tv Bloomberg Markets European Open Bloomberg December 7, 2020 2:00am-4:00am EST
and be healthy. get off the floor and get on the aerotrainer. go to aerotrainer.com, that's a-e-r-o-trainer.com. annmarie: welcome to "the "theean open peer, -- european open." matt: crunch time for real. the pound slipped as traders brexit the latest stalemate. president trump ramps up pressure on china in his final weeks in office. cash trade is less than an hour
away. knife edge. brexit talks near a compromise on fishing, leaving the level playing field the biggest obstacle. can the side to get a deal through today? sanctions hit sentiment. stocks and futures flip as the u.s. is said to add more chinese officials to a blacklist and the rollout begins. coronavirus vaccines start in the u.k. tomorrow. the u.s. may follow suit by the end of the week if the fda gives emergency and approval -- emergency approval. i have been away for six weeks on paternity leave. it has been fantastic. not much seems to have changed in terms of markets. we are still in crunch time. we are still looking at covid infections rising to all-time highs. we are still looking at u.s. stocks rising as well. i guess the vaccines is the
hopeful sign. maybe this week, the good change we have all been waiting for in 2020. on return, everything has changed and yet nothing has changed. certainly new information. that has been a real game changer. but we are still as you say at crunch time for brexit. i think you said that at least 50 times over the last four years. certainly there is momentum building. the pound is wobbling. you have breaking news in terms of the german economy. we have german industrial production numbers coming out. you can see at the bottom of your screen, production rising 3.2% month over month. the estimate was for 1.6%. if you have a bloomberg terminal you can pull up the eco-function
and see industrial production year-over-year still a big drop. 3.0%, not as big as the 4.6% that had been surveyed. figures,l production although year-over-year still a big drop, both of the month over month and year-over-year figures are better than previously -- better than surveyed and better than the previous figures along shop -- by a long shot. let's take a look at where futures are pointing. the u.s.-china relations seem to continue worsening. as a result you have euro stoxx futures down 0.1% -- 0.3%. dax futures down 0.3%. as we said, you have the british pound off a little bit. maybe that is why you see ftse futures up, although that inverse correlation has turned around as of late. take a look at u.s. futures
right now. s&p, dow, and nasdaq futures pointing down. nasdaq futures, little changed. what do you see on the gmm? mixed this hour. we keep an eye on brexit. the pound is weaker, down by around 0.25%. away from that, the bigger we are justes, coming off record highs. friday we saw a record high on the s&p. we are back in that bad news is good news because of fiscal stimulus. we have that fiscal momentum building. we are also looking ahead to vaccine rollouts and better signs there. the only offsetting negative is increased tension between china and the u.s. coming together to create a mixed picture for asian equity markets.
we are watching the brexit negotiations carefully. brexit negotiators are striving to finalize a deal by this evening after resuming talk yesterday. sources say a compromise is starting to emerge. that would leave the level playing field as the main remaining issue. let's get to edward evans. ring is up-to-date. we have not gotten any definitive news, but comments from barnier and others. >> barnier is just briefing the ambassadors from the european union member states. there is still no deal, but they will continue talks. it has certainly been a very busy week for brexit. suspended on friday that only resumed after a call between boris johnson and ursula von der leyen. they are moving toward a landing zone on fishing, one of the key
issues. that still leaves the much more difficult issue of the level playing field to sort out. the issue is that france and other countries are extremely concerned about giving the u.k. access to the market only for british companies to enjoy the competitive advantage of their continental rivals. what they want to do is ensure britain signs up to not just the eu, but any changes in eu rules. that is something they have insisted. the risk is not for a deal being signed. is that talks could fall apart. evening they will decide effectively whether it is worth pushing on for a deal or whether they will have to concede that the game is up. we saw a report in the
times that angela merkel and emmanuel macron are softening on the level playing field. it seems like the more important of the stumbling blocks. i would prefer to soften on fisheries where i the eu. un-macron.ery what do you read from this story? >> the picture is murky at the moment. fishing is -- the order was always going to be fishing. the eu wanted a deal on fishing at the very end. there have been calls between germany and france and they are very strongly pushing for level playing field here. that is sorted out you can get a deal on fishing and then you could get a wider deal on brexit. matt: thanks very much for joining us. edward evans, our brexit editor
covering -- well, it is a murky picture and a complicated picture. at the end is when everything typically gets done in these negotiations. showsobal equity rally signs of stalling. the pound is slipping as traders who speculated on a weekend brexit trade deal were left disappointed. let's get to the markets now. we are seeing i guess you could say the rally is fading, but it is at an all-time high. any time we get to these levels, it looks like down is the only way to go, but we have been full before, haven't we? before, haven't we? >> absolutely. it has been abroad climb for risk assets with pull back every now and then. then we see investors very happy
to buy the dips and keep going back up again. we may be in another period similar to that now given that we do have the latest risk off catalyst in the form of more potential sanctions against china from the u.s. and we are seeing the early reactions across the board both in equities and markets here taking that as a risk off. investors will probably take a look at this and put it in the context of the longer-term narratives that they are celebrating is positive in terms of a vaccine rollouts as well as potential stimulus coming through. they will probably parse that accordingly. anna: let me ask you about the brexit situation. i know the markets live question of the day is how will a brexit deal impact risk assets? this goes beyond the pound, doesn't it? the pound is in play.
