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tv   Bloomberg Markets European Open  Bloomberg  December 21, 2020 2:00am-4:00am EST

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"bloombergme to markets: european open." cash trade is less than an hour away. london's emergency lockdown. christmas is canceled from millions. theprime minister says latest mutation of the virus is ignore.le to
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european equity futures and the pound fall. britain in isolation. and italy arey, suspending travel from the u.k. as brexit talks and without agreement. but there is some relief. congress reaches a $900 billion stimulus deal. the vote is expected later today. u.s. equity futures prove their resilience as the nasdaq and dow point higher. monday morning here in london. certainly feels like the epicenter of the world's focus when it comes to coronavirus and how it intersects with markets right now. just under an hour away from the start of the european equity trading session. let's have a look at your futures. there are a couple of different dynamics depending where you are. in europe we are certainly preoccupied by this new strain of the virus. certainly very present in the southeast of england, hence the lockdowns we are experiencing.
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it is also in other parts of the european continent. one case west of australia. ofs is what we have in terms futures. euro stoxx 50 futures down. ftse 100 futures moving to the downside. in the united states, a different emphasis. gains atto eek out least on the nasdaq futures. this in light of the fact congress managed to pass that -- or congressional leaders have agreed to a $900 stimulus -- $900 billion stimulus deal. we will see which things win out as we learn more about this virus strain. let's go to the gmm and show you what is moving on these markets right now in the asian session. a lot of the themes still dominate what has been going on through the asian session. still the focus on the stimulus conversation stateside, but also
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very focused on the virus and the latest developments around that. the chinese market outperforming, but overall in bound down an eighth of a percent. keep an eye on the pound. a double whammy of lockdowns on the financial hub of london and on brexit. also the australian dollar being hit on the back of further lockdown measures in sydney. oil down by more than 3% as we see investors moving to the relative safe haven of the dollar. london and south east england are under emergency lockdown as the government attempts to control a fast spreading new strain of the virus. >> the new variant is out of control. we need to bring it under control. the news about the new variant has been an incredibly difficult
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year. an awful anna: the virus mutation is causing concerns across europe in germany and france, suspending travel links to the u.k.. we also understand there have been cases of this new variant in some european countries. joining us now is bloomberg's senior editor covering health care. i know you have been looking in detail at this new variant we are seeing. we have heard from the who suggesting there's a lot of genome sequencing taking place in the u.k. and therefore we are discovering variance, and if we look more for that evidence in other parts of the world, we might also find it. it is worth remembering there are many variants. they happen all-time -- all the time. >> that is correct. the fear with this one is it does appear on primary research
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preliminary research to be more transmissible, up to 70% more. it is also proliferating, becoming the dominant strain in places like london. indeed. that is why we are seeing lockdown measures introduced. when we hear those in the medical community say there is no indication vaccines or treatments will behave differently with this strain than they do with strains that scientists have been working on since this first emerged in wuhan, when we hear those words, no indication -- what kind of comfort level for that give us that the vaccines that have given hope to millions, billions around the world, are still things we should look ahead to? >> clearly the vaccines are going to be an incredibly important tool in ending this pandemic. we are going to need them to
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work. need tons they will generate an antibody response that will neutralize all coronavirus is circulating, including this new variant. evidence points to the vaccine not being a problem, will -- but we do know we have to every year tweak the seasonal flu vaccine. the tracksble down we might need to make subtle changes to the covid vaccine as well. so this variant, how much do we know about how quickly it spreads? you mentioned it is more transmissible. how far has it already gone? >> it emerged in southeast england back in september. we are seeing in london now more
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than 60% of new coronavirus cases in mid-december were caused by this new variant. november. from 28% in we are seeing it really increase its prevalence as the major strain causing infections in a city like london. you mentioned earlier it has been shown to have been found in other countries as well. i think we are up to four other countries. the concern is it will continue to spread. we have to remember, this is winter. the coronavirus is much more transmissible in winter. scientists are trying to delineate the reason for the increase in cases. is it because of human behavior? that is the big question. anna: really good to speak to you.
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jason joining us with the latest on the latest virus variant. european futures and the pound facing a double whammy this morning from the new strain of coronavirus and the lack of progress in brexit talks. let's start with the pound. it certainly feels we are in ground zero for a number of news items this morning. a lack of progress on brexit and the latest strain of the virus. at much -- are you surprised how far the pound has fallen? what is the thinking around this latest pound move? the open lasting night from my living room, given the weekend developments. pound ision in the completely understandable given the latest lockdown announcement. i would say that played a bigger
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part in the pound reaction then brexit talks because it seems a lot of that is in the fact that there was not necessarily a revolution on sunday and that both sides are still talking. that is par for the course as far as sterling traders are concerned. the focus has been weakened lockdown developments. -- weekend lockdown developments. it has been an orderly decline, but we have not breached below cable, thatevel in is kind of the dividing line between the moves we saw before and after the eu and u.k. said just last weekend that they will keep the door to further negotiations open, and that is really what kicked off this rally we saw over the past week in cable. we have not erased those gains yet despite the pullback in the
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pound today. that really will be the level to watch. watching out for brexit lines as we head toward christmas. we are thinking about how resilient markets will be around lockdown. they have been very resilient, always focusing on the medium-term or hope around vaccination in 2021. let me ask you about something else newsworthy. stimulus agreed by congressional leaders in the u.s.. under other circumstances you might think this would be really risk on. going into the dollar, the only market moving higher in the u.s. futures right now is the nasdaq. it does not feel as risk on as a what happened weeks ago. >> there is a little bit of an element of a peak here given we have been expecting stimulus for quite a while now. the weekend news does a lot to bend confidence. is doingstimulus news
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is kind of offsetting some of that confidence hit from the european and u.k. developments over the weekend. we probably would be seeing markets a lot lower here had it not been for that stimulus news out of the u.s.. in that sense, that is the bright side of looking at it, if you will, in that this kind of helps shore up some of the confidence damage we saw from the last lockdown restrictions over the weekend. good to speak to you. have a good week. quick news on the oil sector, breaking from the top of this hour. we have heard from shell, post-tax charges from the energy major see upstream adjusted earnings. they will show a loss q3 trading significantly lower compared
