april and leaves of the Recovery Training behind trailing behind. I am joined by u. K. Shadow chancellor anneliese dodds. Welcome. We have some figures. This is such a difficult and complicated way of handling this pandemic, and i know you have criticized the government in the past, but is there anything that they are doing well . David well chancellor dodds well, i would say we have many positives across our country and indeed in the private sector who have been striving so hard to get us through this crisis. I have to be honest and say that i did not feel that the Central Government, unfortunately, in the u. K. Has backed into really what they could do, and we have had a longrunning problem particularly in the u. K. With factories and dual services delivered by Public Health. Services would be very effective, you know, reaching large numbers of people, but unfortunately, the Central Government has not changed its approach into really quite recently. So, you know, there are positive things happening in the u. K. , but i do think our Central Government needs to take a different approach. Francine what worries you in terms of the approach being taken out . Waitingust biding time, for the vaccine that we heard about this week, or do you worry about Small Businesses . Do you worry about solo programs . Chancellor dodds well, my biggest worry that we have seen quite a lastminute approach to the decisionmaking from the u. K. Government, whether we are talking about Public Health challenges or indeed about economic ones. So we called on the chancellorss to provide a mediumterm perspective on support, for example. We called on them repeatedly. It was only announced after the lockdown has come into place in the u. K. And after really quite large numbers of jobs have been lost, so we need to have that longerterm perspective. I think it is important that we dont just bite our time and wait until the vaccine comes into play. We have to wait and make sure that vaccine can be delivered effectively, deliver the problems in the u. K. And learn from them in advance of the vaccine being presented, and also have the mediumterm plan for support for businesses, really have more of an idea of what the situation is going to be into the future. Francine how can you dig into certainties of what the idea looks like . Is it, you know, what would be useful for businesses right now, given the uncertainty that, frankly, you did not know what cases are going to do in the next 2, 3 months . Chancellor dodds well, you are right, we do not have certainty around the trajectory of this disease, and of course that can be impacted by many Public Health measures we have seen presented by different countries. But we can have certainty from government around what will happen, what support will be here, different restrictions. We have had quite a chaotic approach, unfortunately, around this. Er systemtwoti before we went into lockdown. Those tiers were not determined by a clear sector of criteria. There is a lot of confusion around business support that went into socalled tier 3, and there were high levels of restrictions. That led to huge uncertainties for businesses. It is bad enough as a Business Owner not knowing for whether from one day to the next you are going to have your business closed, but it is even worse when you dont know what kind of support will then be available for your business if you have to close, what support will be available to your employees. Where thea situation weekend before the lockdown was actually ends up i had one imposed, i had employer telling me whether he would have his staff at 80 or have to make his staff redundant. We cannot continue like that. Francine would you be in support of increasing the Capital Gains tax . Chancellor dodds well, that has been suggested in some circumstances, which is a technical body that operates in the u. K. I have to say that, personally, i do not think it is sensible to be talking about tax changes in the immediate period. I think we have to be focused in the u. K. Particularly to the light of these figures and what we saw earlier in the week. We have got to be focused on preserving economic recovery and a discussion of how we tax that economic recovery in the future, but it is actually our economy is shrinking. People are losing their jobs, businesses are not investing, and people are not spending, then, you know, it is a rather theoretical discussion, to be honest with you. Yes, in in the long term, lets look at these issues, but right now, we have got to be focused on preserving that economic activity. Francine anneliese dodds, thank you for joining us for it she is the u. K. Shadow chancellor. Coming up, we will speak with Goldman SachsRichard Gnodde. We will talk about risk, working from home, and of course Climate Change. This is bloomberg. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Lets start with the markets, because we had some i. A. Figu res. This is something we have seen quite a lot. Oil giving us an indication of what they are expecting to happen on that, perhaps because of the vaccine, and then the focus is come of course come on brent. Treasuries rising as investors signal an overheated market. Coming up, the intelligent central bank Italian Central Bank revises its guidance. This is bloomberg. E. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua here in london. Lets get straight to the bloomberg first word news. Here is laura wright. Deaths areal virus at record levels. There have now been more than 52 million coronavirus cases worldwide. New york is ordering bars, gyms toants, and close after 10 00 p. M. Modernas vaccine trial has hit a key goal, allowing preliminary analysis of its shot to begin. It can get data within days. It will decide whether the vaccine is effective, if it does not work, or if the trial should continue. That therapy is similar to pfizers, so experts expected to be effective. Opec and its allies are yeararing delaying next planned hike in oil output by 36 months. There was even discussion of cutting production even further, but the idea did not gain widespread support. Ministers are holding an Online Meeting from november 30. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. [audio drop] francine chief executive and former italian minister of economic development. Thank you for joining us. When you look at some of the concerns out there, it is high debt for italy, concerns about possible nonperforming loans. Productivityh, low and the threat of infections. How do you see the path forward for illimity for italy . Corrado it is the path that not only italy has to follow. Now, we have the money to change all the trends that you are mentioning. Business in the crisis will heavily depend on the way we foster a new phase of growth. Luckily enough, europe has made an historical path, and now we e an instrument, not only instrument to finance not only a solitary project solidarity project, but also a big investment plan. I expect europe to be more courageous in using the new instruments. We need a major plan of investment in research, innovation, infrastructure, energy transition, and investment that has to be managed at the european level. Investment that is selected, manage, and financed at the european level. Thats the new challenge we have in front of us. We can cope with the crisis we have in front of us. If we do not do that, the crisis will be very deep. Francine what does the emergency actually mean for a young Challenger Bank like illimity . Corrado in that respect, we can say that illimity is certainly thriving, because our already very large target markets are growing quickly, and they remain underserved. We have developed such strong iness model, both from an point of view, we have no legacy, so we have many advantages. The new way of stress credit that we expect for next year, we have illimity on the forefront. But the size of this wave will really depend on what we do. We can reduce this wave by doing the right things in terms of regulations, in terms of investment, in terms of trust building, and thats what we expect from the leaders, but that the european and national level. Francine if we go back to illimity, what are the challenges and where are the opportunities . Do you worry about bad debt . Do you worry about some of the small and Medium Sized Enterprises that you are trying to help out, that they will go out of business and failed . Fail . Corrado no, we focus our Business Model on smes with hidden potential, and there are very many of them. Not all industries are affected the same way from the crisis. Thats the first segment. Second, for sure, there are a number of companies, and this number is growing, companies that are having problems, but also have the energy, the skills to recover. Good at supporting these kind of companies. Thats also something very useful for the system. Then, we have a division that is very good at managing corporate and stress credit. Unfortunately for the country, the amount of these assets will grow. For a good its good company like ours that extracts value and helps deal with these kinds of situations. Francine banks, of course, are crucial to aid some of the transmission mechanism that the government has put in place. Have regulators done enough for banks to be able to make that you know, fulfill that very Important Role . Corrado i must say that the guarantee schemes that the government has triggered are very effective. Now,ok some time, but those mechanisms are wellfunctioning and they are certainly helping hundreds of thousands of smes, and also mediumsized companies, to go through the crisis. In that respect, i would say, ok, but its not enough. Now, we have to show the way the will use on how we the 300 billion we have on the table. We are talking about an amount of money that were never available to any government. We really have the possibility to redesign our country. We have the possibility to tackle issues that were long forgotten. Four reforms,st and education, justice, bureaucracy, and welfare that was waiting for an opportunity like this one. E, we have to really use the energy of the companies. There are a number of companies that can be helped in pushing this situation. Francine thank you so much for joining us. Corrado passera there, chief executive of illimity and former italian minister of economic about me. Coming up, we speak to the Goldman Sachs international chief executive, Richard Gnodde. That exclusive conversation inaugural the banks conference. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua here in london. Joe biden will take office next year, having made unprecedented commitments to tackle global warming. As well as a 15 year plan to create Carbon Neutral electricity, he has pledged the u. S. Will achieve net zero emissions by 2050. How does the u. S. And the rest of the world meet that challenge . That is something we would discuss at the conference taking place online this week. Joining us for an exclusive conversation on the back of that is Richard Gnodde, chief executive of Goldman Sachs international. Thank you so much for coming on. S,ts talk about carbonomic Climate Change, and esg. How much more products are your clients asking for . How much space can this how much more can this space actually grow . Richard i think we are in the beginning in terms of the development. First conference dedicated solely to this topic. Weve got Something Like 30 different, really big companies, ceos participating today, some of them are from the energy space, but also renewables, mobility companies, Consumer Products companies. Really near right across