Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. I am vonnie quinn. Welcome to Bloomberg Markets here are the top stories we are following. Covid vaccine in the ether again. Pfizer says a final analysis of the chemical trials data shows its vaccine was 95 effective. Free han the 90 previously. Michael stubblefield, ceo of of and later we will speak to the ceo of intact financial. It would be the biggest acquisition of a u. K. Listed company this year. A quick check of the markets. For the most part, not doing much. The s p 500 unchained. The 10 year yield under 88 basis points. Weakk dollar index a dollar index. We have a slightly smaller dollar. Investors keeping an eye on vaccine development. Tor provides materials for vaccine candidates. The president and ceo Michael Stubblefield joins us for more. Michael, you provide Raw Materials for most of these vaccines. What do you mean by Raw Materials . Michael thank you for having us. Going to be here. We play a Critical Role in the development and production of vaccines. We will provide a whole host of materials, ingredients that would go into the production of components that would be part of the final formulation that would be injected into the patient as part of administration of the vaccine. Our supply chain will be critical as we think about bringing this pandemic to an and. End. Vonnie just how much of these Raw Materials do you have to make . We are all concerned about how vaccine makers can ramp up after they have a candidate, but it sounds like you have to supply for all of these vaccine makers, or most. Michael we will be exposed to most of not all of the candidates in developed and supported, particularly by operation warp speed. We have been working with our customers since the Second Quarter to get our cereals specified into those processes to enable their development. Our materials specified into those processes to enable their development. I am not sure which ones will get approved, but we stand ready to supply our materials as soon as we get to work. Vonnie will you be supplying companies outside of the United States as well . For example, the World Health Organization collaboration is aiming to deliver 2 billion doses of the vaccine next year. Will your materials be a part of those too . The scale we are talking about here is impressive. There has never been a therapy or vaccine that has been distributed this widely before. And given our scale and our role in this ecosystem, we are certainly engaged with all the leading candidates around the world and will be looking to leverage our Manufacturing Capabilities to serve vaccine production wherever it happens to be. Vonnie now, what kind of Raw Materials do you need to make your Raw Materials . Is there any kind of supply issue or can you get your hands on everything you need quickly and costeffectively . Michael this will definitely stretch all of our supply chains, going back even to our Raw Materials suppliers. We have been hard at work over the last couple of quarters trying to identify bottlenecks. As you suggest, it will be critical that we source all the Raw Materials we need. We have been making commitments and procuring that part of our value chain. Ownously, within our factories, we will have to have sufficient labor, so we have been aggressively hiring and training everyone we will need. And the physical assets, the capacity we would need to produce our materials, there are certainly expenditures and investments we have had to make along the way. Some of those will come online this quarter. And we will have additional capacity expansions into next year as we move forward. I think everybody in this space is working to bring to bear as much capacity as we possibly can. Vonnie yes, and apparently Raw Materials accounts for more than half the cost of at least a messenger rna vaccines in development. Is there anyway you can bring some of those raw material costs down at any stage, michael, or will that be an issue . Will these vaccines just get paid for one way or another by governments or agencies worldwide . Michael the focus has been to bring these vaccines to market in record time. We have been focused on development and performance and efficacy of the vaccines. Mature asthe the vaccines mature, there will be work to optimize and address issues with these vaccines and we will play a role in doing that. The focus today is getting the vaccine to market and bringing an end to this pandemic. Vonnie who do you compete with and, if nobody, then how do you manage to come up with this magical formula . Michael the materials we provide, we use other therapies in the marketplace today, so we have a Reference Point as to what it would cost to produce these components and materials and solutions. You know, we do business with most of these customers in other parts of their portfolio, and so , you know, it is pretty straightforward in terms of how we would extend into these vaccines. In many cases, we already have programs in place. Vonnie Raymond James is looking at this potential market of 1. 