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with the third quarter. we will keep an eye on shell at the open. thosel keep an eye on all pro-cyclical reopening traits. .- trades sterling is hit on two fronts by the emergency lockdown and yet another missed brexit deadline. we will discuss the outlook for the currency. ♪ the currency. ♪
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anna: welcome back to the european market open. to monday's program. the pound is sliding as the u.k. is hit on both sides. for millions, christmas was canceled as boris johnson puts
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the southeast of england on emergency lockdown measures. european nations have been quick to follow by banning travel in and out of the u.k.. brexit negotiations remain at an impasse. by an fxined now strategist at commerzbank. straight to the pound and the conversation. 1.3350.t what are the numbers you are watching for around the pound? how much does the lockdown of london complicate what is already a fairly complex story? >> exactly. the dynamic we are seeing this morning is largely lockdowns andnew concerns around limitation. the market basically got used to
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talks going through a new deadline. the final deadline is the 31st of december. right now it looks as if even if there will be a deal, it will not be able to go through parliament by then. it makes a difference whether there will be a wto trading for a few days or a few weeks. will have a significant impact on the weeks to come. right now coronavirus concerns dominate. the bank of england of course, they are watching like the rest of us to see where the coronavirus story goes, where the brexit story goes. any thoughts on what we should , the for specifically moves in the markets and the bank of england response? >> the mood in the market is going to determine how the bank
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will react. there are still discussions ongoing. an even with a brexit deal, the headwinds for the u.k. economy will be severe over the next year. a noer, in the case of deal brexit, i do not think they -- set to lower into territory. depending on the market conditions, they may consider a rate hike to stabilize the situation. they are not set on a clear path going forward right now. pound was not quite the weakest performer. the norwegian krone not doing all that well. where are you looking for weakness in the european fx
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space at this point? clearly there is an oil link with norway. >> exactly. norway and the canadian dollar are suffering from decline in the oil price, which is also driven by the coronavirus concerns. otherwise in the european sector , we don't doubt the new developments will have a lasting impact on the euro right now because it is more driven by considerations on how the ecb's monetary policy is going to unfold. this interesting development can rumors as there are some the polish central bank might have intervened to weaken the polish currency. that will bery discussed in the market this morning. to the pound and
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where we started this conversation, looking at the virus as the main story at the moment, when it comes to brexit, though, what kind of time horizon are we looking at given what we know and don't know about this negotiation? >> for several weeks now we are always looking at the 31st of december. deadline.e it is very difficult from a political consideration perspective to find a deal before the very last second. i think the holidays like christmas are always good motivation for the negotiators to find a deal. it will be interesting whether something will come up before christmas. as i said, that might be too late.
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know,g as the consumers ok, we are going forward with a deal at some point in the early days of 2021, this will not matter as much. will it breakis down before the 31st of december or not? --the market can still before, the market can still deal with it. afterwards it will be interesting. anna: thank you very much. stay with us. we will get into conversation about u.s. stimulus next. coming up, congress reaches a deal on a $900 billion pandemic relief package. ♪ ♪
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the usual gifts are just not going to cut it. we have to find something else. good luck! what does that mean? we are doomed. [laughter] that's it. i figured it out! we're going to give togetherness. that sounds dumb. we're going to take all those family moments and package them. hmm. [laughing] that works.
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>> more help is on the way. moments ago in consultation with our committees, the leaders of the senate and the house finalized an agreement. it will be another major rescue package for the american people as our citizens continue battling this coronavirus this holiday season. they will not be fighting alone. perfectbill is far from , nor is it the bill we would pass if democrats had a majority in the senate. it is a strong shot in the arm to help american families
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weather the storm.
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>> european futures are weaker this morning, hit by missed brexit deadlines and london's increasing isolation from the rest of europe. certainly a lot to digest. looking at what is getting hit the hardest by far, it is u.k. assets, especially the pound. we might be seeing ftse 100 futures in a twist of fate doing better than other markets because of that currency effect. regardless, there is a lot of concern. part of this comes down to, even though if we do get a brexit agreement reached, this opens up the possibility that in the first quarter, we continue to get more lockdowns, we continue to see more strain over this virus. that continues to really hurt assets here. we heard from bluebay asset management saying they are pulling their long pound position. this is before the lockdowns were announced, but this tells
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us what the situation is like at this time of the year. you do not want to be long a risky asset at the moment when markets are so illiquid. you don't want to leave positions on the table heading into this season. the stimulus agreement may be helping lift assets, but we are getting a clear value selloff. what has happened here is perhaps that the cyclical trade came on too soon. people were too optimistic so the stimulus package is not going to do too much at this moment. if we are going to get a vaccine that is going to be helpful, that may be 2021. it really might just be too soon in order to really price that in. that's a lot of what we are seeing at the moment. you see the pound down 1.5% so far this morning.
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anna: welcome back to the european market open. 30 minutes or so until the start of the session. european futures point to the downside preoccupied with the lockdown measures and further spread of this new variant of the virus. ftse futures down by 1.7%. euro stoxx 50 futures down by more than 2%. the pound under pressure for those reasons and also brexit. let's get a first word news update. say a lengthy
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effort lies ahead to identify the extent of a suspected russian hack on federal agencies and private companies. mitt romney says russia acted with impunity in launching the attack. president trump is playing it down, suggesting china may be to blame. japan has approved a record $1 trillion budget. it as to the developed world's heaviest debt burden as the country struggles to fight coronavirus and support its economy. earlier this month the government announced a rescue plan with some of it funded by next year's budget. virus is tightening restrictions amid a growing outbreak of coronavirus infections. household gatherings are now limited to 10 people and at least three states are imposing travel restrictions ahead of the christmas holiday. 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.
