Good morning, everyone. Welcome to bloomberg surveillance. I am Francine Lacqua here in london. A lot going on, because we have Christine Lagarde testifying in parliament. We will bring you anything that comes out of it. The markets focusing on infections rising around the world. They are focusing around the fact that we could see a stimulus. Lets get to the markets. I dont know if we have them. If we do, it could be great, and it would be a good time to look at them. Overall,ok at stocks they are falling along u. S. Futures, tougher restrictions, progress toward a vaccine. We have plenty more of course on that. Astrazeneca at rising amidst positive news on its coronavirus vaccine. We are hearing from Christine Lagarde. We had an exclusive conversation days ago. The focus is on the need for a stimulus. The focus is also on the need for markets to do a little bit more. She said basically the ecb delivered in the first wave. She is talking about the physical packages, on course for a fiscal, monetary cooperation. Astrazenecas study provokes an immune response in elderly patients. A phase 3 trial is expected within weeks. Joining us now is richard horton, editorinchief athe the lancet. The Astrazeneca Oxford vaccine is a success. When we hear from moderna and pfizer . Richard we will definitely be getting the phase 3 results before the end of the year, but this is a very important step, because the big worry with any vaccine is that it does not work so well in older people, and of course it is the older age groups who are particularly at risk of harm from this coronavirus. And the fact is, as you said in your headlines, that this vaccine does provoke a strong immune response, this is great news. It is another step, another brick in the house that we are trying to build for this vaccine. Francine richard, how is this vaccine different to the other ones . This is not mrna that we heard, which is a new type of vaccine. Does it make it easier, if it is a success, to distribute . Richard that is right. We have 11 vaccines currently in late stage critical trials right now, and the great thing is we have different types of vaccines across those 11. The dharna vaccine and the biontech vaccine, they are mrna vaccines, as you say. This is when you take a protein on the virus, and you attach it to another virus, and that gets whichtry into the cell, provokes the immune response. There are two other categories of an inactive vaccine and a proteinbased vaccine, so this is giving us lots of opportunities for different types of vaccines, all with slightly different advantages and disadvantages. The good thing about the vaccine is you do not need 17 degrees to store and protect it. It will be much easier to distribute, and that will be good for the global distribution. Francine richard, what do you think is the biggest challenge we face right now . Is it misinformation . I do not know whether there should be another tunnel of information, which means everybody understands what these vaccines oare or not. Everybody almost as what they want about this vaccine. Richard i think there are two challenges. Manufacture ofhe 15 billion doses, which has never been done with any vaccine, because these vaccines, you have to get two doses per person, so 7 billion people on the planet, you need 15 billion. That is huge. The second challenges is the antes vaccination movement. The antivaccination movement has mobilized, it is growing, and it is dangerous. We need to see government, we need to see public figures really working hard to defeat this movement. The vaccine science is good, it is safe. We need to take it one step at a time, no cutting of corners, but we have to protect the progress we have made, and the antivaccination movement is a threat to that progress. Francine , richard, the antivaccination Movement Goes as far as that i was writing statistics, 45 , i think, of people and france will not take this vaccine. Numbers are increasing in other countries in europe and the u. S. Who is the right person to actually, you know, is it regulators who need to step up in talking to the public . Who is the right person to make the case that these vaccines are safe . Richard you know, we need everybody who has a leadership role in government, and science, schools, everyur part of Society Needs to be giving the message that the vaccine science is safe, and we are going to have an effective vaccine, and people should trust in that vaccine, so it is not just one person, but i would say that the responsibility of our political leaders is to really build trust in the public. Distrust between the public and authorities that then fors to the space antivaccine propagandists to exploit. Resident biden coming in, his number one objective for him and his Advisory Group is to rebuild public trust, and then he can protect that progress we are all hoping for in 2021. Francine richard, are you confident that these vaccines, pfizer,ou know, the that moderna, or this astrazenecaoxford one, will protect people for a long time, or will it produce an antibody response that only last for a couple of months . Theard well, you just ask 100 million question, and the answer is we do not really know. The coronaviruses that we know of exist already. You usually have immunity once you have been infected with those for about 40 weeks, so about nine or 10 months, so it is likely that this vaccine will year,ou immunity for a but you may well have to have another vaccination the next year, just like we have with influenza. The good news the good news is it is unlikely that you will have to have a new vaccine every year, so influenza, of course, you have to have a different vaccine every year because it involves. That will not be the case