Good morning, everyone. Welcome to bloomberg surveillance. I am Francine Lacqua here in london. This is what the gap. There is a big movement on europound. That is what i would be watching. Also data coming in better than expected but really still under 50 at 41. 7. If you look at the data, the story on the markets is exactly what is happening with euro pound. Now, the fact that france is now floating a veto threat over the brexit deal makes a lot of Market Participants very nervous. I am looking at our live blog, in 2020 at funny expecthe basically says eurosterling to appreciate rapidly through the september high. Leaplks about ready to Tall Buildings if the trade talks fail. Overall, looking at global stocks really pausing for breath after record highs. Now lets get to the bloomberg first word news in london with leighann gerrans. Hi, leighann. Leighann good morning, francine. Expanding the lockdown in germany for three more weeks until january 10. Reassessrkel wants to the restrictions, saying infection rates are still far too high. It is unclear if a vaccine will be available before christmas. Now, frances warning and may veto a trade deal between the u. K. And eu if it does not like the terms. At a meeting of ambassadors, that yous chief negotiator, Michel Barnier, wants to talk about it before it is even finished. Some are concerned he might be giving too much away and leaving little. Time to scrutinize that deal. And a former french president has died. A key architect of the european integration, laying the groundwork for the euro. Card is recognized for legalizing abortion and making divorce easier he died after contracting covid19. 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, democrat leaders in congress have thrown their support behind a bipartisan stimulus proposal as a foundation for a new round of negotiations. It comes as the pandemic continues to raise come up with 2700. Ties topping testifying before a house committee, fed chair jay powell says he is in no hurry to taper the bond purchase program. He also warns millions of americans are still out of work. Chair powell with the labor market, i think we ought to remember that despite the rapid progress in getting people back to work, which is so welcome, there are still 10 Million People out of work because of the pandemic. Joining us this trevor greethham, head of mostly asset at Royal London Asset management. What are the markets hoping for . Markets werenk the expecting a compromise much closer to the republican end of the scale. Keep in mind the democrats wanted to . 4 trillion, and we are getting just short of 1 trillion. What is 1 trillion these days . There are certainly a lot of focus on the georgia runoff, because of democrats were to win both seats, they could come back with a stimulus package later. And we have got a light at the end of the tunnel with the vaccine developments. So the markets are taking a pause for breath, but the positive fundamentals for next year is still very much in place. Francine but are they already priced into the markets, trevor . What needs to happen for markets to go up from now . Trevor i think probably what needs to happen is we need to get better virus numbers. Theres a lot of concern, understandably, about death. Because of the thanksgiving holiday, that is that a parent because in the new infections, but that could very well increase quite a lot in the next couple of days because of the thanksgiving mixing that has been going on, so i think the markets are quite concerned about that. I think it is quite stretched. Private investors are very plus, directors in the u. S. Are big fellows of their own shares and have been since the election, so there are some concern that markets are overrating things in the shortterm. There could be a dip, and if there is a dip, i think a lot of people will want to buy it. Francine then what will support it, trevor, longerterm . If we have a vaccine and a pickup in the economy longerterm, are we going to policy, you know, realign itself . Trevor it is earnings, really. When you think about covid winners and losers, they are far away from where they were this year. Strong growth. Ry particularly in those moving sectors, which are cheap in valuation, and that can drive the market higher. The real question is if bond yields stay low. If bond yields stay low, that does not change the valuation of Consumer Staples too much or technology stocks. Is my base case. But there is a bit of concern out there that you will have a case in markets that are better traveled into rise. If Growth Stocks selloff, you could have a value rotation where the stock market might struggle to go up, and there are plenty of times in history where that has happened. Example whereat the economy was very strong, and because it was rising, they did not like it. It is really crucially about monetary policy. If francine trevor, win are we going to see worries from investors about debt . We are creating record debt levels, and for the moment, policymakers seem to not worry about it. When do we start thinking about that . Trevor well, there is some very interesting work on this. Book has written a recently on inflation. What he has pointed out is debt levels rising to 100 in the u. K. , for example, where debt drops, this is about aging demographics. The governments have got to find a way of dealing with this debt, and growth is not necessarily the obvious option. Productivity is not really improving as much as you might think, and maybe, because we are using tech a lot more, we will see a boost in productivity. That is something to be hopeful about, but i think inflation will be part of that