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even as vaccinations get underway, a member of joe biden's covid advisory board is arguing against complacency saying the epidemic is worse than it has ever been. a harvard medical school professor told bloomberg vaccinations are not likely to be completed until well into next year. administration's predictions that the general public will be getting vaccinated in the spring sounds optimistic from everything i have seen. these hiccups are going to be happening whether it is production, delivery, it is a massive undertaking, and i want to be careful we are not sending out messages that say it will all be over by late spring. i think it will clearly take some months longer than that. probably to the fall. >> it is not entirely over. point is it making a
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substantial difference of the pandemic? 70%? 80%? >> there is no precise number. the 70% to 80% as in the right ballpark based on what we know. the next couple months we will get more data to learn the critical thing we don't know. the vaccine reduces your likelihood of getting seriously ill with covid. is it stopping you from getting asy symptom attic -- mptomatic infection you could transmit to others? we only know you are less liquid to get sick with the vaccine and that is hugely important. 80%.ave to get 70% to if it is stopping transmission entirely, that will help. >> understanding there is no position to this, but if there is a bell curve when you think
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we might get to that, where would that date be? >> the biggest drivers right now are going to be two things. production and distribution as well as the willingness of people to get vaccinated. assuming production and distribution is going to take i think into the summer, i think we are looking at late summer, early fall to be the more likely timeline that people could count on. is it possible it happens faster? absolutely, but that is not what i would bet the farm on. >> you were such a specialist in public health. give us some guidance, what do we do to get to that point? we had andrew cuomo earlier today say we set a new record for one day cases. 12,000 in new york. we are seeing that around the country. what do we do? >> it is so important to understand that right now the
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epidemic is worse than it has ever been. as of last week it -- covid-19 is now the number one killer in the country. we have more deaths per day than heart disease or any other category of illness. and this is getting worse. , wee head into the holidays are seeing the possibility of what dr. fauci called surge upon surge. people got together over thanksgiving. we are going to have that happen at christmas. going toy know we are cross the 400,000 death point based on the number of infections happening now. one in 100 people have tested positive in the last two weeks, meaning a massive amount of active infections still out there. the critical steps are the ones we have known from the very beginning. it is taking it seriously, wearing our masks, maintaining social distancing, being
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restrictive about those we get together with outside our household. and when we do get together with others, absolutely maintaining can distancing and when we get testing to be sure we are not getting infected ourselves. it is really those basics. the big issues are indoor gathering, especially where people are eating and drinking and taking off their masks. if a small percentage of the -- it is a small percentage of the population driving behavior. about 20% not wearing masks, getting together with larger groups of people, but they are keeping this infection going. we have to get to where we are 90% doing the right thing and better. talking about the extent
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of the virus in the united states. in europe, much of the new strain identified in the u.k., the impact that might have on cyclical stocks, we will get further details. up, u.s. stimulus breakthrough. congress reaches a deal on a $900 billion pandemic relief package. we have the story next. ♪
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anna: 20 minutes to go until the start of cash equities trading. euro stoxx 50 futures pointing to the downside. u.s. futures have been a little bit more resilient based on a story we are about to get to
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shortly. nasdaq futures down by just a 10th of a percent. lawmakers have agreed to a roughly $900 billion pandemic aid package including money for businesses and unemployment programs. let's hear the details from a reporter following this for us. bruce, the only bit of good news i suppose markets are clinging to from a global perspective this morning. what is in this deal? includes $284 billion for the paycheck protection program, which provides loans to small businesses. it includes moneys for transportation, including airlines, for vaccine distribution, very important right now, and includes money for education. we do not know the details on how much money goes to each of those categories. we are waiting to see the final draft of the bill. paymentsncludes direct
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, $600 to most americans. there is also $300 per week in unemployment benefits that will last for a couple months. so some important elements to it. what about what is not in the deal? this has been a long time coming. this has been talked about for months. what did not make the cut? >> that is actually important because it explains why this has taken so long. some of those things they just could not reach agreement on. wanted 150 billion dollars for aid to state and local governments. republicans refuse that. wanted liability shields for companies in case they would get sued by employees with covid cases.
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democrats were very opposed to that. that is not in the bill. there was a last minute, 11th hour complication. republican pat toomey from pennsylvania tried to put on a provision that would prohibit the fed from restarting lending expires which are set to december 31. both sides claimed they won that. we will have to see where that all goes in the new year. an interesting last-minute dynamic to the conversation. we are looking at $900 billion of pandemic relief. what is going to be the impact of that? term, it willt certainly help. there are a lot of people in desperate need of assistance. this will help a lot of people in the coming months.
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it will provide a boost to the economy. nobody expects this is going to be sufficient in the new year. vice president-elect biden has called a down payment. anna: we seem to have some interference, or losing connection with bruce. thank you very much to bruce for joining us. we will certainly keep across that for everybody. it is 7:43 in london. let's get a bloomberg business flash for you. the sixth biggest u.s. banks are set to buy back as much as $11 billion of their own shares in the first quarter after the federal reserve greenland buybacks.