interesting relationship between the ftse and the pound, not necessarily how it had been. what are you hearing in terms of the broad picture for risk assets and the significance or lack of significance of a brexit deal? >> absolutely. there is still -- you could tell speak settling into markets. we are seeing that being priced in in the pound more dynamically. asset complex seems to have moved on from the brexit story. i think once we do get the deal, that is kind of the definitive yes or no for markets at this point. that is all they are waiting for is the binary outcome of whether there is going to be a deal. i think once we get clarity on that, we would expect a knee-jerk reaction either positive or negative and then given all the other catalysts that are present for markets, i
would expect investors to quickly move on. as far as the pound goes, if there is still a propensity for investors to react negatively to but quickly cover those shorts, we saw yesterday evening in london or monday morning in asia when we saw the pound lower initially when fx markets opened. when i woke up this morning, they were back above were just below that $1.34 level. positioning has started to turn more negative with the pound. how that plays out with the couldnear the years highs be quite interesting the next few weeks. anna: it is interesting how for some assets it is binary and for others to detail might matter. a quick line on brexit. envoysbarnier telling eu
the ball is in boris johnson's court. coming up, backing the bill. the bill passes that is likely trump and mcconnell will be on board with more stimulus. plus the positioning around brexit. what about other u.k. assets? strategists are telling investors to start a buying spree of abandoned u.k. assets. ♪
negotiators will spend today trying to find a solution. the times has reported emmanuel macron and angela merkel have agreed to weaken eu level playing field demands. envoysbarnier telling eu the ball is in boris johnson's court. we are joined by the head of economic research at barclays. i want to understand more about the reaction function in u.k. assets to a deal or no deal. maybe we can start with u.k. stocks. i was looking at the ftse 100 and often it has a negative correlation with what the pound does. that seems to have fallen away. the past week we saw a rally in the pound. in the ftsea rally 100. where's you think u.k. stocks stand? talks about the pandemic and other matters?
-- u.k. stocks about the pandemic and other matters? >> the pound does have an influence on equities. reason, the second thing you said is very true. global rebound these companies will do well. the pound is not an expensive currency anymore. one can well see independent of the brexit stories, there may be stocks that look interesting in the ftse 100 or in general the index in a scenario where the global economy rebounds on the arrival of vaccine. matt: what kind of stocks are you thinking? about --lf am thinking i am not a stock picker but if the economyew comes back, global trade
rebounds. equity in particular would benefit from going back to normalcy. normalcy meaning where you go back to having higher growth and of alle cyclical rebound these stocks that have been thatn down by other socks have been doing very well. normalcy,eturn to some of this should be reversed. at the u.k.g economy, a lot has been talked about, the extent of the recession. does that position us, looking at the glass half-full, for a very strong rebound? goldman sachs sees a relatively rapid rebound given the rollout of the vaccine, also the reliance on the services sector and the link between the vaccine and services getting back to normal.
>> we are going to see a relatively quick rebound everywhere if you look at numbers in the sense that we had a large contraction in the u.k. as well as many european economies. a little bit less in the u.s.. those economies that have been suffering heavy recession this year will be coming back on the back of them vaccine. you will see numbers that are very high. similar to what you saw in the third quarter compared to the second quarter this year. the longer-term outlook for the u.k. is a bit less certain well the u.k.ow economy can flourish outside the single market. with the ability to set regulations, to set policies more independently of the eu, will this have the impact some hope for for growth in the u.k.?
the immediate rebound next year should be numbers compared to this year. that will happen in the u.k. as well as elsewhere. anna: when you look at frexit negotiations, if we make the heart of a consumption there will be a deal, what friction do you expect for the u.k. economy to get over? i was trying to think of the list of things businesses need to change january 1 even with a deal. you are going to be looking at customs checks, customs declarations, possibly of pointing -- appointing a customs broker. you need to get special registration to trade with northern ireland, to trade with the eu. you might need to check labeling. rulesnds of different that u.k. businesses will have to get used to. what friction does that suggest? great point.
this is sometimes underappreciated. sometimes you have the narrative when you get a trade deal everything will continue as is. the tariffs will be less but you will have a customs union. there is some anecdotal evidence i believe that because of the high uncertainty, a lot of the businesses in the u.k. have been reluctant to do all of that detailed preparatory work even though it is necessary in any case. it will betion is tension and friction in the early months. given that will likely influence headlines, we believe there may be volatility in the pound. longer term view, this may last one or two quarters, but then people should get used to it.
you get used to the new regime. the trade deal is most important with regard to how expensive it will be to trade with the eu. matt: you stick with us. we have more from you coming up. christian keller from barclays, head of economic research. they put out there q1 2021 outlook and there are a lot of fascinating points i want to go over with christian. we are also going to talk about the possible stimulus bill. gop senator bill cassidy in the u.s. said it is likely trump and mcconnell will be on board for another $900 billion. more on that next. ♪
markets, this is the european open. we are 30 minutes away from the start of -- 38 minutes away from the start of cash equity trading in europe. ftse futures up as the pound falls. euro stoxx and dax futures are down right now. you can see the pound that $1.33. still a relatively high level. christian keller from barclays is still with us. you put out last week your q1 outlook, which i thought was full of fascinating stuff. use shows charts you u.s. real gdp getting back to its pre-covid trend by 2024. is that optimistic? we keep hitting new highs on u.s. stocks. it is pretty amazing even as infection rates climb to new records also.
clearly -- what we forecasted, a very weak first quarter in the u.s.. something could even be negative. economy held up much better than expected. the momentum with which we went sets it fourth quarter apart from europe if you look at seasonally adjusted and annualized numbers. moment is the the virus will influence the first quarter. patch,ket has this soft but the market is focusing on a world of normalcy, if you will. the vaccine will bring us to protected populations and therefore an economy that can go back to levels it has seen before. a lot of stimulus is still there.
that will propel growth in the next one or two years. anna: we have had new data out of china overnight. export data. asia -- doesth of the growth of asia give you into 2021? >> very much hope. china was a country or an economy that transformed a bit earlier. china went back to pre-covid gdp in the second quarter or so and has continued recovery quite robustly. the numbers are very encouraging. not only inrmance , but alsoted areas broader. china is doing very well, expected to grow over 8% next year. that is very important for the
anna: welcome back to the european market open. 30 minutes away from the start of the cash equities trading session. futures pointing to a mixed picture for european equity markets. the ftse 100 expected to go higher. the pound clearly a factor to watch this morning. the pound down 0.5% now. investors are still questioning whether britain and the eu are close to a final trade agreement. options traders are taking no chances. here with the details is dani burger. the pound down now 0.5%. off that $1.34 handle.