makes, and it will be dressed up in various ways about average inflation target from the fed, Central Banks being nervous about debt levels, Interest Rates being kept low by Central Banks, possibly also yield curve control, you know, if bond yields start to rise too much in 2021, do Central Banks step in and say no, we cannot take any risks with this recovery . We are going to keep yields capped . Those are things we will c. P. A. You will also hear rumblings about those are things we will see. He will also hear rumblings about inflation and that as part of the mix. If you start raising taxes and that, we could see quite a rapid relapse in 2022. Francine trevor, thank you so much. Trevor greetham from Royal London Asset management stays with us. Coming up, opec gets closer to a deal with output after failed talks earlier this week. Will they find an agreement . We will bring you the latest shortly. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Crude oil trading at 40 a barrel. That is after failed talks earlier this week. A source told bloomberg the focus is on production cuts over federal. To ouret straight commodities team. Javier, what are we heading towards . What will opec decide . That they still have a voice but dont rattle the boat too much . Well, francine, a few minutes ago, i was talking to one of our sources, and i asked if it was positive, so definitely the news within opec has changed dramatically over the last 48 hours. Every one of the members, the group was meeting on monday, it has been the last two days to hammer a deal. A seems we are heading compromise solution in which increasing goods gradually, not going to increase generally in one single swath, as it was planning, by 1. 9 Million Barrels a day. It is not going to add the threemonth delay to the increase that they were proposing. It is going to have an element of delay, an element of gradual increase. But certainly the move has improved significantly in opec, and they are heading toward a deal today. Avier, tapering starts in january, or will it actually start a little bit later, and how much difference does it make in the oil market and the oil price . Javier that if the element we do not know. I do believe there will be an element of delay to that increase, that gradual increase in production, but whether it is going to be a delay of one month or two months for a few weeks is something that the ministers need to agree when the meeting starts today at 2 00 p. M. Vienna time. Certainly a few weeks is going to be very important for the markets because of the balance of supply and demand is so, so fragile at the moment, but i think that the market has no there were reports yesterday night that opec was heading to the new type of proposal of a gradual increase in production, and the markets this morning, it is not much tomatoes. 4 , but the market it is not much,. 4 , but the markets believe they are at least getting something that is not an immediate increase in production would be enough to keep prices supported at current levels. Francine javier, thank you so much, javier blas there, he leads our opec coverage. Trevor greetham with rea london Asset Management is still with us. Trevor from the first lockdown in march and april, we can see things like availability data or restaurant table bookings, they dipped very dramatically in april and they dipped again recently in some countries, not all countries, the u. S. , for example, has not seen another lockdown, and china, they kept the virus under control. I think the real question is what will happen in what will manufactured goods, because if they start to travel, they will come back, and if people start to travel more, not as much as before, the but there will be travel, that helps oil demand, and retail sales held up extraordinarily well in 2020, because people have got money to spend on goods rather than services, and as a result, manufacturers want to fire up their factories as well. I think on the demand side, there is quite a rosy outlook, and i think opec wants to make more revenue. Copper the new benchmark, trevor, for how the World Economy is doing . If you look at, you know, the price of oil, the dynamic is we could be heading toward peak is notcause oil renewable, and there is all this talk of climate change, but what does it need right now . Trevor equities, bonds, currencies, commodities trevor it tells you a lot about the economy, and the reason for that is there is not a operating supply for copper the same way there is for oil, and as a result, it tends to reflect supply and demand dynamics very quickly, demand dynamics particularly very quickly, and it has been very strong, so that is telling you about the reopening. The chinese economy, you know, called a lot of this earlier this year, in the sense that for china, covid was a 11 problem. The economy has a onemonth problem. The economy has been recovering ever since. That is why demand is holding up so well. Francine is there something that makes you nervous about the chinese economy . Is it pboc policy . Trevor yes. We are starting to hear more about the fall allowed. Beingay defaults allowed. That may or may not be serious. People are looking at very leveraged factors. We saw that with the Wealth Management a few years ago. The collapse in the economy. But there is also rumbling about a tightening of chinese policy at some point, and that is, i think, perhaps the first sign of a central bank talking about tightening in a serious way. Be i understand why it might china that is the first to talk about tightening, because they were first out of the lockdown, and if the World Economy is really strong next year and theres