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it follows the second round of 2020 stress tests with the central bank saying lenders have the capital to whether an extended downturn. softbank plans to file to raise at least $500 million through a blank check company. a source told bloomberg it will be run by the same group that runs the vision fund. it will be used to buy a company softbank has already invested in. no comment from softbank. movingsk discussed tesla's cash to bitcoin. a supporter of the cryptocurrency encouraged the the billionaire to make the shift. musk has indicated he is tempted by bitcoin which is more than tripled in value this year. that is your bloomberg business flash. . back to the virus story, the u.k. has been plunged into christmas chaos with police blocking people from boarding trains and trouble with europe
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band. into emergency lockdown as a new strain of the virus rages. >> the new variant is out of control. we need to bring it under control. this news about the new variant has been an incredibly difficult and frankly an awful year. germany and france are becoming the latest nations on the continent to suspend flights from the u.k.. for more, let's get to our brussels reporter standing by with details from that. how disruptive can this get? we are seeing almost every few hours another country added to the list of countries that will not allow britain to travel to it. , trade is also being disrupted. the list isand already big. some of the biggest countries in europe. netherlands,h, the
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joining that list of countries restricting u.k. travel is fermenting -- travelers from entering. that list could get bigger. this pointception at is spain. they say unilateral measures are not going to help and if anything, they are going to create more air traffic problems heading into what is one of the busiest times of the year. the only main exception is spain. that could change. 11:00 a.m., the meeting is expected to take place in brussels. in terms of the restrictions and the disruptions that could happen. we know that is affecting aviation. if you are not able to get into a flight, you are going to want your money back or you are going to want the flight rescheduled. there is very little clarity as to how long restrictions are going to be in place. --s could potentially be this is happening two weeks before brexit, that is already
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accelerating the issues we were fearing could happen at the borders. huge lines and so on. minister, it is very obvious today in the european press, it is a blow to the idea 2021 is going to be a good year for the u.k.. you could argue a lot of this has been spanned from the european press, but the image is one of u.k. borders in chaos, and get ready for what could be a volatile 2021 given that we could be headed into a very tricky time of the year regarding brexit. we were certainly waiting, bracing for chaos at borders surrounding the brexit, the end of the brexit transition period. that seems to have come early for a number of reasons. it was coming already with businesses stocking up, trying to stockpile ahead of the deadline. then you had virus chaos. u.k., people are being
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asked to not to travel to get across the channel. the french have closed that for trade purposes. this is coming at a very difficult time. how does this impact the brexit talks themselves? >> with the europeans are saying is you should reach -- should not read too much into the politics. it is that time of year, there could be a no deal brexit in two weeks time. they argue they are simply responding to the mutation the prime minister said the u.k. identified on saturday. what is interesting and i would know to this, too. europeans may have jumped the gun and they may be overreacting . the u.k. does a lot of sequencing, in some cases more sequencing than european counterparts. it is almost logical they would identify this new variation
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before any european countries have. what the u.k. is doing is the right thing to do, to identify a new variation. when you go back to the conversation on brexit, clearly it does add to the tension we are already seeing play out. it does add to this idea we are heading -- you remember, we knew yesterday was presented as a deadline by the european parliament. they argue this deal or no deal is not going to be able to rectified in january. it is stress headed into what was already a busy time of year. anna: we are hearing from the u.k. transportation secretary the u.k. will not extend the brexit transition period. if that was part of anybody's thinking, that is certainly still the u.k. line. time does seem to be running out. with aadeo joining us
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.irus response let's quickly check on what's going on on european equity markets. euro stoxx 50 futures down by 1.9%. ftse futures down 1.4%. it is the french market and the ibex for we are seeing the most fall. where we are seeing the most fall. we are bracing ourselves for further fallout from those cyclical stocks that have been so heavily bought of late. the ones that represent the return to normality, the back to work trade. we will be looking to see hospitality names under pressure. minutes away from the market open. we will get your stocks to watch including food delivery companies. they could be the one that you better -- the ones that do better after this new virus mutation. plenty of be hospitality businesses in focus at bloomberg. ♪
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>> the briefing i had, particularly about the speed of transmissions, it was not possible to ignore. when the virus changes its method of attack, we as a country have to change our method of defense. we are learning about it as we go. we already know enough, more than enough, to be sure that we must act now. of course we bitterly regret that this is necessary. i know how much care and goes into preparation for christmas. you will have to lift a glass to those who are not there in the knowledge that it is precisely because they are not there to celebrate that we will have a
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better chance they will be there next year. boris johnson speaking over the weekend, reading the news, many in the southeast of england that christmas will not be as they imagined. for many businesses in europe, this is something we are watching. joining us now is dani burger. airlines, as if they were not bad enough, we have seen focus on the aviation sector. some of the launches have been called back. not today we expect. >> it is not just if you live in the tier four area in london or surrounding areas you cannot travel, or european countries banning travel from the u.k.. spread, willt does we see stricter lockdowns that curtail travel in general? .e have seen stocks obliterated lufthansa down for percent. carnival, 11%.
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brian, 8% down. british airways parent down a percent today. that will be one of the hardest hit when we look at the open. anna: certainly a focus on hospitality and the trouble sector. what about the banking sector? many banks have been doing quite well with the return of cyclical trade as well. how much does that stand threatened right now? tolect some of this return cyclical is being questioned. out, the dividend trade is under concern. we will see banks start to suffer and therefore may not get the return investors have been looking forward to. hsbc and standard chartered down as much as 4%. thanks very much. dani burger with the latest on the companies that are hit hardest.
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businesses will benefit and the home delivery businesses, businesses that deliver groceries and take-out food to your front door, no doubt will see. coming up, a focus on the virus in europe. the u.k. at the heart of that conversation right now. this is bloomberg. ♪ ♪
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anna: one minute to go until the start of european equity trading. london's emergency lockdown. christmas is canceled for millions after boris johnson said the latest mutation of the virus is impossible to ignore, forcing britons into tier four restrictions. britain in isolation. france, germany, and italy are among the countries suspending travel from the u.k. another round of brexit talks end without agreement. relief.e is some
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congress reaches a $900 billion stimulus deal. a vote is expected later today. u.s. equity futures proved their resilience with the nasdaq and dow temporarily pointing higher, though now they are coming to the downside. welcome back to the program. moments until the start of the trading day. i will give you the nuance over u.s. futures. nasdaq futures point to the upside, but the dow and s&p futures point to the downside. the nasdaq managing to focus on other matters. elsewhere, we are all focused on the variance of covid-19 and what it does for the latest lockdown measures in the u.k. and what they do to businesses and beyond. we have seen parts of europe come forward with travel bans on those from britain. as a result, this has become a more european focus. in asia, we see various countries come forward and say we will not accept flights from the u.k. as scientists scramble
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to work out how serious this new variance is. the decisions over the weekend in the u.k., about 15 million or so people in much stricter lockdown here in the southwest of england. the ftse 100 down by 1.6%. the cac in paris down by 2.4%. the ibex down by over 3%. we are having an impact on other assets. we see strength in the dollar and weakness in oil price. being undone.rade start to see some of that coming through. ryanair down by more than 4%. some of theng for other airlines to start opening up. we will keep a night on that sector and food delivery businesses to see where we are
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getting a response. london and the southeast of england have been under emergency lockdown as the government tries to control the new strain of the virus. >> the new variance is out of control and we need to bring it under control. this news about the new variant has been an incredibly difficult end to an awful year. more than 16 million britons are required to stay at home. the mutation is causing concerns across europe, with countries including germany and france suspending travel to the u.k. joining us is bloomberg intelligent senior pharmaceutical analyst. we are focused on the market response and fallout from the latest lockdown measures, but really we are still scratching our heads to fully understand the significance of this new variant. one thing the scientists seem to be sure about is it is more transmissible than other variants. how significant is this in your mind? reporter: good morning, anna.