>> we have to look at this gap we saw overnight. we saw this big drop when the markets first -- one of the things that will be interesting to look out for, we are seeing markets start to pick up. typically during the early twilight trade of cable, those losses will tend to reverse as liquid trading gets underway. this is a pattern we see of traders in the cash market not really moving on to those bearish positions that dramatically. maybe it is the weakening in the dollar keeping cable in the market. me, theyader put it to talks continue to be at a stalemate. cash pound dollar spot in the blue. one risk reversals are plunging.
they are at their most bearish since the start of the pandemic. something is disconnected between what is happening in the surface and underneath. remember, these are from one week, so this is preparation for something bearish to happen soon. pound, a lotn the of traders do not see them lasting much longer. the bloomberg survey says if no deal is reached by next year, we could see the pound fall to one spot 25, a nearly 7% decline from where it currently is. thanks very much. dani burger talking to us about brexit. to watch thosee moves in the pound and follow the negotiations closely. hoping to finalize a deal by this evening. the sides resumed talks yesterday. both are denying that a compromise has been reached on fish despite earlier reports.
tadeo ins now is maria brussels. we have heard reports they are nearing a deal on fishing. we have seen reports in the times that angela merkel and emmanuel macron are softening on level playing field. both of those things still seem to be evasive. >> yes, and there has been a briefing as you know by michel 27 eu countries. the mood was optimistic, michel barnier telling ambassadors he does not see a breakthrough one sticking points including fish, the eu now pushing back against the idea that a compromise was near, that a landing zone for fish was approaching, saying there still remains a sticking point, that this has not been resolved and that the level playing field, the overall
governance on the package continues to be problematic. russell's pushing for this idea there is no compromise around fish that could solve what has been a major sticking point over the past week. you could argue this is part of the choreography. it needs to be perceived as a tough negotiation, but the mood i would argue has slipped over the past 24 hours. we were talking about a rate through on the fish. the ideapush back on of compromise has been reached on that area that has been problematic between the u.k.. fairly gloomy comments, that is overstating it. less than optimistic comments from the irish overnight. that seems to break with a lot of comments from ireland. what is the latest on the timing?
many people assumed a deal over the weekend. what is the latest on timing? saying they are now look at this deal potentially happening, not happening, as a 50-50 situation. we were talking about an eminent deal that has not happened, has not materialized. there is a very important phone call today between boris johnson and the head of the european commission, ursula von der leyen. from the european angle, the real deadline is thursday, friday. that is when they are coming here to brussels. the summit could spell into saturday. into saturday. if it does not fly politically, it is not going to fly. that will only happen toward the end of the week, not today. anna: it is going to be interesting if we get a deal.
the sticking point is around one of the big issues going into this, level playing field. it will be interesting to see how much ground both sides have given to get a deal done. this goes to the heart of what brexit was all about in the eyes of some in the conservative party, the ability to diverge from brussels. if you want access to the single market, you may not be able to diverge that much. the actual detail will be interesting to look at. >> i would agree with that. the european union has never made this a secret, they want the u.k. to be a competitor to the european union. there is close proximity and that could be an issue. and the legislation the u.k. has put forward has not helped to create that binding trust that is needed between the blocks. ultimately you are right. -- whether oring
not the hypothetical deal passes the brexit sovereignty test, this is about taking back control, making our own rules. can you sell this back home as from.k. actually brexited the european union? from the european union it is about governance and it is about being able to trust of the u.k. is a close partner going forward. anna: thanks very much. keep across the story for you. >> goldman sachs is weighing plans for a new florida base for one of its key divisions. executors are said to be scouting locations with a view to relocate the asset management arm. if confirmed, the move would be a blow to the stature of the u.s. financial services industry. doordash and airbnb are set to start trading this week for what is likely to be the busiest year
end on record for u.s. ipos. they are aiming to raise a combined $6.2 billion with the top end of their price ranges. price rangesed its on friday. airbnb is said to be seeking to increase its price range which could give it evaluation of as much as $42 billion. walmart is said to have hired goldman sachs to assess the art unit.e of its flipk walmart plans to sell about a quarter of the company which is india's largest online retailer. 's valuation has more than doubled since walmart bought it in 2018. that is your bloomberg business flash. wright in london. let's take a quick look at what is going on in terms of markets.
chinese and in the other asian markets, for example hong kong as well. it did not portend well for european futures. european futures are down as ftse futures rise right now. nasdaq futures also turning positive even as dow jones and s&p futures fall. toing up, the u.s. is set slaps sanctions on more chinese officials over what is going on in hong kong. everetails of those worsening relations next. ♪
said to outperform. futures suggested will be the case today. one of the things we are focused on is around vaccine rollout. these are some of the events you should be looking out for this week. we will get a vote from the u.k. nhs set to roll out the pfizer-beyond tech -- pfizer- biontech vaccine. the ecb will meet on wednesday. will meet ins brussels thursday and friday. they will likely talk about the approval of the next budget, the ratification of the 2030 climate goals, also the recovery fund for europe that still needs hungary and poland, and of course brexit. preparing to. is sanction at least a dozen more chinese officials over their role in the recent
disqualification of hong kong's legislators according to people familiar with the plan. the move comes as president trump continues to pile pressure on china in his final weeks in office. for more on this, our chief asia economics correspondent joins us out of hong kong. sanctionshese signaling for u.s.-chinese relations? now, the trump , this is another strike against the communist party. yet know which chinese officials will be against, but in retaliation for their recent news against local lawmakers in the legislative council here. i think he goes to the bigger picture. these measures against china will be difficult for the next administration to unwind.