6 billion for bio processors like yourself. Is that the size of market you are aiming for . What kinds of revenues are you aiming to see may be in 2022 . Michael we have not really been able to quantify specifically what the revenue upside be specifically to our company. We have tried to look at what it would mean for the market at large. As i mentioned earlier, there are four different being developed, and each workflow has different requirements for consumables. Ultimately, the Market Opportunity for Raw Materials and consumables would be informed by what technologies get produced, the number of es that get administered, and societys willingness to take these vaccines. As we look at what has been publicly announced, what could be available from each of the candidates, we have talked with our investors and shareholders to 5 billionlion impact to the Raw Materials environment at large, all the weight up to 9 billion. Vonnie wow, eight billion dollars or 9 billion, multiple of what Raymond James sees. With President Trump and president elect joe biden, or either, both . Michael we have not specifically spoken to the administration, but our contacts would be coordinated directly operation warp speed. We are probably on speed dial at this point. We would be in close coordination with that team thats obviously looking to coordinate, ultimately, the supply chain and distribution of these vaccines. Vonnie i will ask you one more question that is slightly out of left field. The drug is tribute ors sold off big time the other day when it was announced that amazon would get into offering drugs, i guess, to prime members in particular. Was that warranted . Do you see them being a disrupter in the part of the model that ups might take over or something . Michael yeah, that is probably not our area of expertise. We will be involved in getting ingredients to our customers and supporting them in their production, so we probably wouldnt comment on the process downstream of that, but i would be surprised if, you know, there were significant changes to the supply chain at this stage given the criticality of the supply toin and its Important Note there are special handling requirements associated with these vaccines. It has been widely talked about of late. The Pfizer Vaccine needs to be stored at low temperatures and you need a specialized supply chain in order to facilitate that. So i expect that any dramatic changes in the shortterm, you know, would be limited. Vonnie michael, thank you for your time. A fascinating story. Looking forward to reading more and seeing more about avantor. That was Michael Stubblefield, the ceo. Pfizer in phase three of its covid19 vaccine candidate. Data proving it was 95 effective. We will hear from the biontech ceo. This is bloomberg. Vonnie this is Bloomberg Markets. I am vonnie quinn. Following news of a possible moderna vaccine, pfizer and biontech announced today they have a treatment that is 95 effective. We spoke with the biontech ceo earlier about next steps, including emergency youth authorization emergency use authorization in the u. S. We plan to submit our documents on friday to the fda. We are already in submission. We have a rolling submission to the european regulators, so this is ongoing. Congratulations. This is obviously great news. We want as many vaccines as possible. How do we know if the vaccine prevents asymptom attic transmission . Have the information yet. But we have indicators that the vaccine should be able to since onefection of the components of the immune system is the neutralizing antibodies. We know our vaccine induces strong neutralizing antibody performances. This has been known and clinical models that this could prevent infection. And clinical models that this could prevent infection. We will collect data showing how well, but this will be a few months. Will you get a t cell response . Will there be a longterm effect . Because the antibody response fades, but there will be a t cell response . Will the body of longterm memory on how to deal with this virus . Yes, we have created evidence for that. We have analyzed the t cells from subjects, from volunteers who have been vaccinated. What we observed is that after already four weeks, the reallyted people have strong t cell responses. We see two types of t cell. Esponses this is an extremely important finding. The finding shows that the t cell responses we are observing are even higher than the t cell response observed after disease. We know from other virus infections that the t cells can last for many, many years, so we have now one component of the immune system, which is better stability than the antibody response. Vonnie that was the ceo of biontech speaking earlier. For more on the latest results of pfizer and biontechs vaccine candidates, lets bring in max, bloomberg opinions columnist. Washis piece of news, there a marginally better outcome with this study. 