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transmissibility is something that still has to be proven. momentypothesized at the that it is based on the population data that they are seeing, but it is a strong hypothesis, i would say. that is the way to think about it. what that means is the measures that governments are taking wherever this you tatian turns out, and i am pretty certain it will turn up elsewhere, in terms doubling down, because that is the only way you can stop transmission. anna: we were hearing from the who earlier that the u.k. has done a lot of genetics and good saying and as a result might -- and the might be more likely to find them. it may be in other parts of europe. how much do we know about the
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spread of this variant? reporter: not a lot. the u.k. and denmark are absolute leaders in the pace and quantity of genome sequencing we have been doing. interested tolly see what is happening in the united states. the hypothesis seems to be this has been driven by the use of convalescent plasma in patients that have immunosuppressed situations, to help them cope with an infection, so the infection lasts a long time and creates the opportunity for the virus to mutate. but they have been doing this in the united states, too. they have been doing this elsewhere. i would be very surprised if we don't find this. in the next week or two, i am sure we will hear stories about how widespread it is, which is the key question. anna: thank you very much. sam fazeli, thank you very much for giving us your thoughts. four minutes into the session
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that looks really negative for european stocks. u.s. futures mostly point to the downside. stoxx 600 in europe down by more than 2%. just giving you some of the aviation response. 5%.air down by more than lufthansa down by more than 8%. we do not have prices on easyjet. joining us is our guest, head of global macro strategy. really good to speak to you. i know you like many investors have started looking at the cyclical trades, the opening up trades. does it now seem as if that was a little premature, or were we always going to get these winter setbacks and we need to focus on the medium-term? guest: good morning. we were always going to get these setbacks, and we were always going to have profit taking. we knew it would be a difficult winter. we new measures would get tighter, particularly in europe. we went from trying to save
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christmas to now blocking christmas and not just in the u.k. february,y, january, until the better weather of easter, it was always going to be complicated. overarching is still going to be the vaccine news. that doesn't mean we can't have down days like we are seeing this morning, or that it cannot continue a bit. but when you look at the outlook for 2020 one, it is a lot stronger than it was for 2020. vaccine rollouts so far have been ok. this new mutation doesn't seem to impact the vaccines because there have been hundreds of mutations already of this covid virus. i don't think this is really surprising at this point. to underline the response we are seeing, iag is open, easyjet open, and both opening around 16% to the downside. say, it is not just hospitality sectors. ,e are seeing this in energy
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bank shares under pressure, energy under pressure because the oil price is down over 3% overnight. thanks under pressure because perhaps these cyclical trades have been overdone. when you look at the banking sector, hsbc down by one point 6%, standard chartered down by more than 3%. do you think we have been a little too quick to go back into those cyclical trades, or what is the story on banking? are still optimistic about european banking. reversals are not that surprising. the rotation did start early on the vaccine news and there are plenty of things we don't know, and plenty of question marks about the vaccine rollouts and potential hiccups. valuation lies, european financials are extremely cheap. there is potential there. airlines and others are going to get hit because lockdowns are looking stricter.
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christmas travel is not going to happen now. i don't think it is a question of was it too soon or not. it could be, did we get too carried away. at sentiment, that is probably more the case. maybe the u.k. news was worse than expected, for sure, but these types of days are not surprising, even in a positive, bullish outlook perspective. virusas long as the positive news flow remains on the agenda, remains on the horizon into next year, maybe this is just a short-term blip. it is just the 21st of december, the shortest day in the northern hemisphere. maybe that gives us reason to be cheerful. let me ask you about the oil sector. oil prices are down by more than 3%. we have news coming through from shell overnight, and specifics around their business.
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they are talking about the quarterly oil trading business is lower. there is reason to be gloomy about shale, but in terms of bp and other businesses, how do you play the oil sector at this point? guest: a lot of it is about investment horizon. we know the picture for oil gets better throughout 2021. the more we vaccinate people, the more people get back to travel. we know particularly that people want to do tourism or leisurely travel. maybe not as much business travel as compared to the precrisis. we always knew also that at some point there is still very abundant supplies. you have this rally in oil markets, in oil prices, and at some point it was probably going to get capped by supplies. less overwill travel the festive period, and we will travel less in the first quarter. not really surprising, but it
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postponed some of that pickup in demand that the oil sector was expecting. if you are trying to trade short-term, it might look a little ugly for a couple days. if you are thinking six or 12 months out, i think there is some upside potential, although i think it might be limited. anna: i am reminded about the performance of nasdaq futures overnight and the relative outperformance of food home delivery businesses in europe, the likes of hello fresh. reminded by those moves that the work from home trade, the technology trade around the pandemic maybe isn't done yet. were you thinking when you were getting in cyclicals that you were rotating away from those, or were you keeping exposure to that sector? guest: we have kept exposure to that sector. first of all, the work from home trade is not over yet. we are going to be working from home for a long time and it will take a long time to start to get
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back to normal. at this point in the timeline, it is somewhere in the summer of next year. it is a lot of people who need to get vaccines before we can reopen much more broadly. if you think of technology in particular, fermi it is ebb -- for me it is a long-term structural or winter -- structural winner. companies are working more online and a lot of that is not going to go away, even when we reopen. can the sector underperform as cyclicals take over a little bit and we get this catch-up reopening trade? absolutely. 12 months out or beyond. i do not think this is the end of the technology outperformance. anna: thank you very much. esty dwek is investment managers head at natixis investment managers.