lots of demand from consumers, then you could see, you know, a big boost in growth next year that they want to get ahead of. The policy is more about going from super easy to a more neutral position. I wanted to gor, back to something you said about treasuries but also the dynamic between treasuries and gold. When did we get something that looks a bit like, you know, the old normal . Well, i mean, treasury yields, if we are right to suspect that yields my stay rly low, i do not think they are at the moment free risk. But if yields stay relatively low and inflationary pressures are actually building the underlying economy, then what you will see is a further drop in real yields that go deep into negative territory, and there are two things that tend to drive the gold price, one is the dollar, assuming a weak dollar trend, the others deepening negative real Interest Rates. At the moment, real Interest Rates are picking up on signs of optimism on the economy, and if we see nominal yields capped, and breakeven inflation rates have to widen by going more negative, that could be another big leg up for gold. At the moment, you know, i would be nervous about buying gold on the basis of what is happening with Interest Rates. If you start to see real Interest Rates go more negative again as breakevens widen, then i think you can see more progress. Francine thank you so much. Head ofreetham there, multiasset at Royal London Asset management. Coming up, jack lew 1130 a. M. London time here on surveillance. This is bloomberg. Year,ying into next including the 50 million, 1. 3 billion in total, i do not think this is going what we are providing against in the first half, but of course we are ramping up reduction extremely quickly so that we can get the vaccine to everyone as quickly as possible. Francine well, that was the beyond tech chief commercial biontechsean merritt chief commercial officer sean ett talking about a vaccine before 2021. The vaccinel that can get approval before christmas. Of course a very different type of vaccine, but we also understood by speaking to the astrazeneca chief executive that he needs to go through a second set of trials. Now lets get straight to the Bloomberg Business flash, heres leighann gerrans. Hi, leighann. Leighann hi, francine. Nestle is investing 3. 6 billion dollars in an effort to fight climate change. Plant 300 Million Trees and help farmers shift to more Sustainable Agricultural practices that also plans to get 100 of the electricity from renewable sources within the neck five years next five years. Daimler is proposing the former boss at bmw and volkswagen lead a supervisory board. It wants them to take over as chairman in march. The carmaker is currently undergoing a major overhaul, focusing on bitter cars and cutting thousands of jobs. Isd french utility o lining up advisors. Bloomberg sources say bmp, credit suisse, and lazard have been shortlisted for potential roles. It once about 5 billion euros for the operation. Assays no official comment of yet, and that is your Bloomberg Business flash. Francine . Francine leighann, thank you so much. Coming up, we speak to spains Foreign Affairs minister, Arancha Gonzalez laya. Getting to the markets, there is one currency trend actually, the currency pound, that is what i would say if i were tom keene i spend too much time with tom keene. [laughs] eu investors have warned Michel Barnier not to give too much away in talks. In fact, france has also warned it could veto a trade deal between e. U. And u. K. If it that is what we are watching out for. I will show you that as well we will talk more about brexit and the Eu Recovery Fund next. This is bloomberg. Is bloomberg. In a land not so far away, people are saving hundreds on the most Reliable Network with xfinity mobile. They can choose from the latest phones or bring their own. And because they get nationwide 5g at no extra cost, they live happily ever after. Again, again. Your wireless. Your rules. Your way to stay closer together this holiday season. Switch and save up to 400 a year on your wireless bill. And get 300 off when you buy the Samsung Galaxy note20 ultra 5g. Learn more at xfinitymobile. Com. 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. Democratic leaders are throwing support behind a bipartisan stimulus plan worth over 900 billion. They see it as a foundation for a new round of talks with republicans and the white house. It marks the first public retreat from the democrats much larger proposal for nearly 2. 5 trillion of spending. Iran has approved a bill forcing rouhani to end nuclear topections, a blow president elect joe biden, giving his Administration Just weeks to make a key breakthrough with tehran. The powerful Guardian Council made the decision, which has been criticized by rouhani. Opec is making talks on oil raises the, possibility of salvaging a deal. Earlier in the week bloomberg sources say the focus is now on the gradual easing of output cuts over several months. It is unclear if the tapering would start in january or later in the first quarter. 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 france has warned it could veto a trade deal between the u. K. And the e. U. If it doesnt like the terms, pressuring negotiators. Warned of theoy danger of brokering a deal with you leaders. Were talking a month left before the transition period. Exporters from around the block will be anxious for a agreement. Spains of a trade is worth more than 35 billion. Joining us now is Arancha Gonzalez laya, the spanish Foreign Affairs minister. Thank you for joining us today. Are you worried that Michel Barnier is giving too much away, could give too much awa