95 versus 90 effective else did we learn 90 effective. What else did we learn . Max i would mention this is good news. Often, when you get a bigger cut of the data, you see the opposite, a decline of what seemed like a really effective results early on, so that is great. An update on safety and other issues. It may compare favorably on that front with the moderna vaccine. Overows efficacy in people 65, obviously a really crucial population given the characteristics of covid19 and how much it affects that population. So all of that together, you know, a really nice update, and definitely supportive of them seeking that quick path to authorization with the fda. Vonnie so someone writing today that it is really important to keep an eye on Adverse Reactions as we go forward, not just for the data, but also to keep vaccines in the public eye as a good thing, as opposed to, you know, people not wanting to get vaccinated perhaps because of Adverse Reactions. Of i do think that sort safety follow and good reporting will be really, really important. And i know that the u. K. Is taking steps to shore up its ability there. The u. S. Already has a pretty excellent vaccine monitoring system, and the cdc will follow up on that by actually having apps, sending Text Messages to the first cohort to get vaccinated, all important to build confidence and also to a longer amount of safety data. This is new technology, and compared with the traditional vaccine approval process, a shorter amount of safety followups. That is not necessarily a dealbreaker in the sense that you need to move quickly in a pandemic setting and the vast majority of side effects occur relatively soon after vaccination, which is why that fda why the fda put that two month barrier for followup, but you do want to build up confidence and make sure that you do not see rare side effects in a certain category of people. Vonnie writes, and the who says ht, andion shots rig the who says we will need some 30 million shots. Not affects of the vaccination. Noneffects of the vaccination. How far are we from getting that knowledge . Max that is something you will only find out once the vaccine is in the public for a long time. It will be a combination of inmarkers, looking at that the body response, and trying to assess the t cell response. That will be more difficult. And looking at, over time, whether there are reinfections or a greater uptick in infections among vaccinated people over time. It will just take careful followup and time. It is just something you cannot really, juste, watching people over time. The fact that it is so robust and there have been few natural cases of reinfection and no major mutations, all of those are reasons for optimism, but that cannot replace realworld followup, realworld data in a lot of patients. So we may need three vaccinations over time. We will have to see. Vonnie max, thank you. Keep an eye out for max neesons column. He is amazing. Bloomberg Opinion Column this year. Our stock of the hour today coming up. A look at housing. From new york, this is bloomberg. This is Bloomberg Markets. I am vonnie quinn. Of the hour. Stock the housing boom still in force as every day seems to bring another feat in construction data. Today is housing. It is amazing. If you think back to march, it is hard to imagine, let alone predict, that one of the booms to come out of the pandemic would be a Home Building boom. That is the case. At october numbers back it up. You were talking about the housing start numbers. Growing by 5 for the month of october when you include multi family to 1. 5 million. Anything above one million is very strong. Singlefamily growing to 1. 2 million. Building permits also beating estimates. The Housing Market is strong. Yesterday, we had the homebuilding index come out. And that was strong. We had the Home Building index hit an alltime high and that is not surprising given the boom we have in construction, folks fleeing the citys, going to the suburbs, building new homes. Plus, you have record low Mortgage Rates and you also have this inventory that is extremely tight, so homebuilders doing very, very well, bonnie. Ns for horton, they reported a extremely strong quarter. They beat revenues by 37 . They put up 5. 5 billion in revenue, so that is a big beat on a big number. That is how strong this Housing Market is. Not surprising that the stock is doing well. Vonnie abigail, thank you for that. We will continue to follow the data. That was abigail doolittle. Time for your Bloomberg Business flash. In threeecond time months, Goldman Sachs will be cutting jobs. The new round of cuts is not expected to exceed the 400 positions the bank began eliminating in september. They delayed cutting jobs during the pandemic, but that has given weight to a push to improve efficiency. Given way to a push to improve efficiency. Ceo said lawmakers are failing the country in their inability to reach compromise on fiscal stimulus and that a package is needed as a bridge for the economy while the world waits vaccines to be distributed. 737 regulators say boeings max can return to the skies after a 20 month grounding sparked by fatal crashes. That is your latest Bloomberg Business flash. Stay tuned read in our next half hour, we will speak with the ceo of a Canadian Insurance Company that just made one a onendollar made billiondollar offer for rsa. Mark i am Mark Crumpton with bloombergs first word news. House democrats have voted to stick with nancy pelosi as their leader and nominee for speaker. She must still win a majority of votes from the full house to remain speaker when the new Congress Begins in january. Nancy pelosi will have a slimmer majority next year, which complicates her path to securing enough support to when the gavel on the first round of voting. Some pandemic aid programs are set to expire in the new year, leaving millions without the Government Support that helped keep them afloat. The biggest