♪ francine: the rally stalls. highly effective vaccine sends u.s. stocks to record highs but optimism is tempered with fresh restrictions across america. full speed ahead for tesla. the electric carmakers set to join the s&p 500 next month as its biggest ever new member. the bloomberg new economy form, bill clinton says xi jinping's long-term rain has upended relations between china and washington. happy tuesday and welcome to

"bloomberg surveillance." this is what the markets are looking at. the focus is firmly on the vaccine trial data out of moderna yesterday. the focus is of course on the fact that we could have a vaccine quicker than expected simply because it is the second trial data that is better than what analysts and watchers were thinking. this global stock rally powered by hopes that the vaccines will bolster economic growth was paused, partly because investors are weighing the spread of the virus. i think investors are also looking at valuations. and also, there is a bit of profit taking getting underway. inla jumped more than 10% after hours trading after the announcement that it will join the s&p 500 index on december 12 . in other asset classes, treasuries drifting with the dollar. let's get straight to the bloomberg first word news.

here's leigh-ann gerrans. >> good morning. the trump campaign is withdrawing a key part of its lawsuit against the election results in pennsylvania. it is abandoning demands that almost 700,000 mail-in ballots be thrown out because observers were kept too far away from the count. the challenge is now against a far smaller number of ballots. almost certainly just a fraction of biden's lead in the state. in germany, chancellor angela merkel has failed to push through restrictions to tackle the pandemic. she is postponing major decisions until next week after being unable to reach a deal with the regional leaders. instead, she is urging people to limit public and private gatherings. the strongest storm of hurricane season has hit central america. it made landfall late on monday in nicaragua, bringing catastrophic winds and torrential rains. at 155 miles per hour, its winds are powerful enough to crush

homes, snapped trees, and make areas uninhabitable for months. and finally, four astronauts have arrived on the international space station after a 27 hour voyage on the spacex dragon capsule. they will now begin their six month scientific mission aboard the orbiting lab. it is the first time in nasa's history that a full crew has been ferried to the space station on a commercial vessel. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine? much.ne: thank you so i promised you the share price for tesla after hours, so promise delivered. here it is. gains of 12% after the announcement yesterday that elon musk's carmaker will join the s&p 500 index after december 21. you can see premarket at the moment gaining some 12.3%. let's get back to our top story,

vaccine optimism. moderna's vaccine was shown to be 94.5% effective during its large late stage there trial. the ceo tells us what sets his vaccine apart. afford for 30 days to have a vaccine stored in a regular fridge, like with insulin. as you know, every pharmacy, doctor's office, hospital has that capability. we dig it is a very important game changer. the other piece to keep in mind is our vaccine does not require dilution. francine: for more on the vaccine, joining us is sam for li. -- sam faze a lot of optimism. this was widely expected because of the nature of vaccine, which is quite similar to the pfizer -- to what the pfizer vaccine trial actually gave us and that

was last week. what information do you have to give to make sure that this is a vaccine that will work and will be rolled out quickly? >> moderna gave us a bit more than pfizer did. they prevented so far the ,evelopment of severe disease so nobody in the vaccine group had any severe covid. looks like it also works in the elderly, which is a crucial element. i do not expect it to be necessarily different, but time will tell. the key thing that remains for all of them is obviously more details, in terms of more patients, and we could always ask for more as well, but clearly, the durability of the vaccines. that is something that would just be nice to see that data as it comes out and we get to analyze it. me a senseam, give of exactly what these vaccines are.

there is a lot of misunderstanding about what these two two types of -- two types of vaccines are, which are rna. is it going to be hard convincing people to take this vaccine? sam: i mean, people should not really -- it shouldn't make any difference to anyone. all that's changed is rather than using proteins are pieces of the virus that you inject into people first in a lab, you are just giving them the genetic material that allows their own bodies to manufacture it. we have extremely delicate and complex systems that control this. ga does not get into your enes, it doesn't do any of that. it allows yourselves to produce the vaccine -- your cells to produce the vaccine inside your body. from that perspective, i

wouldn't worry about it at all. sam, if somebody takes the vaccine, so it means you are less likely to get sick or almost unlikely to get sick, can you still be a vector of transmission? can you still give it to someone else? sam: francine, that's the question that nobody can answer today, including the ceo's of pfizer and moderna. unfortunately, the trials were not conducted in a way that would allow this to be properly analyzed. it has to be something that people look at further down the road. we don't know if people who are vaccinated who do not get the disease are still infectious are not. -- or not. anna: thank you so much for all the insight. of bloombergere intelligence. patrick armstrong's chief of --ive markets are wobbling a little