that is going to be critical both countries in the near term. ifther point to make is -- the u.s. was to signal sanctions against banks in hong kong, that would take the economic and market stress to a whole other level. we are mindful of the handover of power in the united states and how much this lives on through that, if it does. chinese trade data was released this morning, handily beating expectations. what is behind this big jump in chinese exports? bump, and this plays into geopolitical tensions as well. we are seeing an ongoing surge in demand for chinese-made goods in the health care sector.
that servee goods the work from home story at the moment, laptops and everything else. the thinking has been china's export story would maybe be cooling down in year-end. in fact it is gaining new legs. i suppose the big question is how long this export boom can continue for china and whether ifnot it starts to peter out the global economic recovery start to slow down on the back of the u.s. and europe's issues trying to handle the surge and .n the back of waning demand as houses stock up on work from home goods they won't need to buy those next. -- next year. matt: having said that i just
ordered another box of 50 masks. i remember thinking there is no way i'm going to need 20 of these and now i have gone through a solid hundred. what do economists figure for the export figure for the legs on these strong export figures out of china? >> the virus story is a bit perverse for china. benefited hand, china greatly from controlling the virus early on. they were able to produce when the rest of the world was in lockdown. then there was feeling the rest of the world had caught up with china or at the same time the surge in the virus would slow down the global recovery. that would futures lower demands for chinese goods. at the moment, china continues to benefit on being the first in an first out of the virus crisis.
that is allowing it to meet demand for ppe goods, laptops, and the like. that story is likely to remain in play. next year might be a whole other story. vaccines are expected to trigger an easing in the demand and might allow normalization of economic activity. right here right now, china is benefiting from this boom. india is the world's only economy credited to grow this year and it is on track for a strong finish. anna: let's get a first word news update. says rudynt trump
giuliani has tested positive for coronavirus. the new york times says the 76-year-old was admitted to hospital yesterday. the president wished him well in a tweet saying we will carry on. giuliani's son tweeted his father is getting great care and feeling well. the u.k. is gearing up to deploy its first covid vaccine. plans to deploy the shot at more than 1000 centers. the u.s. could improve -- approve pfizer's vaccine for emergency use as soon as thursday. los angeles county reports 10,500 new cases. the u.s. is set to be ready to sanction chinese officials over their role in the disqualification of hong kong's legislators. the latest round of sanctions could be ruled out as soonest today with as many as 14 people reported to be affected. vierbiden has picked xa
bacerra as his health and human services secretary. prioritiesnt-elect's in tackling the virus will likely include expanding testing, access to ppe, and distribute vaccine. ra would be the first latino to head the agency. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. matt: thanks very much. laura wright with your news. now we will take a quick look at what's going on in terms of markets. a mixed picture in asia but we are seeing drops on the hang 300.as well as the csi gains in australian stocks, up to gains for the year today in australia as well. that is leading to slightly
lower euro stoxx futures. you can see here they are up 0.3%. the pound down 0.5%. no more $1.34 handle. the weaker pound is why you will see green arrows if you look at ftse futures. s&p futures in the u.s. down index thatrom a cash is currently at an all-time high. we are minutes away from the open. next we will get your stocks to watch including mike ashley's razors group as the company is in talks to buy devens. . ♪
there is not one of us who has not been affected by this pandemic and our organization like every other has been completely focused on doing our job to be able to help defeat this terrible disease. the ceo of the u.k.'s medical regulator talking about vaccine dueiontech for rollout from tomorrow. we are minutes away from the start of the markets session in europe. the cash equity session, just seven minutes to go. dani burger has a rundown. of your stocks to watch. been in crisiss mode. they said they would have to liquidate the business after talks failed with jd sports. . jumped in to buy the struggling retailer, saying we are hoping to save as many jobs as possible.
one of the concerns with debenhams going under. people tell us the value will center around 280 million pounds. matt: what is the story with socgen? >> socgen hoping to streamline, cut costs. they are looking at merging their french retail banking unit as well as credit due nor. save money by can revamping their retail outlets and have to close some of the branches with this. that will save costs as well. also unveiling new targets for their online business, hoping to increase their customer usage to 4.5 billion. focusing more on the online digital change and closing physical branches. anna: interesting as we get to the end of 2020 with some key uncertainties perhaps removed. that is the big picture story. give us the specifics around
risk. arista and paul singer's activist management group elliott have fallen apart. they are back on the table again . arista confirming the have received a -- from elliott. the is a premium from where company closed. they have been disappointed with the performance, but the chairman of the board has been very public in -- and vehemently says he does not think they should be selling the company. course hanging out in west palm beach as well. dani burger reporting on a number of stocks that can move this morning. the market open is in five minutes time. we have a mixed picture in terms of futures. ftse futures higher, dax futures down.
the: one minute to go until cash equities trading. leaving a level playing yield the biggest obstacle. sterling takes a pitch. stocks and futures slip as the u.s. is set to add more chinese officials to a blacklist. and the rollout begins. coronavirus vaccines start in the u.k. tomorrow. the u.s. may follow suit by the end of the week if the fda gives emergency approval as infections hit an all-time high. welcome to the program. 20 seconds to go until the start of the european equity trading session. european futures count to the --
point to the downside. last week, we saw both of those going higher. today, things look a little different. that is the picture on futures. it is a little unclear if we are making progress around these brexit negotiations. matt, tell us how these european equity markets are opening up. matt: let's take a look here. the ftse is the first out of the gate, and it is little changed, but moving higher, about 0.1%. you can see that the pound is down. we were talking about this before the show. typically, there is an inverse correlation, but it has been a positive correlation of late. this is a little change from what we have seen over the past week, the pound dropping below 1.34. stocks benefiting from that. ibex opening up, down 0.6%.
the biggest loser on the continent thus far. the dax here in germany down 0.3%. the carafe also down. continental indexes falling this morning as the ftse rises just a little bit. negotiatorsrexit are striving to finalize a deal by this evening after resuming talks yesterday. both sides are denying the compromise has been made or has been reached on fishing, despite earlier reports. we heard from "the times" that merkel and macron are thinking of softening their stance on a level playing field, at least according to one source. joining us is bloomberg's government managing editor. maybe they are going to reach a deal on one of they two hurdles, and no, are not reaching a deal on either one.