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any calls to the upside, please? congress reaches a deal on a pandemic relief package. we have that brighter story next. this is bloomberg. ♪
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>> more help is on the way. with our committees, the four leaders of the senate and the house finalize an
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agreement. there will be another major rescue package for the american people. as era citizens continue battling this coronavirus this holiday season, they will not be fighting alone. this bill is far from perfect, nor is it the bill that we would pass if democrats had a majority in the senate, it is a strong shot in the arm to help american families weather the storm. has reachedongress a deal on a roughly $900 billion pandemic relief package. the hard-fought agreement is aimed at supporting the u.s. economy as the pandemic continues to. deal later today. esty dwek is still with us. some brighter news for us this morning. certainly in other
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circumstances, on another day, you might have expected this to drive a risk on move in markets. we have seen the dollar focus much more on the new variant of coronavirus and the negativity around that rather than focus on the pandemic relief fund we are now getting in the u.s., this $900 billion. how do you expect the dollar to respond to this latest news flow surrounding the bailout, the latest support package in the u.s.? guest: at this point, it looks like it is a combination of the more negative news in europe and the fact that the dollar has weakened so much in the last couple months that taking a breather on some of this news is not unexpected. normally, you would have a much more dollar weakness coming through with this stimulus announcement. although some of this was expected. for the past week or two, we have been anticipating this
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bipartisan proposal and it would look like it would be tied with the budget. the probability of getting this done before christmas had gone up significantly. some of this was priced in. if anything, no agreement on this in the couple days ahead of the end of the year would have been another negative surprise. this is definitely positive. the more important components are in this new bill, and it did come before president-elect biden arrives in. january but some of this was already expected. maybe that is why the dollar was focusing more on the european story than the stimulus story right now. anna: and when you talk to clients, what is there concern at this point? were they assuming we would get that fiscal support coming through, and what do they expect to see with this military and fiscal support doing to inflation?
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what is the conversation around inflation at this point? guest: that is the big question. onget a lot of discussions the rally, on corrections, on rotation, but we keep getting questions about inflation. frankly, i am in the camp where we are not going to see massive inflation. most of the stimulus, and we saw exactly in the new announcement this morning, it has been about income replacement, and unemployment benefits have been brought down because they were thought to be too generous and just incentivizing going back to work over the spring and summer of last year. massive stimulus coming into people's pockets. we have already seen the d monetary side does not necessarily lead to inflation. definitely a question from our clients and other investors. think it is going to be concern, and
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especially we don't think the fed is going to see it as a massive concern and change any of its recent forward guidance. anna: when you look at which markets to put money into, if you think there will always be hiccups and setbacks caught in the way of the opening up trade, the pivot to cyclical trade, where do you want to put your money at this point? i am looking at your today moves on the bloomberg and -- at the year twto day moves on the bloomberg. do you still want to put money into u.s. large caps right now? there is quite a big range between the dow and the s&p. the nasdaq is down, for example. guest: absolutely. for me, this is really about time horizon. if you are trying to look at the next two weeks and the first quarter of 2021, i would stick with the rotation.
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vexing news will remain supportive and fundamentals are supportive. we are getting the ongoing monetary stimulus. earnings are pretty good. i think there is a bigger question mark in the sense of, will we have already gone through so many different phases this summer that we ended back where we were before the pandemic? in a situation where the u.s. and a number of emerging markets are out performing. the time horizon depends. i believe in the rotation, i just am not sure how long it will last and if it will be for all of 2021. anna: thanks very much. esty dwek, chief investment manager head of natixis investments. she will continue her conversation with me on bloomberg radio at 9:00 a.m. u.k. time. a quick check on the markets. stoxx 600 in europe down by one
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point 7%. the ftse 100 cushioned from the worst of the fall. pound weakness in that graphic for you. in terms of the stock market and where we are seeing the worst reaction, the sector most hit is the travel and leisure sector, down by more than 3.8%. this is bloomberg. ♪
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welcome back to the european market open. what a day we are seeing. 23 minutes into the european equity market session for monday, down by 1.9% on the stoxx 100. very much a focus on the latest spread of the new variant of covid-19. european stocks have been following this morning, hit by the coronavirus. london increasing isolation from the rest of europe and the mist brexit deadline. joining us is dani burger. what are markets telling us this morning? how much concern is there over this new strain of the virus? dani: the pound is down by more than two standard variations. clearly we are getting immense strain. growthoff of that story, hampered by news of the u.k. lockdown. it is not necessarily just that we are having the u.k.
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increasingly isolated from the rest of europe. it is hitting travel, but that tells us we are not necessarily in a place where we will not continue to see lockdowns through different regions throughout the entirety of the western world. even if we do get any sort of agreement on brexit, this will be a threat continuing into the first quarter. i don't think that had necessarily been priced in yet, these really severe lockdowns in q1. tornight, volatility jumping the highest we have seen in the spring. the pound is off the most since march 18. we are getting this echo of what we saw earlier in the year, how the markets initially reacted to the pandemic. we are seeing not as a severe version of that, but a version of that as well. story,add exit into the the market is as ill as it is right now and you don't want to have any positioning right now. anna: thank you very much.
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it is the shortest day here in the northern hemisphere. for some reason, that makes me feel better about all of the gloom we are covering this morning. we do have the upside, the up story, of the stimulus package passed, or congressional leaders agreeing to it in the united states. that is the other side of the trade this morning. let's get a look at the movers in europe. dani went through the big picture narrative about why we are moving, but here are some of the individual gainers and fallers. iag moving down by over 13%. this does not take a genius to work out the links to aviation, lockdowns being extended. hsbc also falling. some of the banking stocks have done well on expectations of cyclical trade and expectations of dividends to be paid out. shale also in focus, oil prices down. about the extent to which it is weighing on their business.