the economy. We have something in the order of 5000 participants broadly from the investing universe. A huge focus and huge interest in the topic. Bidens election obviously gives it further impetus. Francine we have had some pretty encouraging news in over the week. Its a vaccine. Its what weve seen, a commitment with the u. S. Going into Climate Change. Are we at a point where we are too optimistic that things will move on the vaccine front, that things will move on the Climate Change front . Richard well, lets start with Climate Change. Europe has obviously shown real leadership in this space, in the greendale and the green deal is another example of it. The u. K. Certainly doing its bit. We have seen china really commit to net zero. Biden has said what hes said. We will have to see how this plays out in the u. S. If biden if the blue wave had actually happened and he had had full control of both congress and the senate, it would have been an easier path for him. If he does not get the senate, he will need to do this on a cross party basis. There is a lot that the president can do without congress, you know, through regulation, through appointments of personnel. Clearly, the u. S. Is moving in that direction. But i think the important point is that the world is obviously going to be able to move more quickly if it has good policy support and Good Government support. I do not think the world is going to wait for that. You see society broadly supporting the move in this direction. You see capital flowing towards esg friendly products. We would argue that the cost of capital for an environmentally friendly project is lower than the cost of capital for a carbon heavy project. You are seeing capital moving in that direction. Investors broadly are demanding o thats the way that the economy is going. I think we are at the beginning of this journey. I think there is a huge opportunity, both for investment spending, and this will not have to say on government balance sheets. This can come largely from the private sector. That will lead to, we believe, mean for job creation over the next period of time. You think about the infrastructure spend that is required. I think its a terrific opportunity and it will help drive the recovery from what we are all going through right now. R from a lot of policymakers, the need for bigger and better carbon markets, or better functioning carbon markets. Whats the role of banks in that . Richard look, this is a really important topic. Carbon pricing here has been a topic that has been with us for quite some time. If were honest with ourselves, its really not been that successful. The average carbon price varies around the world. The average carbon price is order of magnitude three dollars right now. That needs to get much closer to 7500. Thats where the european policymakers would like to see it. Theres is the potential for a mandatory drive at this. The board of tax that border tax that the eu talks about, that would obviously be a move in the right direction. In many ways, it makes sense. If youre going to force your economy to go2net zero, why would you expose it to carbon leakage from other parts of the world. If carbon unfriendly products are going to be coming into that economy, you will have a border tax. Thats a complicated thing to get resolved. The u. S. Position now makes it potentially more likely. That is one drive, but then there are obviously voluntary markets. From a consumer point of view, consumers wanting to have net zero carbon products, corporate wanting to go to net zero. The list of corporates signing up to those commitments are growing day by day. So, trading carbon is going to be for real. The demand for it is going to grow. The question is, how do we bring this together in one place . This is a real opportunity for london as a financial center. If london could be the center of a Global Carbon market, which was deep, liquid, accessible, we already see markets potentially, but markets with common standards and structures, so people could satisfy their needs, whether they are buyers or sellers. I think we are going to see that growth. Francine richard, when you look at what the Fourth Quarter has been like so far for your bankers and traders, what can you tell us about volatility . What can you tell us about what is in the pipeline if we do have encouraging news for the vaccine . If we have it sooner than expected, does it mean much more activity with ipos, m a, and the like . Year,d throughout this there has been a huge amount of activity and you have seen that in bank results. That activity clearly continues. The speed of recovery, the pace of recovery, it continues to be strong and robust. We have all seen the vaccine news over the week. The expectation is that we will see a lot more vaccine news over the coming weeks. I think what we can see now is a bridge to sometime next year, lets call it the spring, you know, and this vaccine really being deployed broadly by that point in time. Of lly, the beginning Everyone Wants to get back to a more normal existence. Its going to put some of the lockdowns that we are currently going through behind us. You can start to see a bridge. We will see how this plays out. There is obviously a great accelerator to the markets this week. We will continue to see that. There are two things you need to think about. One is the speed of recovery, the growth rate. I think he also have to recognize the levels from which that is coming. Obviously, today we saw great u. K. Data, but from a very low level. I think thats broadly the case around the world. As we go into next year, its still going to be a year of recovery, of growth, albeit from relatively low levels. Forecastd our s p for 2021 yesterday and you have seen those numbers. I think equity markets, this is Capital Appreciation