how do things look right now? reporter: it is the classic brexit groundhog day, isn't it? two steps forward, one step back. indeed, last night we did have some reporting that seemed to indicate that on the tricky issue of fish there was what had been referred to as political landings, the makings of a possible compromise. we have to remember that the other big obstacle is the so-called level playing field, which would mean the u.k. would .ave to abide by eu regulations emerged as the bigger issue. briefed the, they u.n. ambassadors and said it is all terrible and nothing has changed. i think we have to factor in that there is a lot of posturing. it is clear the mood has soured, and as much as we keep saying time is running out, it really
is partly because there is this summit at the end of the week that feels very much like the last hurrah for anything. anna: let's talk about some of the timing. we have seen the u.k. was goaded to meet with talks on northern ireland. that coming through this morning. we also know that boris johnson is scheduled to talk once again tonight. they talked over the weekend. things pushing ahead to thursday. that is starting to look like a new deadline. reporter: it very much is. he should be there at 9:00 a.m., in an hour. the idea behind that is whether the u.k. will remove the clauses as an olive branch, because it seemed in your face. how can yo have a deal if you're pushing through this element? there is a summit where the eu
leaders will be dealing with another problem on their hungarys, which is holding up all the financing and funding for the budget. it really is not ideal for them to be dealing with both issues at the same time. one thing that has emerged and is a frightening thought for those of us who have been covering this for so long is the idea of there is going to be a tariff system and negotiations will resume in the new year. eventually, there will be a deal, but there will be another kick down the road. anna: we are seeing significant movements on fx markets. we will keep everyone informed on that. flavia krause-jackson, bloomberg's european editor joining us. we are seeing substantial movers. down 0.7% now on cable. 133.44.
let's get to the fx market. it is not just a call around cable, but the euro pound as well. our guest joins us, and fx market analyst. simon, the perfect person to speak to today. as european stocks start trading, the pound takes another leg down. what do you think it is that is particularly spooking markets this morning? is it that people thought there would be a deal? what is happening? why is the pound so weak? guest: good morning. it is monday morning. are we really surprised? how many times have we been here? there was a flurry of strength against the dollar and the euro on friday evening, and this was positioning the rumors. people took this as the deal is almost done.
barnier going back to the mainland, everyone took this as well. fx markets have always been forward-looking. that sterlinging is back under pressure because we have not seen the breakthrough brexit negotiations and we are back to square one. it is not surprising anymore. we have a groundhog day. she stated that we could be going into the new year with this. you cannot write anything off when it comes to brexit negotiations, volatility and the pound. it is becoming a high currency. all the more intensive now. there is substantial economic pressure and minimal trade deal is required for some relief in sterling. but until we get this, we will continue seeing read on the screen next to anything that has
gb next to it. matt: we are seeing headlines now from u.k. tabloids. "the sun." i am sure not living in the u.k. how widely read it is in the city, but "the sun" is saying boris johnson is ready to pull out of trade talks within hours. what dowere the case, you see sterling doing, already dropping right now there .7% to 133? if the u.k. says, we are out, we are done, and we are ready for a hard brexit, what happens to sterling? sun is not the most wide red in" -- is not the most widely read in the city, but it puts those rumors out.
the pandemic eroded much of the upside that the deal would be minimal. but the downside very much still exists. if we are going to fall back to wto trade terms, we are looking at 8% falling in sterling against the dollar. these are sizable moves. everyone should be hedged in and protected against it because the downside exists. you still have the economic damage of putting out the access of financial services, the blockade of trade, particularly an irish border. we are not sure how that will play out anymore because it has been moved about a lot. there for thetill u.k. economy because it is not well-positioned at the moment. we are seeing data come in. it is very soft. the last thing they need is a stumbling on brexit. previously, we saw the idea that fiscal stimulus would come to the rescue like a knight on a
horse. but the fiscal stimulus tends to be empty because of the pandemic. so what will come to the aid of the pound and the u.k. economy if brexit talks completely collapse? it is going to have to be the bank of england. we will not see negative rates by the bank of england year unless we have a deterioration in brexit. if this is true, what "the sun" is saying, it will be a busy day for fixed income traders. negative interest rates from the bank of england and we will see more volatility in sterling markets. anna: sterling markets, we are looking there at euro pound. we are seeing it at 9.077. i was looking back at some history of where we have been. going back to 2008, you have to go back that far to see levels in the high 90's. where do we get to? do we get to parity on this one
if we see no deal coming through? what are you looking at on euro-pound? guest: we are not talking parity, but we are talking substantial sterling weakness, especially against the dollar. it is a mixed question when it comes to the euro because they are also sharing some of the economic pain, but not anywhere near as much because it is spread out over a much larger economy. we are talking substantial sterling weakness. i am not sure where that takes us. i am sure it is close to parity, but not quite there. the knee-jerk reaction probably will take us there because one thing we have learned over the last four years is fx markets have gotten a massive appetite for trading and speculating on sterling with regards to brexit. there is a lot positioned into --kets in the chart in the short run and we could see substantial volatility.
