Fishing license. Welcome to bloomberg surveillance. Im Francine Lacqua in london. It is the last trading day in november. Certainly a lot of traders will be feeling the same, but stocks are dropping after this recordbreaking rally. A bit of a pullback on the last day of the month, capping this recordbreaking rally. Oil sliding after ministers failed to reach an agreement on supply. Small caps, energy and companies, banks, that group has been leading the rally in november. Today, a bit of profit taking. A couple of other things im watching for is the price of oil. We talked about that, encouraging news on brexit, which is why we see sterling at 1. 3333. The portuguese 10 year yield come i like that because we are on zero watch, or negative watch for that yield. Word newsyour first with leighann gerrans. Opecplus has failed to agree on an allay to januarys height. Many members support keeping production at current levels but the United Arab Emirates and kazakhstan oppose the move unless a new agreement is reached. The cartel could add 2 Million Barrels a day into the market. Iran says it wont fall into the trap of scuttling future talks with the u. S. Over the assassination of a Top Nuclear Scientist killed on friday. He had played a major role in Irans Nuclear research. Iran blames israel for the attack. It hasnt commented on the allegation, the previously accused the scientist of masterminding a secret project. A senior has Communications Team composed entirely of women. Jim press hockey the White House Press secretary was director of medications under president told obama. Global news 24 hours a day, onair and quicktake by bloomberg, powered by more than 2700 journalists and analysts in. Ore than 120 countries im the end darrens leighann gerrans. The first vaccines are just weeks from distribution. The White House Task force is promising a rapid rollout to millions by the end of the year. There was light at the end of the tunnel because we will really be seeing vaccines soon. We are likely almost certainly going to be vaccinating a portion of individuals in the First Priority before the end of december. Is hoping to u. K. Begin its own Vaccination Program before christmas. Joining us, jim cormack, global head of desk strategy. When you look at what the market has done, the rally we saw in european stocks this month, the next thing we will be looking for for a leg up, is a vaccine news or is that priced in . I doubt it is priced in. The economic story on the vaccine is the wedge youve seen befitting between Consumer Confidence and indicators elsewhere. And the consumer gets momentum, you will see a rally. The big question for me is when this becomes more of a fixed income event. Fixedincome yields look a little low to me. Francine that would be on progress for a lot of these Companies Going forward in terms of revenue . Danger of that as the growth gets better, we will see inflation and a change in Monetary Policy. I dont think we will see a change in Monetary Policy but to me, the big story next year is you should get deeper curves, steeper curves because Economic Growth will pick up, fiscal policy will be a support. There will be supplied and Central Banks wont do anything. Be the biggest risk to the equity rally, but that is a story for 2021. Francine you are not worried about inflation . If you look at the details on inflation, we are in the negative demand shock portion of the crisis. Toward the middle of next year, we will see medium run inflation risk start a cold. To take hold. Francine robust inflationfrancine . Does it change our growth patterns . Jim i think the growth patterns will probably help to drive it. Inflation is something we havent seen in a very long period, but it is something i would worry about second half of next year. Francine if you are worrying about it in the second half of next year, do you not need to take stock of that into the First Six Months of 2021 if it rapidly changes . Jim i mean, i think you do. Again, i feel like the equity markets properly reflect that. To me, the complacency is in fixedincome. Yields at 60 basis points, 10 below the policy rate. That is where you need to see the market reflect inflation risk and that hasnt happened yet. Francine what do you see portuguese bond yields in the next couple of days . Will they ever touch zero . Do they go into negative territory . Jim the outlook for the european periphery bond market is still pretty positive. The bulk of the rally has already happened. The combination of low supply across periphery including portugal along with a strong economic recovery and a lot of support from the ecb would argue portuguese yields will probably keep going lower end of the periphery will do pretty well next year. Francine why do you do with emerging markets . I think emerging markets are set for a better year next year. The global backdrop is more constructive. Policy in the g10 is very constructive and there is a foundation of growth in a lot of these economies that should continue. Asia has been driving the growth story the past six months, the places like brazil, poland, places like south korea, youve got a lot of growth momentum heading into 2021. What is the haven you would be looking at right now . I dont know whether you look at gold or bitcoin or go to yen and swissie. Havenseres not a lot of that are particularly cheap right now. I would suppose gold still looks like a fairly good asset to holding a world where real yields will remain very low, but im not sure how much further upside you will get from here. Francine so what else would you be buying . There are a i think lot of currency you could be buying. The euro looks reasonably good value. The japanese yen and the world