blow will likely come from the end of two federal Unemployment Insurance programs with roughly 12 Million People facing a late december cut off according to a Study Released today by the century foundation. Also, measures that froze Student Loan Program and froze student loan payments, halted evictions and mortgage payments. Face talks with the u. K. Substantial work that might spill over into next week. They hope a deal could be approved when eu leaders meet thursday. The u. K. Left the eu on january 31, but a transition period runs until the end of next month. Both sides had hoped to get a trade deal by then. The head of the u. N. Atomic Watchdog Agency today confirmed beguns that iran has operating centrifuges installed at an underground site. Uraniumtrys overall enrichment capabilities have not increased. In general terms, there is no significant, i would say, increase in the volumes since, as i mentioned, they had already been operating in a different new one. It is a of course, it is something that is not within the limits of the jcpla. That come of course, i can confirm. Past iran is already far the 2015 Nuclear Deals limits on enriched uranium. Pulled the United States out of the deal, the joint comprehensive plan of action, in 2018. Global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. Amanda i am amanda lang. Welcome to bluebird markets. Vonnie i am vonnie quinn. We are joined by our bloomberg and cnn audiences. The biggest takeover in the u. K. This year. Canadas intact financial is in a bid to acquire the uks rsa for 9. 6 billion. We will speak with the ceo, Charles Brindamour, in the minute. Retail earnings role in after the pandemic. In after the pandemic. We gauge the health of the consumer. Boeing wins 737 max approval. The faa gives the approval to return the 730 sacks to the skies the 737 max to the skies, amanda. You mentioned, intact financial making a big acquisition today, the move to acquire parts of the u. K. s rsa business. It will cost 9. 5 billion as you said. International presence to about 25 outside of north america. Charles brindamour is with us. Just in terms of the importance ,f the International Business why this urge to go global . What does it bring to you . Charles i think the first thing that this brings to us, and our position in canada will be strengthened by 30 , and attractive distribution mixes. So it is important for us to be strong on the home front. The second thing this brings to the north american platform, amanda, is that we will get 40 bigger in specialty lines, which is an attractive segment of the insurance, and add International Capabilities to serve our customers wherever they operate within north america as well as europe. In the context of the transaction, to make this happen, we also chose to acquire the u. K. , and international, but primarily u. K. And ireland let form where rsa has a strong leadership position in the highly competitive market that compares with canada. Leadership have position, given we have scale, we think that we can leverage some of our work competencies where we turned scale into an advantage in the u. K. Market and the environment is good to do so. Vonnie you will also be picking up the pension obligations. How do you navigate that challenge . Charles the pension obligation is fully reflected in the economics of the transaction, where you see that our profit per share will be up, upper singledigit in the first year, upper teens within three years, and the returns will be north of 15 . We have agreed with the Pension Trustees to support the commitment that rsa has done and continue the commitment that rsa has done to fund the pension plan going forward. So fully reflected in the riskreward equation, economics of the deal. Where does your longerterm view about Interest Rates and where they go from here factored into the timing of this, if at all, charles . Charles amanda, we are builders. We have a longterm perspective in mind. And the environment in the mid to near term, whether it is Interest Rates, the pandemic, really, does not have an impact on the longterm economics of the transaction. We have shortterm products, 12month products, and we reprise, as the macroeconomic environment changes, Interest Rates included. So we are comfortable operating in this environment. Not a big driver of the decision we have made. Vonnie what about socalled synergies, charles . People will lose their jobs. Charles you know, we have shared with the market that we expect 250 million of synergy. Three quarters of which will come from the integration in abroad, 5 20 from specialty lines. Bonnie, we have a long track record of integration in canada. We have done that many times. That is why we think the risks associated with the transaction work. Though synergies are not only people synergies. They are actually technology synergies, supply chain synergies, tax, risk management, and so on. In aggregate, we think the job losses here will be approximately 2 of the combined workforce over time. That being said, you know, intact is a growing organization. Processour integration consists in sourcing, services, so i think job losses is really not a big part of that story. The insurance industry, especially pnc, is facing stiff headwinds in recent years. Obviously, extreme weather would be a