we have heard rumors, we have seen headlines. we have had this risk the last four years. we have not seen anything. we have not seen the final result yet because we have been kicking the can down the road. once the road ends and the can hits the wall, you are going to see where everyone sits. live, eat,, you and sleep fx in the city. i believe it is a family endeavor for you. is anyone talking about anything else? es we areany other par missing because we are distracted by what is going on in sterling? yeah, sterling is always going to take the headlines because of the volatility that comes from it. but this week is busy for other reasons. we have discussions on the recovery fund, the ecb, the bank of canada. comingnalysts, we love
into these meetings with a sensitive level on these currencies. with the loonie, it is not just going below 1.30, or the euro going above 1.20. we should not be looking at these comments these last few months, or even back to the last bank of canada discussion on the strength of the looney. what we should be looking at is the trade values. the broad dollar weakness allowed these currencies to strengthen somewhat on a trade-weighted basis. they are still being offset by other currencies that will make trading partners. is aten the trade sensitive levels for these central banks, it is very interesting. if you asked me to talk about friday and what was going on in brexit, what we see for next week. maddockhat, the big the
trade that everyone is discussing is -- the broad trade that everyone is discussing is dollar weakness. at the same time, i will say again, with the last four years, how many times have discussed the broad u.s. dollar weakness the maddock trade for next -- thematic trade for next year? we have the u.s.-china trade war, the pandemic. there is that risk going forward. you see headlines with the bank falling. i don't believe it. i haven't read the reports, but that is a big move. there is a lot still going on in fx markets. anna: simon, thank you very much. simon harvey was sharing some movement in guilt markets -- in gil marketst. the bank of canada easing in 2021. an interesting case to talk about our brexit conversations and how that links into central banking.
matt: welcome back to bloomberg markets. this is the european open. we are 15 minutes into the session and we are looking at a mixed picture, as we thought we would. stocks in europe on the continent are higher. lower, sorry. the ftse in london is higher right now, just fracture early -- just fractually. twoave seen it move in sessions from 134 to 132. dani burger points out there have only been 11 trading days this entire year where cable has closed down more than 1%. it would be interesting to see it hold at this level. the other half of this picture is the dollar. actually, we have seen asentless dollar weakness the driving force in fx
typically0. clearly not today, again sterling. dollar index is at the weakest since 2014. simon harvey, market analyst, has just finished telling us a little about this. you touched on this at the end of the last block. your point was we see this trend indicated often in december. what would stop this dollar weakness? what could turn it around in 2021? the 2020 outlooks that we have written ourselves, looking toward dollar weakness toward the next part of the year are based upon this u.s. dollar narrative. that aad assumption vaccine would be widely distributed in the first half of next year, the different calls
between different institutions depends on their assumptions of when the vaccine roll out would occur. onthe same time, it hinges the point of u.s. outperformance next year relative to the rest of the world. this still hinges on we don't know the results in the georgia runoff. a sweeping trade come through and massive fiscal stimulus from the u.s. we cannot completely write that off. that would allow the u.s. economy to outperform somewhat next year, potentially leading to a further dollar weakness or dollar strength. i think the biggest risk at the moment is the assumption of all these forecasts on a vaccine. it is based upon preliminary trials and efficacy rates. we don't necessarily know that this will allow reopenings next year that everyone is anticipating. fxn we are talking from an
standpoint, we are not epidemiologists or experts in containment of the virus. but you have to take the medical advice. you are talking the biggest risk this year, that the haven channel is reopened because the global economy cannot bounce back as rigorously as everyone expected because there is some kind of delay in the process when it comes to vaccinations. anna: simon, thank you very much. we keep putting up the images of what the pound is doing. we are seeing substantial moves. euro pound over 0.9%. cable down at 1.1%. just keeping everyone abreast on what the markets are doing. simon harvey, thank you so much. simon will continue his conversation with us on bloomberg radio at 9:00. a lot could change in a 40 minutes, so very good to check
anna: welcome back to the european market open. 23 minutes into our trading session. the ftse 100 was just holding its head above water, just dropping into the red. had been going the other way from the currency. that would have been in keeping with pasts of old. it is not keeping with what we saw last week. we saw the pound in the ftse 100 in the same direction, and we are perhaps reinstating that direction today. they are down by a full percent against the u.s. dollar around nervousness about whether there may be no deal. december is set to be the biggest on record for public offerings. we will see two long-awaited listings with airbnb and doordash. they will raise $2.2 billion. joining us is our guest. really good to speak with you. we are preoccupied with the latest brexit news, so here in london it does not feel like a big unknown of 2020 has been
dispatched with. but from a global and u.s. ipo perspective, a lot of unknowns have been overcome. why are there so many ipo's taking place right now? guest: hi, anna. i am grateful to be on the show, as always. that is a good question. we have seen a record year in ipo's, not just in the u.s., but pretty much across the globe, especially here in asia as well. part of the reason is that some of the companies that were badly we arethe pandemic, waiting to see how the rest of the year would pan out. now we have more visibility about a potential vaccine, overcoming it. the u.s. elections are out-of-the-way. i think companies are rushing to get to the finish line before year end. but also, most of the companies we have seen this year our
technology related or commerce related, which has been one of the subsectors that have benefited greatly during the pandemic. matt: it has been doing very well, and we want to cash in on that. the question is, are they going out on a high? manuel baigorri there. i am guessing we will be talking more with manuel in the future because that trend does not look set to peter out anytime soon. take a look at the pound, down more than 1%. you can see it trading 132.92. down around the session low and dropping from big 134 -- dropping from a134 handle. johnson" says boris could pull out of brexit talks. we have had comments from the irish minister o'brien as well. anna: absolutely.
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) welcome back to bloomberg markets. this is the european open. we are 30 minutes into the session right now. essentially on brexit watch. you can see the ftse right now turned lower. it had been higher earlier as the pound traded down. the pound is trading down even more substantially, 1.25% to 132.72. we do see the u.k. 10 year yield coming down as well to less than 30 basis points. it is interesting. the pound weakness is significant. dani burger pointing out we have
only seen the pound to close down more than 1% 11 times this asr, and we see a big jump well in the bloomberg dollar index, right now trading at 11.33. the other side of that cable equation, of course. but across fx, we see serious movers. in equities, we see movers in the u.k. as well. anna: absolutely. let's get to some of those. i want to show you what is going on with games workshop, and pandora. both putting out trading updates, both of those moves to the upside. brexit sensitive stocks moving lower, as you might expect. we see a sizable move in the pound, 1.3% or so. one point 2% is where we move on repositioning the over the weekend when we did not see a brexit deal and we are seeing similar dynamics play out. lloyd's qualifies for that.