of Asia Economic outperformance looks like a good story. There arent many safe havens left out there right now and if you buy them, you probably have to buy them at fairly expensive levels. Francine thank you so much. Jim mccormick, Natwest Market stays with us. With one month until the end of transition, u. K. Officials say a lastminute deal can be done if an agreement could be reached on access to fishing waters. We will also talk about possible negative rates from the bank of england. This is bloomberg. Francine economics, finance, and politics. This is bloomberg surveillance. With one month until the end of the brexit transition period, they say a trade agreement could be reached within days if both sides continue working in good faith to resolve sticking points rights. Ng if negotiations fail, millions of businesses and consumers will face higher costs with tariffs on goods and disruptions on supply chains. We speak with rosalyn mathieson. What kind of deal are we talking about . Is it the barebones deal that would be positive news could but could put companies in difficulty or would it be a comprehensive deal . Rosalyn that is one of the remaining questions and with just a few weeks to go to get anything done and ratified before we hit the end of the year, but we are hearing signs of optimism that they will get some progress on key sticking points, which are pretty fundamental and comprehensive deals around competition rules and state aid and it seems the u. K. Might be moving on that and in response, we will get some action on the third major sticking point, fishing waters and access to bridge british waters for others to keep fishing in but what we will probably get is a sense we get a deal agreed to and ratified through both places by the end of the year, but some of these things still punted into next year. A framework deal is the likely outcome, but there will be sticking points still to be all right out and that does mean ironed out. That does mean for businesses there could be, confusion about what the regulations will be, how they get their goods from a to b and what kind of regulations they need to do so. There will be uncertainty for businesses into next year either way. What exactly are the sticking points that are left . It seems every day, it is good news and then bad news, and good news. A lot of focus now is on fishing rights. Is it 5050 we get a deal or less . Rosalind we are in what they call the tunnel, a sign they are at the pointy end of the negotiations. There was a lot of messaging. In essence, it is part of the game sometimes to sound as if things are on the edge of the cliff when they are not really. What we are paying attention to is what the secretary foreign secretary is saying and he is a doing a positive picture of the negotiations. He says the deal on fish off to be achievable in what could be the final week of talks, basically if the eu shows pragmatism and good faith, we will get there. Fishing really is the main obstacle on the u. K. Side and it seems they are getting close on the competition rules and stated. I do love the fact that we talk about a tunnel, intense negotiations. I feel my life is a tunnel but we should know something by the end of the week at the very latest . Rosalind we are getting those indications. The Irish Foreign minister saying a deal looks finalized and it possible and says it should be finalized this week. He says we are running out of time for ratification. In theory if they need to, they can probably get it through parliament on either side in a day or so. It is the final signoff, but they dont want to be leaving it until Christmas Day to still be negotiating. The sense is we may get something in the latter part of this week. Francine is there any chance whatever Boris Johnson home with gets voted down, or if we have something concrete by the end of the week, does it go through and we have a deal . Rosalind you would think so, that tory lawmakers having waited so long for what they want to have, the full transition out of the eu, would prefer to have a deal rather than no deal, which would be inherently dangerous to business given the state of the british economy like many others after the pandemic this year and giving greater certainty to business. They would expect it would get through parliament. Even so, there is a lot of uncertainty and you can hear the shift even today from the Stock Exchange side of business going from london to amsterdam and elsewhere, and that is probably going to continue even with a brexit deal. ,rancine Rosalind Mathieson our executive editor for politics. Lets get back to markets with Jim Mccormick of Natwest Markets. Is it time to turn positive on u. K. Assets . Jim i think we are going to have a good start to next year. I put deal probability at 75 . I think it is almost certain it is going to be a very skinny deal, but either way, the market wants to see something. They want to know no deal brexit risks are no longer an issue so certainly a little bit above side heading into next year, but the u. K. Economy has a lot of hurdles through the course of 2021. Francine do we underestimate the Disruptive Force of a skinny deal . Jim yeah, i think we do. You have a u. K. Economy that will probably end this year 12 below where it was at the end of last year, which is almost depression like growth and the transition brexit is probably going to shave another 1 off of gdp in the First Quarter of next year, so there are a lot of economic hurdles for the u. K. To clear next year. Certainly an early year rally. Im not sure how long it is going to last. Francine what do you make of what the bank of england can do . We have a great story on the talking aboutinal the pros and