with this coronavirus, but honestly, we cannot be 100 sure at the moment how long immunity will last. But my guess is it will be around the year. Francine richard, thank you so much for all the insight. Richard horton, editorinchief at the lancet. Coming up, new york city shut schools we will round up the latest on the coronavirus and discussed vaccine optimism and the markets. That is coming up shortly, and this is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Lets get straight to the bloomberg first word news with , leighann gerrans. Hi, leighann. Leighann good morning, francine. The United Arab Emirates privately floating the idea of meeting opecs trust. Whether this is a warning of production or a general plan of action. There has been friction with neighboring saudi arabia since the summer, when the uae increased outputs above its opec quota. Now the u. K. And canada are on , the brink of signing a new trade deal. That is to replace the existing agreement britain has through e. U. Membership. Last year, trade between the two nations was worth about 17 billion pounds. Sources tell bloomberg an announcement is expected within days. The u. S. Is facing another grim milestone with 250,000 deaths. The number of intensive care patients falling the most, and that is since may. 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 leighann gerrans. This is bloomberg. Francine . Francine leighann, thank you so much. Now, we have just been discussing vaccine hopes, but more restrictions blew over the recovery. New york city has shut schools and crippled the transport topem, as u. S. Deaths now 250,000. Chancellor Angela Merkel warns the situation is very serious in germany. In u. K. , Prime MinisterBoris Johnson has been considering regional curbs after a national lockdown. Joining us to discuss all this , chief Investment Officer at ccla investment. The market is focusing on the longterm hopes of a vaccine. It feels very binary. What are the markets misunderstanding . James well, i think the markets correctly anticipate that governments and central bank are taking covid19 seriously. There will be more support. Haveect ultra, did policies ultra accommodative i would sayd also the age of austerity is passed, governments will spend more money. Companies are going to benefit from an environment where consumers are supported by government handouts, and the path to look forward to the postcovid world does provide a sense of optimism. When you looks, at the big rotation or the start of the big rotation that we, you know, that started a couple of weeks ago, what will be the catalyst for it to continue . Does it just continue naturally . James well, market participants, who have shifted labels and cyclic cyclicals are in essence betting that the worst is passed, that path will be relatively straightforward, and the move this year will be the start or move of next year. For that to continue, we need three things, companies confirming they are experiencing a better tomorrow than yesterday, and i do not mean that is going to be difficult, but it is very easy for markets to run ahead of themselves and to buy the hope rather than the reality. The second issue is we have to see continued support of policy, richer valuations, so low Interest Rates, relatively low inflation, and the continued commitment by government toward the generation of decent asset returns, and that is very much the box top of social banks. The third issue is we have to see the base plates of household confidence began to rebuild. So we have had continued good news on covid19. We have to see the Savings Rates have been high began to dissipate and turn into real spending. Francine james, is there a concern that actually theres not going to be, you know, enough monetary support, Central Support if we do not have fiscal spending . Is there a danger that if we get a vaccine, the market is mispricing, the start of very w nomination . Normalization . James i concur that Central Banks can end up pushing on a piece of string. They can provide credit, they can provide liquidity. The velocity of the circulation of that money can be very, very slow. And that means the Central Banks will progressively deliver lower bang for the buck, in terms of monetary support, so it is critically important that governments are prepared to spend money. Madame lagarde, european Central Banks made this abundantly clear. We see this in u. K. , where sunak has been bankrolled by the bank of england. And i believe it simply would not have been possible had we had the unlimited comp quantitative easing on the 23rd of march. In the u. S. , there is a real issue as to how much team biden will be able to spend. Spend at they will least 3 trillion, and that will be enough to drive the u. S. Economys genuine recovery. Francine james, what do you do with inflation in that case . I thinknterestingly, inflation remains remarkably low. I think it is now on an upward trajectory from very low levels. But there are some structural issues that hold inflation down. Demographics, globalization, which continues to be a force, despite the fact of lastminute wars, aging demographics, but also part of the challenge that so many economies face and of course disruptive technologies. Against this backdrop, i think they really big issue is will Companies Invest in additional productivity, and if they do, inflation stays low. Francine james, thank you so much. James bevan from ccla Investment Management stays with us. We will have plenty come of course, on europe and concerns on the budget. Coming up, eu leaders gear up for what looks like a grueling battle of pandemic relief. We discuss that next, and this is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Now, the