pandora and games workshop trading up. pandora talking about the strength online which lifted its stocks by more than 4%. let's get a first word news update with laura wright. laura: president trump says his attorney, rudy giuliani, has tested positive for the coronavirus. "the new york times" says the 76-year-old was admitted to hospital yesterday. the president wished him well in a tweet, saying,, we will carry on, while giuliani's daughter tweeted that he is feeling well. the u.k. is gearing up to deploy its first vaccines. the u.s. could approve pfizer's shot for emergency use as early as thursday, as los angeles county adds more than 10,500 new cases, hitting a record for a fourth straight day. the u.s. is set to be ready to sanction more chinese officials over their role in the recent
disqualification of hong kong legislators. according to people familiar with the plans, the latest round of sanctions could be rolled out as soon today, with as many as 14 people reported to be affected. joe biden has picked xavier baccera as his health and human services. secretary the california attorney general will work to curb the pandemic and strength in the affordable care act. the president-elect's priorities in tackling the virus will likely include expanding testing, improving access to ppe, and distributing a vaccine. if confirmed, baccera would be the first latino to head the agency. 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. this is bloomberg. anna, matt? laura, thanks very much. brexit negotiators striving to finalize a deal by this evening after resuming talks yesterday.
both sides are denying that a compromise has been reached on fishing, despite earlier reports. and we have also seen a headline in "the sun" that boris johnson may pull out of talks within hours. joining us is maria tadeo in brussels. we are definitely seeing signs withncern in the fx market the pound falling down below 133. what are you hearing? it does respond to this change in narrative we have seen over the past two hours, in which barnier goes into a briefing in brussels, which is very early for brussels standards. he says he does not see much optimism in the three sticking points that remain. he pushes against this idea that there has been a breakthrough on the fish. european diplomats have been telling us that this has not been agreed, that there is nothing that looks like a political landing zone for the
sticking point that is fish, which for the french is a huge concern. now we have another european diplomat. barnier is briefing members, saying he does believe it could go either way. this is a diplomat, and it very much depends on the united kingdom. this is what the eu has been trying to do over the past 45 minutes, to prove the narrative and say, we want to get a deal and continue to talk, but it comes down to the prime minister. the pressure is on him, not us. anna: remind us of the situation with the level playing field. maybe they have or have not made progress on fish, but certainly there have not been reports of progress on level playing field, and that could be a substantial sticking point. maria: yes, and it could be because this is a huge area. whenever i asked someone here or in london to explain what this level playing field would encompass, it is huge. it is labor laws, the
environment, future regulation, competition. it really is everything, and it comes down to what kind of a relationship the united kingdom wants to have with the european union. the eu says we can be good trading partners, but you need to stay close to the alliance rules and regulations. this is all about taking back control. the will be to some extent big political calculus that the prime minister will have to make in the next 48 hours to see whether this hypothetical deal, this future deal that could be put on paper. this is a test that he can only answer himself. anna: what is the latest on the timing? who is talking to whom, and when can we see any firm progress here? maria: matt talked about this. these headlines coming out of "the sun" newspaper, saying the prime minister is ready to walk out. he could say this tomorrow if the talks do not go well. but there is an important phone
call that will happen this afternoon with boris johnson and the head of the european commission to set the tone. even if that goes well, it is a reminder that he does not speak for the eu 27 leaders. this is the commission. the real deadline, and i talk from a european perspective, is summit that is set to take place thursday and friday. that is when a political decision would be taken by the european leaders. if a country does not agree, that deal would not happen. even if we do get a technical deal, you do need approval from the eu 27 leaders. that only happens later in the week. matt: we saw headlines in the macronsaying merkel and would soften their stance on the level playing field. that sounds very un-macron, to
be honest. but even with the strength, we ce.y see the euro by 95 pen how much does the eu really care? maria: how much do they care? that is a good question because if you ask diplomatic -- diplomats how much they care, they say we have a big decision coming up from the central bank and our own clash happening with victor orman and the polish. if you are spanish or italian, you really care about that and not so much brexit. how much do you care overall? they would tell you it is better to leave with a deal and have a smooth relationship going forward, especially in the context of the uncertainty coming from coronavirus. if you ask someone in france, belgium, the dutch, is fishing a big deal? they will say it is because it could be problematic for those industries.
they will tell you they are ready. we are talking about two weeks to step up no deal preparations. timee talking about little to get ready for a no deal. they will tell you, we probably do want to get one just to avoid those uncertainties. anna: thank you very much. rhea today of joining us from brussels. she will keep us up on all those details. next, the positioning around brexit. goldman sachs strategists are telling investors to start the buying spree of abandoned u.k. assets. this is bloomberg. ♪
welcome back to bloomberg markets. session, wento this are looking at a big drop in the pound. right now down more than 1% to 132.86. we see the ftse turned down to join the currency, trading down about 0.25%. the 10 year yield is also falling, below 30 basis points. traders continue to be concerned about the state of brexit negotiations. let's get a bloomberg business flash. for that, we go to laura wright in london.
laura: goldman sachs is weighing plans for a new florida-based, but one of its key divisions are said to be scouting office locations in the south of the state with a view to relocating its asset management arm. if confirmed, the move would be a blow to new york as home of the u.s. i natural services industry. doordash and airbnb are set to start trading this week in what is likely to be the busiest year end on record for u.s. ipos. they are looking to raise a combined 2.2 billion u.s. dollars. up to its range on a filing friday. airbnb is said to be increasing its pricing, which could give it a valuation as much as $42 billion. shares in j.d. health international have jumped as much as 27%. the firm says the retail portion of its offering is part of the city's biggest ipo of the year.