problem. Certainly in some regions and in some companies. How did the pandemic play for you . How does it shake out . Theles yeah, i think pandemic, broadly speaking for the industry, is a massive event that is historic in nature. I mean, it is clearly a big, big challenge for society, and therefore it is a big, big challenge for our industry. I would say that the cost of the pandemic in commercial lines, through liability claims, event cancellation claims, and so on, has been staggering, but, you know, a big portion of these costs, at least in the case of impact of intact, we have accounted for for the first part of the year. When it comes to the fact that there is list driving, a lot of relief has been provided to consumers. Less driving, a lot of relief has been provided to consumers on that front. Aggregate, intact has had strong performance. It is a function of the fact that we came into the crisis in a position of strength. Otherwise, it is very challenging for the industry and certainly very challenging for society. Vonnie so what will be the plans once this is integrated . Will you be looking for more buyback positions, or will that be it for the foreseeable future . Onnie, i mean, our first focus will be a strong integration where customer service, and Employee Engagement and performance are at the forefront of how we determine success. In terms of capital deployment, we still want to continue to build our domestic position in canada. We want to deploy canada deploy capital in specialty lines, which is now international once we close this transaction. Then strengthen our position in the u. K. Once we see we can outperform in that marketplace. So the capital deployment story is very much consistent with where we are coming from. There is no plan to plant flags. That is not the business we are in. We are and the business of building Great Customer service and outperforming our competitors and we will stick to that. Nie Charles BrindamourCharles Brindamour, intact ceo, thank you. Hope on the horizon for some retailers. Tjk shows signs of stability after being hammered by the pandemic. We will discuss. This is bloomberg. Vonnie this is Bloomberg Markets. I am vonnie quinn in new york alongside amanda lang in toronto. It has been a big week for retailers. Earnings continue. Tjx soaring as sales be analysts estimates even as it has been hurt by the pandemic. Joining me is barclays adrienne yih. It looks Like Companies that were hurting have managed to stay that off. Ienne what we will see is that the consensus expectations are to low across the board. Quality versuse those that are beating numbers that were just model to low for the backdrop of the year. Just modeled too low for the backdrop of the year. H in march, april, and may worst Case Scenario was we are more opened than we have expected at that point. Amanda thanks to government stimulus, we have seen checks sent to consumers, big increases in savings rates, Balance Sheets. Do you expect that to hold up even as we kind of get this stimulus cap . Gap . There is definitely a gap for a lot of consumers. Adrienne absolutely. In the Second Quarter, and retailers had an odd quarter july, there was this huge pentup demand that carried forth into june and july. Stimulus ended at the end of july, and so this is the First Quarter where we have a clean read on what the consumer actually wanted to do, how she or he wanted to spend, and it is pretty good. Now that we are going back into a covid surge, covid closures, you will probably have expectations that are tempered, but the great thing about this is we got a peek into what the future looks like when the world reopens in a post vaccine comic postcovid world, and consumers will come back to spend. If we get another stimulus, that will certainly be helpful as we go into spring 2021. With thehat happens gaps . We know there has been trouble in some parts of the United States over rent. Im sure there are thousands of cases. If gap is forced to pay rent somehow . Adrienne it is a Balance Sheet issue. And earnings,pnl they have to record accrued rents. So from an earnings standpoint, that will not be impacted. The issue with gap and banana republic, which is now about 45 of the business, because 55 is from old navy and athletics, and those growing pieces of the business are expected to be 70 of total sales for gap inc. In three years. So the notion of gap as a brand that we have seen struggle very, very hard is almost overwhelmed by the name of the company, and really what people should be focusing on is the health of old navy. The reason they will be able to negotiate these deals is because they have more brands over which, overarching, they can negotiate titfortat. Closing a gap, and open up a store elsewhere perhaps. I think that is the negotiation, that tap dance that will happen over the next six months. Amanda there is a really interesting tension here because we have optimism for a vaccine that seems legit. On the other hand, were just tearing in the province of ontario in canada that new restrictions could be coming for hotspots, including a total lockdown. There is a potential that the economy goes in reverse. How do you weigh those factors . Adrienne great question. As i said earlier, when we were in the marchapril timeframe, you saw Companies Come