plus dividends, you know, somewhere in the high teens in terms of driving returns next year quite possible, albeit from relatively low positions. I think the transition, i think this is may be the real key theme here, transition and rotation. You know, performance year to date has been really driven by those companies, as we have seen, which will thrive and prosper in an acceleration towards a digital world. That will continue those are secular growth trends. Up again start to open and people see the prospects for opening up as we go into next year, there is clearly the chance for those companies to rebound. If you look at the performance of some of the airline stocks, travel stocks, leisure stocks over the last few days as this news has come through, that has been significant. Companiesin those share prices, albeit from a levels. Francine thank you so much. From goldmane sachs stays with us. We will talk more about brexit. Coming up, as president elect, joe biden takes his pyxis white house chief pick his white house chief of staff. We will talk politics a little bit later. Up next, more with Richard Gnodde. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua here in london. Lets get back to our exclusive conversation with Richard Gnodde from Goldman Sachs international. Thank you so much for staying with us. Whats the best hope right now for u. K. Financial services in negotiating brexit in this late hour . Richard yeah, believe it or not, this is a topic we have been talking about for just over 4. 5 years now. I think all the major firms are well prepared for the move and are working on the assumption that there will not be a deal. So to the extent there is, it is upside. Think whats really important is that the u. K. , from a regulatory point of view, from the,rastructure point of place that big a Financial Firms want to be to service the global markets. Its obviously more than the eu. Important part of business being done in london, not the only part, by any stretch. There will be a shift of business into the eu. The challenge is, how do we grow the Global Business . Markets continue to innovate. We had this discussion a few moments ago about the carbon market. You go back in time, you know, when the atmospherics around china was maybe slightly different, the offshore renminbis market being situated here. London has to continue to innovate. There is plenty of opportunities for growth. There is going to be massive infrastructure financing requirements around the world. If london can play its role in all that, it will have a bright future. Some of the activity, europe specific, will migrate onto the continent. Francine when you look at working from home, how much can in the second lockdown . Are you looking at hiring some buildingswork style for the future . Richard yes, if you go back to march, when we were really speed into a work from home environment for the first time, the question was, would it work . We learned that it could work and absolutely did work. We knew that this could function. For how long does it have to function . If this is a matter of a month thats quitenk doable and we have the infrastructure in place. We invested quite heavily in terms of incremental infrastructure for people at home so they would have better systems, Better Technology and able to operate. We also saw that between the lockdowns, there was a real appetite from a lot of people to get back into the office, to reconnect with colleagues. The benefits of the social dimension of the work place in terms of brainstorming, exploring 90s, and actually just doing things together exploring ideas, and actually just doing things together, people found that to be deeper, more nuanced, more creative. So i think a combination of both. I think we are able to manage both. Clearly, we would hope that we could get back to a situation where our people felt comfortable, which many of them demonstrated they do, can get back to the office and get back to a more normal existence. But retaining, which i think is a really important point, the flexibility. And i think that creates opportunities for many people, just having incremental flexibility in where they are spending time. If you dont need to spend time at the office, you can work from somewhere else. Francine Richard Gnodde there, the chief executive of Goldman Sachs international. Coming up, we have more markets and politics. This is bloomberg. When you switch to xfinity mobile, youre choosing to get connected to the most Reliable Network nationwide, now with 5g included. Discover how to save up to 400 a year with shared data starting at 15 a month, or get the lowest price for one line of unlimited. Come into your local xfinity store to make the most of your mobile experience. You can shop the latest phones, bring your own device, or trade in for extra savings. Thats simple, easy, awesome. Visit your local xfinity store today to ask, shop, discover the latest on xfinity mobile. Francine another grim milestone. Global virus deaths jump by the most on record. Cases worldwide top 52 million, markets have lower. The u. K. Economy sees record growth but the rebound leaves it far behind its peers, as a new lockdown gets set to buy. President elect biden starts to name his cabinet. Ron klain will be his chief of staff. Then says bringing pandemic under control is his top priority. Good morning, everyone. This is bloomberg surveillance. Im Francine Lacqua here in london. Tom keene in new york. Important to follow the equity markets. We look at politics in the u. S. , the transition period, which is pretty bewildering if you look at it from the outside. And then, the u. K. And oil. Tom well said. I am a political junkie and i am as confused as you are. We have a guest in a couple of minutes that may will provide clarity. The 10 year yield