bit. are they worried about valuations? is there just too much good news priced in? patrick: well, markets have gone very far very quickly. the pullback we are seeing today at a fraction of a percent is inconsequential versus how things have rallied. i do think valuation will matter at some point. it is not something that matters right now. it is liquidity, central banks, reopening of the economy and the vaccine pushing risk assets, in particular, cyclical assets, the reopening of the economy. the pullback today makes sense, given how far things have come. i still think there is headwinds for some of the cyclical sectors in the near term. francine: where do you see value?

if you were to pick a part of the market that can still arise, you know, given where we are, where is that? patrick: well, our most recent additions have been in some of the hard-hit value stocks recently. it comes from that i believe that there will be the growth, reopening of the economy. i had a very big position in quality vol into this week. we've limited some of that. peugeot, some of the travel companies. airbnb filed for ipo yesterday. those kind of companies, solid profitability estimated. with the path back to profitability for these companies, i do think there is some value in some of those beaten down stocks at this point. francine: the big news yesterday, and i know a lot of people were tweeting about it, looking at exactly what it from, tesla on the s&p

december 21. how did you react to that? patrick: it's not a surprise. the timing, you never know when it's going to come. the math is staggering on tesla. if there is 11 trillion dollars tracking the s&p 500 and tesla's market cap of about 80% will make tesla the seventh biggest holding in the s&p 500. that will put at about a 1.2% weight. that will mean $130 billion of passive money. you also have active money that is benchmarked against the s&p. from december 21, you will have a risk for not owning tesla. put that on top of the big short position on tesla, you can see really strong demand that is just structural now for the next three or four weeks. it's not a surprise that it's entering the index. the timing yesterday, nobody

indicated it would be announced yesterday. they may not do the full allocation on december 21. s&p asking for some guidance. they may do it in two stages as well. anna: patrick armstrong there. he stays with us and we will talk a lot more about tesla shortly. coming up, we will not only talk about tesla, but of course valuation sector as a whole. adam was $390 billion in value, tesla set to become the biggest company ever added to the s&p 500. we discuss more about the s&p 500 shortly. this is bloomberg. ♪

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economics, finance, politics, this is "bloomberg surveillance." late trade on news that the stock is joining the s&p 500. the carmaker will join the index on december 21 after months of speculation and a temporary setback failed to make the grade in december -- september. the stock this year making tesla the most come -- valuable company ever to be added to the gauge. ipo,b filed for its outlining widening losses and plunging revenue due to the projectedbut it has optimism for a rebound in demand when the economy recovers. sources tell bloomberg the company plans to raise as much as $3 billion. let's get back to patrick armstrong. we touched on tesla. i want to go back to actually what will be in the s&p 500 for now. we saw also this huge rotation in markets.

how long can that continue for? patrick: it can continue for value stocks to have a sustainable recovery, you need to have either a steeper yield curve or higher interest rates. if that's driven by economic growth, where -- full employment, i think you will have a sustainable value. when future earnings are discounted at next to nothing, you should pay a lot more for growth companies. if there is a steeper yield curve, which a strengthening economy will lead to, all other things equal, used to have yield curve control at some point, i think that's the real catalyst for value. if people believe in economic growth, there is a higher discount rate for growth multiples. the cyclical companies generate their growth, the heavy lifting for them is done based on economic growth. other growth pins to what

products are, barriers to entry are. cyclical companies basically have that tailwind of the improving economy, should we get that. francine: the question we are asking today, patrick, on the , when will the s&p hit 4000? what will be the catalyst for that? patrick: you will have to see earnings growth. it cannot just be multiple expansion at this point. not, 2019 earnings are dissimilar to what they were in 2018, but the s&p was up massively. 10% this year. you do have to see earnings start to be proponents of that expansion. with economic growth, we probably think the u.s. is poised to grow at close to 5% next year. that's still not going to put