cons of negative rates and the fact that boe is split on it. Are we going to see negative rates in this country . Jim we dont think you will. You would need an Economic Situation worse than baseline. The bank of england has clearly been having this debate puzzled publicly for the past six months and it feels they are not getting closer to wanting to do it. Quantitative easing is going to be the main vehicle of Monetary Policy year. Negative rates, we dont think you are getting. Francine are we going to be seeing more of the double whammy that is easier on the u. K. Compared to most other regions, which is fiscal and Monetary Policy together . Jim i think fiscal and monetary together is effectively the Global Policy paradigm. More needed in the u. K. Than most other places, but youll see the same in the u. S. , the euro area next year. Francine Jim Mccormick of Natwest Markets stays with us. A battle looms after opecplus members failed to agree on januarys output hikes. A full roundup of what happens to the price of oil before the roundup of opecplus. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Oil retreating as opecplus members fail to find consensus. The uae and kazakhstan oppose curbs, raising tensions ahead of the key meeting today. Bloombergs executive editor for energy and commodity joins us. Well, thank you for being on surveillance. What can we expect from todays meeting . Will i think we go into this meeting with less idea of what would happen than we thought a couple of weeks ago. The assumption had been opecplus would agree to delay their planned output hike because the oil market, while it has been recovering, is still fragile but what weve seen is the real runup of the oil price, 48 a barrel last week, a lot of producers are hurting revenue wise so there are some members that say why delay . Put the oil into the market, get the extra revenue. The saudis appear not so sure, and the russians want to be cautious, see how a second way will develop. It is uncertain. There were arguments on both sides. It is not clear what the outcome will be. Francine what is causing this friction between saudi arabia and the uae . Will that is an interesting one because traditionally, the uae and saudi arabia have been close allies in every respect, but on opec oil policy, they tend to work handinhand. We have seen friction, the uae being much less willing to go along. Francine when you look at some of the concerns out there, how much will demand be hit in 2021. Does it come back in 2020 21 when we get vaccines 2021 when we get vaccines . Will you can see there is a lot of optimism from traders about a rebound. We see next year rally even harder compared to the near term. Once hopefully the pandemic passes. Francine i think we are having difficulty with will kennedy sometimes. This is a very 2020 problem, we lose connection on satellite and the phone. Let me go to the markets. The markets are pretty incredible, especially on a monthly basis. Global stocks are pulling back on the last day of the month, capping a recordbreaking rally, especially in europe. Oil sliding after opecplus ministers failed to Reach Agreement before a full meeting. Will kennedy was talking about that. Smallcap stocks, energy companies, banks had led the rally in november and seeing steeper losses. Technology shares are a bit more resilient. Another couple of things im watching for is Goldman Sachs in their note saying they expect a large proportion of the public across major developed economies to receive a vaccine by the middle of next year and they say this will drive a sharp pickup growth. L that we are trying to figure out is if that means we will also see a change in regime from Monetary Policy because it will have implications for inflation. Im also looking at pound, a bit of optimism on a possible brexit deal. Sterling, 1. 3312. Coming up, chinas Stronger Economic data pushes its factory gauge to a threeyear high. The details next. This is bloomberg. 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 hi, francine. A post exit trade deal could be done in days if there is a compromise on fisheries, according to dominic raab. It is an upbeat assessment. If negotiations fail, millions of businesses and consumers could face higher costs and disruption to supply chains. U. K. Is set to become the first country to improve to approve pfizer and biotech coronavirus vaccines. Bloomberg sources say clearance is possible as early as this week. British doctors are on standby for a possible rollout for christmas. Swiss voters have rejected two proposals that could have altered the corporate landscape in the country. Almost 60 of proposed an initiative to ban the Swiss National bank from investing and defense companies. The second measure to hold multinationals responsible for human rights and environmental lapses also failed. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Francine the latest reading on china separate economy shows its recovery is gaining momentum. Pmi data from manufacturing and nonmanufacturing both top forecasts with the factory gauge getting a three year high. For more on this, we are joined by our chief Asia Economics correspondent, enda curran. Happy monday to you. What is driving this recovery . Enda thank you, francine. Isa points that china recovery now is pretty stable. Accelerating well away from we know the manufacturing side of things is a hard enough story. Exports hit a record share from china early this year, and a lot of this is being driven by global demand, robust domestic consumption. It is a big global story from chinese goods, be it health care or be it work from home equipment that we all need an electronic space and technology. Manufacturing and