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ocado one of the bright spots, up by just over 3%. many people getting back into those home delivery trades. more on markets when we return. this is bloomberg. ♪
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welcome back to the european market open. 30 minutes into the trading session. if you were hoping to a quiet run-up to the christmas period, no such luck. stocks falling with european equity markets falling quite considerably. the stoxx 600 down by just over 2%. the ftse 100 cushioned from some of the worst of those falls because of the weakness we see in the pound. that relationship, that negative correlation between the two, standing. in terms of the sectors in focus, travel and leisure is the worst-performing sector. we see banking stocks coming
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under pressure. to the upside, we have some money going into some of the more work from home stocks like theo moving to the upside, cleaning products made by unilever, and all those consumer staples. those moving to the upside. grocery stores and personal care is the name of the sector doing best this morning, even if none of these sectors are in positive territory. another deadline for brexit negotiations passed without any agreements. talks are set to resume today, even after the european parliament time limit has expired. let's get to our reporter, maria taddeo, who hopefully can shed light on what this means for parliament. certainlym hoping for that. i am joined by a member of the european parliament. he sits on the influential trade committee as the ep. said there was a
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clear deadline that you needed a legal text to ratify the future hypotheticals. that is monday morning and there is no text. so what happens next? >> it is quite clear. the process inside parliament cannot be closed by the end of this year. there will be a period where if there is a deal, this deal is not really ratified by the parliament. we have to manage this transition period so that the parliament has enough time for such a big trade. we will discuss it quite carefully how to manage the situation. but of course, no one is knowing if there will be a deal or not. is thewhat you say
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european parliament is not going to ratify the text this month, not going to happen, time has already run out. i wonder, is that the consensus view at the parliament? is that all of your thinking? >> of course. that is a common approach from all groups. fromlly, we have a period 136 in average for trade agreements. of course, we have some experience in those agreements. this is, of course, not possible by the end of the month. so we need some extra time for a proper process. yes or no on the deal is by the european parliament. on january 1,d based on that logic, we are heading into a period of no
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deal. what does that period look like in your review? >> of course we can find some measures to stabilize the situation as it is. it is depending on the situation if there will be an agreement or not. we can discuss whether to apply some parts of the deal to avoid disruption in trade and goods and services. it is depending on the situation. upare ready to be flexible to the time of next year. clear,to make it european leaders could agree to extend the period to bridge the agreement being voted or agreed at any political level, then ratification would come in parliament. do you foresee any scenarios in which the u.k. and the eu agreed
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to terms purely because of logistics coming into play now? >> of course. it is not my hope and not my wish, but if there is no possibility to find a compromise on a level playing field and other issues, then we are scenariofor a no deal going back to the wto rules we adopted last week for the proficiency measures so that we can avoid a total disruption in the supply chain. but nevertheless, there will be customs. it is a totally different situation as now. you have taken contingency measures and europe is ready for the no deal scenario, but i would say when you speak to businesses on both sides of the channel, they say that is not clear in any way, that they don't know what happens if there is no deal on
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january 1, or even if a deal is not ratified. what do you say to criticism that ultimately you are playing with fire? maria: they are right. understanding, to be honest. it is not adequate to the democratic process. even worse, it is not adequate to the consumer and the people on the ground. is going on in 10 days? this is less the responsibility on the process. maria: quickly, do you foresee that ryanair will come up with a deal that will come very close to new year's? i am thinking 29th, 30th of december. >> no, i don't think so. nevertheless, nobody knows. i don't have my crystal ball
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here with me. we hope by the end of the year, but i am not sure whether it will be on the table. we are prepared to be flexible to avoid the disruption in the interest of the economy and the people on the ground. maria: bernd lange, thank you so much for joining us after that deadline that has gone past on sunday. monday morning, we are already seeing disruptions now related to the virus, but it could be worse because of coronavirus and the brexit affect coming into that. anna? anna: thanks very much, maria tadeo, with that important interview, talking about the ratification process with bernd lange, member of the european parliament. he said the time has run out to ratify any deal before the end of this year. let's get a first word news update. here are today's top stories. london is in lockdown as the government warns a new strain of
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coronavirus is out of control. the so-called tier four means people have to stay at home except for specific reasons. it also bans household mixing and closes nonessential shops. european countries including france and germany are suspending flights from the u.k.. congress has reached a deal on a roughly $900 billion pandemic relief plan. democratic and republican leaders announced the deal yesterday. the text is still being written, but the house is expected to vote on the deal, followed by the senate. it leaves out the two most contentious issues. 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. a quick check on the markets. 38 minutes into a european equity market that looks very negative. down by 1.7%. u.s. futures continue to point down, but nasdaq futures point to the upside. we see money coming out of the
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pound and going into the perceived safety of bond markets. we see bond yields and gilt yields down at 1.83 on a 10 year horizon. brexit, covid, and market valuations make the u.k. a prime target. up next is malcolm mackenzie. this is bloomberg. ♪
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locum back to the european market open. 41 minutes into a trading session with the market down by 1.6%. the focus of the new strain of shields the u.k. biggest falls because of the weakness in the pound combined with the virus and a lack of progress on brexit. let's talk about how some of those matters built into the role that investors play. they are facing a double whammy from the new strain of coronavirus and lack of progress in brexit talks. what does that mean for activist investors? joining us is malcolm mackenzie. we have spoken to you about the role of activists. how do you see activists approaching the u.k.? many tell us how undervalued u.k. assets are now. guest: through 2020, activists have been sitting on the
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sideline. there has been less activist activity. but we believe it and our forecasts show that in 2021 activists will be coming back strongly into the u.k., for the reasons you are saying. we have a triple whammy of disruptions. we have technological disruptions. we've got the covid disruptions, which are obviously used today. as well as brexit and the broader trade disruptions. activists love disruptions because it sorts out is the management a premier division or second division? if it is the latter, they will not managed well and the share price will suffer, and that provides opportunity for the activists. anna: how are activists dealing with esg matters? a lot of the activists you speak to or you have dealings with right now, are they asking for more money to be returned to shareholders, share buybacks, dividends and the like?