anything close to full capacity, full employment. you will have economic growth. 23, januaryo say 20 2023 for 4000. anna: when you look at -- francine: when you look at some of the other things, are we going to see a resurgence of ipo's, including airbnb? once we have the vaccine, does it become back to what it was like an 2019? patrick: you should have a surge arepo's, because there these unicorns that have billions and billions in market cap and basically not traded in equity issuance to private investors. with these kinds of multiples you are getting in the public markets, it makes a lot of sense. there is tons of liquidity. that liquidity is increasing what centralith

banks are doing, keeping interest rates pegged at zero. i do think with these multiples, it's just a no-brainer for companies to take the multiples they can get. there is obviously demand. usually, the oversubscription of all these high-profile ipo's, so i do think there will be a wave of ipo's in the coming year. francine: what does a biden administration mean for stockmarkets? patrick: it depends on the senate at this point still. that got two senate races are going to be finalized in january. it's looking like the republicans will win those, but with elections, there's never certainty. if we see the democrats take control of the senate, then it's a massive fiscal stimulus from biden, so environmental spending on infrastructure, raising minimum wage to $15, u.s. manufacturing really pushing

contracts. all of those things really progrowth. the consequence of all of those things would be higher taxes. you have a republican senate, it doesn't allow any of those things. biden will reenter the paris accord. the senate will not approve minimum wage being doubled to $1 5 an hour. it is still iffy, depending on how the senate races go. with gridlock, i think you are going to have less ambitious policies from biden, just because they will not be able to get them through. francine: what happens with china? does the u.s.-china relationship get better from here or could it actually get worse? patrick: i don't think it gets worse. i think biden's playbook will be ending the tariffs over time and basically synchronizing tariffs the u.s. do with europe and

other major allies. it will be going from america first to part of the old global order and the globalization, were basically -- where basically pushing values and being benefits of globalization, i think that will be going back to how the previous regimes were in america. you probably won't get there fully. it's probably good news for global trade, good news for china. if the u.s. does coordinate with europe any tariffs and pressure they have will probably have a much higher efficacy against china as well. francine: patrick, thank you so much. patrick armstrong there. coming up a little bit later wo ofof course it's day t the bloomberg new economy form. don't miss our discussion with christine lagarde at 4:00 p.m. london time. this is uber. -- bloomberg. ♪

♪ >> a competitive approach to china was inevitable, but keeping it healthy and not pernicious is vitally important, and that will not be easy. some some places, with cooperative action to a catastrophe. >> what i do believe both sides are capable of through the highest level diplomacy at an early stage of the biden

administration is to define the parameters. >> we should build an open world economy that works world -- works for all. we must safeguard the system under the wto and unequivocally reject unilateralism and protectionism. >> when your economy becomes so big and your interests are all you have told, protect your own interests. >> the american administration is about to change, but the clock will not simply be rewound. >> i hope that he would be able to focus his mind on developing a framework for an overall constructive relationship with china, because the last four years have been quite a tumultuous ride. >> they have trumpeted the decoupling and to have fully walked away from these international commitments, posing challenges to multilateralism. >> i don't think that going into

a world of deep protectionism going forward. i see more regionalism. those were some of the guests from the bloomberg new economy forum giving their take on their u.s.-china relations. i was just looking at the markets. the markets really not worried about what is coming up ahead in terms of u.s.-china. the focus is on the vaccine. coming up, a discussion with ecb president christine lagarde. don't miss at 4:00 p.m. london time and this is bloomberg. ♪ businesses today are looking to tomorrow.

adapting. innovating. setting the course. but new ways of working demand a new type of network. one that's more than just fast. you need flexibility- to work from anywhere. and manage from everywhere. advanced technology. with serious security. and reliable coverage, nationwide.

forward-thinking enterprises, deserve forward-thinking solutions. and that's what we deliver. so bounce forward, with comcast business. >> it will be available at first at the level of tens of millions of doses. i would suspect before the end

of this year, some 20 million to 40 million doses will be made available. the first into quarter, that number should ramp up to as much as 15 million to 100 million doses. tot will ramp up for 2021 500 to one billion doses. ofncine: that was the chair moderna speaking to us yesterday. the vaccine was expected -- was found to be 94% effective in the latest trial. that scheduled leigh-ann gerrans. leigh-ann: president-elect joe biden says containing the coronavirus is vital to economic recovery. he urges congress to pass a stimulus bill this year to deliver immediate relief to americans. biden says it should be likely to point true -- the $2.2 trillion heroes act passed by the house.