European Union is facing what looks like a persuadebattle to hungary and poland to pullback threats. Which much of the countries in lockdown, the two Eastern European countries and say they will veto a key plan to the blocs economic package. France says hungary and poland can be cut out of the brexit plan altogether. Still with us is james bevan from ccla Investment Management. James, i have questions regarding brexit, but what does this tell us about the economic policies in europe . Right after the summer, a lot of investors were extremely optimistic about europe. Is that going to change . James i do feel that there are some serious issues within the construct of the eurozone, and as madame lagarde has pointed out, what we have is a reform, a neutralization of debt. Is a particular challenge. People talk about italys budget balance and challenges. I would put forward that the Italian Economy needs a lot more spending than what is under the eu rules. Eurozonete that the project is still very much at risk. Francine and, james, what does that mean for the euro . Hass i think that the euro the capacity to strengthen against both the pound, because of brexit risk, and strengthened against the dollar, as the u. S. Challenges its postcovid strategy under the biden administration. But i think that will be fragile. What we expect over the next 12 months is much greater volatility of currency, and that currency volatility will go handinhand with more market volatility, more generally. Francine james, when you look at, you know, some of the Bigger Companies in europe, is there any value to be made . It is still one of the, you know, regions that is still trying to focus on the green recovery. We have all heard from Christine Lagarde about what she wants to do with bond buying purchases, focusing on green things. Is that something you want to be invested in . James oh, absolutely. I do think there is a falling went from environmental, social, and government factors, people turn in this combination of regulation, mitigation, action means that higher Environmental Standards will be ever more pressing at the company level. Bet, to me, means we should focusing on Companies Like schneider electric, which is clearly a play on a more widespread recovery. I think the play in europe, particularly risky at the moment, is going back to support europen banks. I think they will make more money in the climate of sentiment and Interest Rates on an ongoing basis. Francine is there anything else we should be looking at, james . When we look at brexit, you know, there is another deadline looming. We do not know whether we get a deal. Have u. K. Assets been oversold . James i would say there is a bifurcation of opportunities within the u. K. There are local companies, the unilevers of the world, that i think will prosper in the long run as global companies. They just happen to be located in the u. K. There are other companies that are not u. K. Companies that will benefit from a domestic economy reopening, such as heineken. I do not think there are opportunities within the u. K. Domestic economy that threatened domestic policy, and i am thinking particularly of u. K. House builders such as fairway. , the chancellor of the exchequer in the u. K. , bank of England Holding money rates low, likely to announce an additional 100 billion of quantitative easing on top of what was announced in the Monetary PolicyCommittee Meeting in november. Against that backdrop, a relatively thick supply. I think the opportunity for House Builders francine great. James, thank you so much. James bevan, chief Investment Officer at ccla Investment Management. We will be back with plenty more on the economy. This is bloomberg. This is bloomberg. Businesses today are looking to tomorrow. Adapting. Innovating. Setting the course. But new ways of working demand a new type of network. One thats more than just fast. You need flexibility to work from anywhere. And manage from everywhere. Advanced technology. With serious security. And reliable coverage, nationwide. Forwardthinking enterprises, deserve forwardthinking solutions. And thats what we deliver. So bounce forward, with comcast business. More voluminous hair instantly. All it takes is just one session at hairclub. Introducing xtrands. Xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. Theyre personalized to match your own natural hair color and texture, so theyll blend right in for a natural, effortless look. Call in the next five minutes and when you buy 500 strands, you get 500 strands free. Call right now. upbeat music francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get to the bloomberg first word news with leighann gerrans. Leighann good morning, francine. The covid venting being developed by Oxford University and astrazeneca shows a strong immune response in older adults. Phase 3 results are expected and the coming weeks. They will determine if it can meet the high bar set by front runners pfizer and modernity. New york city is closing schools after the positive test rate hit a critical threshold. It is also a warning of 40 cuts to the subway without aid from washington. Governor cuomo says if the infection rate increases, nonessential businesses could also close. Australia says it will not compromise after beijing ramped up reduces him of the government. China is after beijing ramped up criticism of the government. Tensions have been escalating since Prime MinisterScott Morrison lead calls for an inquiry into the coronavirus outbreak. China has hit the nation with a wide range of tariffs. Pimco is being sued by a pair of female workers accusing the money manager of having a fraternity culture. They say the company marginalizes, demeans, and undervalues wome