to market to raise capital, raise debt, and the scenario in which they raised that debt was, what if we are not able to open our stores for the rest of the year . That was the insurance policy type debt they raised. So they were very wellcapitalized to endure through another covid shut down. What i would say is we are getting, every day, closer to this hope now that we have the pfizer announcement, the moderna announcement, there is a pigeon hole late growing at the end of that tunnel. We need to make it through when, 2021, to the date we can pinpoint stores can reopen, and at that point, hopefully we will have a portion of the population vaccinated. Amanda thanks to barclays adrienne yih. Cleared for takeoff. The boeing 737 max is getting the nod from the faa. We check in with bloombergs Brooke Sutherland after this. Amanda this is Bloomberg Markets. I am amanda lang in toronto alongside bonnie quinn in new york and we are watching boeing shares getting a lift as the faa gives its clearance to start flying again with an extensive package of fixes and training along with it. What lies ahead. We speak with Brooke Sutherland. This is an important step for boeing, but how far from here until we see this plane back in your view . Mark it is important brooke it is important, but to your point, a first step to getting this plane back into service and being the thing that boeing can make money on. There will be a lag before passengers fly on a max jet, likely at the end of december. American airlines has said it intends to use the max to fly our route beginning december 29, but they are bringing it back in a phased operation. Other airlines prefer to do they need everything they need to do upfront, including retraining all of their pilots and flight simulators before they start reintroducing the max. Southwest airlines falls into that category. They expect it will take three to four months before they are ready to put the max back into service. That will put us into the Second Quarter of 2021 before we really start seeing the max being widely available. Vonnie for sure. How many are ordered . How many will make good on those orders . How many will drop some of those planes, brooke . Brooke that is the question. At this point, there have been more than 1000 max aircraft removed from boeings backlog this year. A portion have been outright canceled. Another portion are deemed unlikely to be fulfilled because of the strain on the buyers finances. You know, boeing has 450 of these jets that it has built during the course of the grounding that has not yet been able to deliver and those planes are really key to the companys cash flow prospects. That is how it makes money, actually handing over airplanes to the carriers. Obviously, not many are interested in taking new planes because we are in the middle of a pandemic. So i think it is going to be a very long process for boeing to start clearing that glut of parked lanes. There run the risk of being further cuts for downction of the 737 max the road with the inventory it already has. Amanda i think youre getting at an important point, which is even absent the technical issues of this particular model, we are in a global pandemic. I talked to the ceo of canadas Biggest Airline and they downsized their fleet heard they plan to fly fewer planes for the next three to four years. What does that do for boeing longterm . Brooke there is certainly an appeal to this airplane. It has had its problems, but it has a more fuelefficient engine, a source of cost savings for the airlines. For carriers that are flying older airplanes that tend to gobble up a lot of fuel, maybe there is some appeal to replacing those with boeing jets. But to your point, i do not any any airpl airlines supplementing their fleet. Many have planes parked that are not max jets. There is not a lot of discussion on new orders. This will be a long process. The longerterm question for boeing is what does the competitive dynamic look like when we get out of the pandemic . Airbus has significantly increased the share of the narrowbody market, the first expected to recover out of this pandemic and boeing is lagging materially behind. It is not clear how they rectify that issue when theyre balanced she is so strained. Vonnie down 43 yearoveryear. Lets take a look at where it has been. Dow 35 since the beginning. Thanks to Brooke Sutherland for talking about boeing. When passengers will be on the planes, that depends. From new york and toronto, this is bloomberg. I am Mark Crumpton. A federal judge has ordered the Trump Administration to stop expelling immigrant children who cross the southern border alone. Halts policy that has resulted in rapid deportations of minors during the pandemic. The Trump Administration has expelled more than 100,000 people since march, including at least 8800 unaccompanied children. The Justice Department has not said if it will appeal. Twitter will no longer give President Trump special treatment once he is out of office. The senate told Judiciary Committee the platform will treat mr. Trump like any other user after biden is sworn in. That means he will be barred from nicking threats, harassing others or violating copyright. Either flagged the president tweets, but has not suspended his account. Crowds ignored calls to wear maskan