recruiting women into senior roles, according to a new study by zurich insurance. women applying for management jobs jumped 20% after the insurer advertised roles with part-time and a job share option. as a result, the number of women hired for senior positions jumped by a third. four astronauts have arrived on the international space station after a 27-hour voyage on the spacex dragon capsule. six-monthnow begin a scientific mission aboard the orbiting lab. it is the first time in nasa history that a full crew has been ferried to the space station on a conversion -- on a commercial vessel. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. francine? francine: leigh-ann, thank you so much. bill clinton says xi jinping's

long-term rain has upended u.s. china relations. he made the comments in a conversation with former u.k. prime minister tony blair. >> does a new administration in the u.s. -- i think the big challenge with china is to get what i would call a strategic framework for dealing with china , rather than a series of reactions to whatever the chinese may be doing. i don't know what you think about this, but it is distinctively two things -- one is that china power today is a fact and it is a perfectly justifiable fact in the sense that it is a large population, huge economy. china is and should be one of the great powers of the world for the 21st century.

the problem is the system is a different system, whereas i think when you and i were in anice, there was not expectation exactly, but a hope that as china opened up and developed, then political not in terms of turning into a western-style democracy -- but political evolution in the direction of more liberalism, i think that was our hope. it was my actual expectation. but you've got to say in the last few years that there has regressionxternal and more internal oppression. that is a fact of what we are dealing with now, and i think the strategic relationship is important to define because you need america and europe to work together. if, as it would be bad it were, europe is kind of

navigating between the u.s. and china, and i think that strategic framework has to accept that there will be areas of confrontation -- and you just mentioned some now. there are inevitably areas of competition. technology is going to be one. but you need to leave some space for cooperation. because whether it is the pandemic or indeed what we will talk about a bit later, climate change, none of these problems can be solved today without the participation of china. therefore, i think the analogies with the cold war are misplaced. some of the bloomberg documents show means decoupling is going to be painful for both of us,

for the west and for china. so i think if you can get, as you rightly say, the new president comes in and has a more strategic framework, then you can identify consistent with that, areas of cooperation, and at least offer china the possibility, whatever differences there are for those areas of cooperation, to be fruitful for both sides. pres. clinton: i agree with that. i also think we can strengthen our negotiating and operating position by reestablishing the had withhips that we other countries in asia, southeast asia in particular, who were our allies, who would have been the principal partners in the trade deal that president

trump killed the trans-pacific partnership. new administration chooses to revive that are not, we can clearly do more to strengthen our partnership and work with them. and we have to recognize that the old chinese system, which was by no means a democracy, still guaranteed enough to debate and play in openness because there was a regular rotation of leadership. now that it appears that a person is in charge of china who intends to stay there for life, in essence, that changes things. but we shouldn't accept or exhume -- or assume that it is going to be bad. we have got to give the new administration a chance to articulate an approach and try to achieve in cooperation with europe and the united states and

the international bodies a strategic partnership which will enable us to do good things together and try to minimize the bad things that we think will happen if we just walk away. francine: former u.s. president bill clinton, former prime minister tony blair come in conversation at the bloomberg new economy forum. we will have plenty from the new economy forum today. berkshire hathaway has tech and on big vaccine makers. and thisoming up next, is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get

straight to the bloomberg business flash. leigh-ann: hi, francine. tesla is joining the s&p 500 next month as its largest ever new member. it follows months of speculation, which helped the company's valuation skyrocket. to almost $390 billion. it will be one of the indexes' most influential members, with a weighting similar to that berkshire hathaway or johnson & johnson. spanish bank bbva is in takeover talks with rival sabadell to create one of the country's largest lenders. the move comes a day after bbva announced it was selling its u.s. arm to pnc financial. that gives it the firepower for a deal and boosts its capital ratio. and airbnb has filed for its ipo, outlining widening losses and plunging revenue due to the pandemic, but it is projecting optimism for a rebound in demand when the economy does recover. the listing is set to be one of the biggest this year. sources tell bloomberg the company plans to raise as much as $3 billion.