walmart is reported to have hired goldman sachs to assess a u.s. sale to raise around $10 billion. walmartial paper says plans to sell about one quarter of the company, which is india's largest online retailer. the valuation has more than doubled since walmart bought flipkart. that is your bloomberg business flash. anna: laura wright care in london. the pound continues to weaken further with investors questioning whether london and the eu are close to reaching a trade agreement. at the same time, option traders are taking no chances. dani burger is here. brexit talks are likely to end today if there is no progress. we will look for that. how are the options market positioned? dani: we are seeing some reaction now. at first, it looked like the
majority of the reaction we would see is in the cash market, and that is a tad of what we are seeing. we had that gap when trading ff, and nowd o seeing the weakness in cable, something that has really happened this year thanks to the weakness in the dollar. the reason why the cash market seems to be more reactive is because the split is positioning. options have tended to be more bearish than what we have seen in the cash market. that does not mean that in the derivatives market there has been no reaction. in the past few minutes alone, we have seen this jump in euro-pounds overnight volatility. the dollar one looks similar, but not as drastic. we see this jump of traders trying to protect against potential volatility. this is the most since the peak of the pandemic, or at least the .irst peak of the pandemic a lot of traders have been burned by previous options
surrounding the brexit drama. because we continue to get this back and forth, there is no outcome. the dollar story tends to dominate. let me show you what happens. as soon we get new positions, perhaps talks will end today, we get this spike up in volatility. protection against further losses versus the euro. it is basically flattened out to what we have seen for most of the day. we have to remember, the options market was hedging against losses in the pound, hedging against the possibility of no deal, and that continues to be the case. the really big reversal we could see is if a deal does seem certain. that is when we could get more movement in these options. matt: thanks very much. dani burger talking to us about what is going on in cable. we are watching very closely as the pound falls below 1.33 in value.
let's get to the car industry. a toughsays restructuring program to cut costs and lyft returns has helped it weather the pandemic, keeping cash margins healthy. i asked the ceo about demand returning across europe and north america, and when he expects business to return to pre-covid levels. >> from today's perspective, 20 22 is probably a good estimate. but we are flexible, we are ready, should the vaccine and things that are coming now, should the market come back faster, we will be able to react. but we have also made adjustments to our cost structure and have strict cash management. even if the market is not on that level that we can protect healthy margins and healthy possibility at somewhat lower sales volumes. here in germany, there is a prolonged lockdown and in many parts of the western
world. does that make you have to rethink your most recent forecast we got in october? situation ishe fairly robust for us. i think two factors are key compared to what we had in the lockdown in march, april, and may. our dealerships are open. maybe even more importantly, the registration offices where you register your car, they are also open. should they shut down, that would have an effect, but that is not the case as we sit here today. we watched this situation very carefully to make sure we always keep an equilibrium between demand and supply in this unusual situation. time athave spent some the dealership during this lockdown. with restaurants and bars closed, there is not a lot else to do. do you find more people coming into your dealerships now, or are there concerns about lost revenue for the consumer on the
street outweighing that? >> one thing i believe the pandemic has highlighted is something we have always taken for granted. it is personal, individual mobility, personal freedom. to have that now, it is like a reminder to you. the absence of going on vacation and spending money on a lot of other things that you normally would do, may be one factor that has helped us comeback in this second half of the year is indeed people looking at a car. is going toward us. if you cannot do anything else, you are always welcome to stop by a mercedes dealer. matt: that was the ceo of daimler, ola kallenius, talking to me about -- i think we talked for about 20 minutes. i am relatively upset with cars,
but it was great to hear from him. he has a fairly optimistic point of view, even amidst the pandemic. it seems to be worsening. certainly from my perspective, he was over weighing or outweighing brexit concerns from this side. kallenius has said a no deal brexit would cost daimler hundreds of millions of euros. remarked upon in the u.k. by some commentators, that we were not flooded with messaging from german exporters suggesting a deal must be done. that was interesting. we are much more upset about brexit than you would be, and that is understandable. in terms of the latest news lines, influencing assets. we started with a 1.34 handle on cable. we are now down by 1.2%. we are hearing from a u.k. official that brexit talks will likely end today if no progress is made. that is an important caveat to
european market open. 53 minutes into a trading session that shows u.k. assets under pressure. certainly the case for the currency. the ftse 100 in negative territory. it started off with a negative correlation with the pound, but that did not last long. the pound down by 1.3% this morning. also a bit of movement on gilts to keep an eye on. joining us is the markets live editor. the lines keep on coming. the latest line from the irish, who had been optimistic last week. now saying the brexit deal looks very difficult at the moment. that eu talking about facing the deadline. the u.k. side saying they need to see progress today, and that seems to be the latest news flow. how is this expected to stick to risk assets as a whole? what kind of commentary are you getting on the markets live blog? reporter: it is pretty
interesting, particularly given that we heard the irish foreign minister saying that 97% of the negotiations are done. assests across the board will move on this. what we have seen so far is that the pound has been particularly volatile, but the pound moves the dollar, the dollar index, and the dollar moves everything else. we have seen gold up this morning. even across commodity markets, there are pockets where you will see impact. of course, u.k. equities and european stocks, and so on. there is broad risk on the table today. matt: even bitcoin moved on this. 9,430 and weo $1 are back down now. gold as well down to $18.28.
most commodities are down as the dollar index moves higher. what do you expect from the dollar index if there is no deal? obviously it hits the pound hard. does that continue to boost bbdxy? assumption think the -- the subject prolonged time talks up to the last minute, and as the clock strikes, we will get this last-minute push through with a deal. i think they are starting to question that now. if we really do not have a deal and talks do not continue, i think the pound moves significantly lower. even the euro is weaker as a result, and the stock index pushes higher, which goes into the dollar, and gold. anna: eddie, thanks very much.
francine: on a knife's edge, -- boris johnson is close to pulling out of brexit talks and not close to a deal yet. coronavirus vaccines begin in the u.k. tomorrow, the u.s. may follow suit by the end of the week as infections hit an all-time high. an exclusive conversation with the ubs chair. we will talk the future of european banking and the pandemic. welcome to "bloomberg: surveillance." i'm francine lacqua in london