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is that the focus, or is the focus the long-term sustainability issues that have been thrown into the spotlight around governance and the environment? guest: i think the switch is to the environment, to the end as bit -- to the e and s bit of esg. project there will be much more emphasis on the e and the s. the exxonis in situation, where you have seen engine number one aligned with the church of england, using its stake in exxon to demand changes on the east side. we see more of that coming through 2021. percentd what kind of of share ownership to investors need to have to really have their voices heard? that is a very general question. maybe it depends on the amount of free flows or the size of
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other shareholders, but broadly speaking, how has that evolved over time? guest: an activist will typically be looking for 5% to 10% of the free float. the activists, as you say, cannot do anything with 5% of 10%. they cannot take control of the business. they will be listened to, but little more than that. what an activist needs to do is form what is called a wolfpack behind them, where they are making the demands but typically investors are following behind them and tacitly agreeing with their demands. that is a type of way they operate. when it comes to esg or putting someone on the board, you have got to have whatever group following you. and thewhy the analysis research the activists do is so important, and that they are
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prepared to challenge things, which may be that internal management is not happy to do. they find the sacred cows and work out which need to be grown. anna: thanks very much for joining us. malcolm mackenzie, alvarez and marsal managing director. thank you for bringing us your thoughts. viruses mutate all the time, but a new covid variant that emerged in southwest england is causing concern across europe. the who chief scientist told bloomberg u.k. scientists are working with the who to study the mutation. >> it is really important that the studied impact, particularly when it becomes a dominant strain, we have seen this happen before with other strains where they arrive and then become the dominant strain. we have some advantage which allows it to spread. the bottom line is the interventions that are needed to
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prevent the spread, regardless of which variant it is, are the same. that is key and that is where we should be focusing. to figure out what are the implications of this variant that has been suggested? that would prevent antibodies from binding to the virus, and you will not have an application vaccine efficacy. these are questions that scientists will answer. >> how long will it take until we know the variance response to the vaccine? say it will take a couple of days, if not a week or more, because there are several experiments that need to be ran. it is such an important question. and wes to be addressed, need to let the science and data
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drive us. what needs to be done is experiments in the laboratory where the virus is controlled and then it is exposed to neutralizing antibodies from people who have either had natural infection or people who received the vaccine and who have antibodies that were vaccine induced. we do these experiments, then we will know whether we can neutralize this chain like we neutralize any other strain of the virus. we need to wait for these experiments to be done. >> is this new variant unique to the united kingdom? largest numbers of genome sequences on this variant have been described in the united kingdom. some reports are that countries like denmark, the netherlands, and even australia has cases. u.k.eep in mind that the has been sequencing much more
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than other countries, and so it is not -- similarly, south the -- they do most of the genome sequencing on the continent. is more countries need to do larger sequencing and add to the databases we have now . scientists can actually compare, look across countries, and also look at the timelines of how these strains have been evolving. at the moment, most of these strains have been described from the u.k., but we have to remember the caveats i mentioned, and that we might find it in other countries as well. it is important for us to keep track of the virus as it evolves because it is so important for treatments and for vaccines, for
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more antibodies, and so on. it is very normal for a virus to behave like that. there is so much focus and interest on this virus. the influence i virus you taste influenza-- that virus mutates much more rapidly. these are all possibilities in the future that we need to consider as well. but at the moment, i think there is no indication that vaccines will not work. viruses as they come under pressure, as we start using vaccines, viruses evolve to try to avoid those. that is the natural evolution. but at this time, i don't think we have any evidence to suggest that the vaccine in development will not work for the majority of people. no evidenceication,
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that the vaccines will not work. that was dr. soumya swaminathan, chief scientist at the who, speaking to my colleague annmarie hordern earlier on this morning. up next, more on the markets and the response we are seeing from various countries around the world to the latest outbreak in the u.k. norway holding flights from the u.k. an irish minister saying that a 48 hour travel ban is likely to be extended. all of this weighing heavily on assets this morning. this is bloomberg. ♪
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him back to the european market open -- welcome back to the european market open. down 1.8% on the stoxx 600. when i woke up this morning, i saw the news surrounding the u.s. stimulus being agreed in the u.s., and i thought maybe there is room for some upside for risk assets. but that is outweighed by more immediate concerns around the virus in europe. what is your take on the balance of those? reporter: i think so. virus has hand, the definitely spooked people. people were talking about a second wave. a lot of people were not talking about a new strain. a new strain spokespeople a
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little bit. but i think once markets get vaccines may that be still effective against this new strain -- we don't know, but that is the word we are getting from the who and westminster yesterday -- i think people will start calming down. on the question about stimulus, this is an aid package. it is not really this big stimulus package that everyone is waiting for. this is to keep the economy ticking over. keeping the balance probably gives markets some concern this morning. anna: it seems to be all-important for the markets thinking going into the end of the year, the link between the virus and the vaccine remaining intact in the face of this new strain. if that is true, perhaps some of the selling is overdone. we could ask the question, at least. let me ask you about something
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that has been topical, and that is bitcoin. the latest rally in bitcoin ha , it excited you? i have been stalled by bitcoin over the weekend just to see this work. people are getting very excited about this. bitcoin, it appears to have grown up into a full asset class. but i think people still need to remember who this is for. just because you can invest doesn't mean you should. this is still very volatile. it is an uncertain space at the moment. and it is still appropriate for those looking at the long time horizon or those looking for their portfolios. anna: eddie, thanks very much. always good to speak with you, and on such a gloomy monday, it is nice to hear your voice. eddie van der walt, thank you for joining us. that is it for the european market open.
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stay with bloomberg. "surveillance" is next. dayon, the first working after the restrictions. last?ow long will that this is bloomberg. ♪
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>> european equities slump on virus concerns. travel and leisure stocks leading declines. london close -- goes into full lockdown. france, germany, and italy suspending travel from the u.k. bertens biggest port stops traffic of the continent. in the u.s., congress has reached a 900 alien dollars spending package to take place later today. -- nine hundred billion dollars spending package to take place


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