that is your bloomberg business flash. francine? thank you so much, leigh-ann. among and just -- in a bunk -- among investment giants reporting overnight was berkshire hathaway, revealing a big bet on vaccine as well. turning us is dani burger. first of all, what stocks precisely did berkshire buy over the quarter? dani: as you mentioned, there were a lot of pharma stocks that berkshire added. this reflects some of what buffett has been saying all this year, some concerns over the u.s. economy, and these bets reflect hope to the vaccine, or at least the benefit that the vaccine news could bring to these pharma companies. he put new positions and he and berkshire put as a whole new positions. at merck they are developing a covid therapy. ralliedefore pfizer

with the success of its vaccine -- you can see other pharma companies there as well. in terms of what berkshire sold, they are well on their way to exiting positions on j.p.morgan and wells fargo, in some cases exiting some 96% of the stock they own. they flash some of the local banks, amity and pnc as well, francine. and pnc as well, francine. francine: what sort of effect does this have on the benchmark? aboutwe have been talking how massive tesla is, and that can be a disruptive event, to put a 390 billion market cap stock into the greater index. managers who track the index would have to sell about $40 billion worth of other stocks in order to just fit tesla in. so dow jones, s&p, the owner and

the ittee behind the benchmark has been seeking comes from investors saying should we do this in two parts? what is the best way to include tesla? this could also be a boon for the s&p 500. rallied what has driven elon musk's wealth, and that is part of the reason why the nasdaq 100 has outperformed the s&p 500. asla rallied overnight with $15 billion gain in terms of musk's well. francine? francine: dani burger with the latest on some of these u.s. stocks. a busy day for the new economy forum. business and political leaders taking on issues from the economic fallout, the pandemic, and climate change. we spoke to the u.n. secretary general, and he told me his hopes forgetting to net zero carbon by 2015. that we are

committed to a number of transformations in the u.s. economy. the role of the u.s. private sector, the role of cities, the role of different states has been so dynamic, and bloomberg has been so active in pushing for it, that we are already seeing in the u.s. very , and a veryeps important mike bloomberg initiative is the proof of that. i think the governments are committed to move forward, and i believe the extraordinary dynamic of the american society will allow us to reach net zero emissions by 2050. francine: how worried are you has the largest u.n. donor still refused to concede the election? thatio: well, i think problem will probably be solved soon. wedo not need to fear that

do not need to interfere with anyelection process in country. francine: antonio guterres speaking with us at the bloomberg new economy forum. coming up, the global economy pandemic --onavirus when will it easy ech? this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. the global economy recover from 2020's coronavirus related session?

year aheadeased its outlook. the wealth manager says its base case scenario is for economic output and corporate earnings to boost rebound between -- two pre-pandemic levels during 2021. , one get to mark haefele of the authors of this report. great to have you on on the day when you release the 2021 outlook. is this based on having a vaccine, or are we going to see a rebound know better what? mark: i think that the vaccine is key to the speed of the recovery, and so a widely available vaccine by the second quarter, is in our base case, and the effectiveness rates of this base case are particularly important, the speed of which we can see that normalization. which we can respect to see in the third quarter of 2021.

i have to say, your year ahead outlook is simple to read, to the point. the 16 pagesns on where it really breaks it down. some of the questions you ask is, what does it mean for the u.s.? how quickly can the world recover? what do those questions mean for where you want to put your money? mark: we are calling it the year of renewal, and renewed growth, add new leadership both in the market and the u.s. thethen a real focus on renewable future. that gives you a couple of clues. the first is we buy into this view that we will rotate away from mega cap tech, and into some of the laggards, which are going to catch up. we have seen some of that already, but we think that that can continue for a while yet, as we get this corporate earnings rebound. that should foster a lot of good things happening, including some

companies being able to refinance at lower rates, which can help earnings. we think that the leadership change in the united states is important for a couple of reasons. one is while the u.s. voters chose kind of legislative gridlock overall, there will be changes particularly toward sustainability, and that is important globally because what we have seen, this trend toward these big pledges, carbon neutral by the middle of the century, that leads a lot of investors towards what the next big thing is going to be. does it: mark, what mean -- you say there is opportunity in the 2020 laggards. what exactly are those? you mentioned some of the mid-cap stocks. where did you find them region by region? mark: we like the u.k. market. create that is going to opportunities because it has

been beaten down so much compared to other regions and sectors that have improved. we like the cyclicals with industrials, which that is part of. so i think that is one of the ways that we would play this rebound. and then we are looking, i think, longer in tech, what do you do? moving more toward these companies that are disruptors within sectors -- so we are looking at syntax, we're looking at health tech, we are looking this 5g tech playing rollout, accelerated both by the acceleration between u.s. and chinese tech, but also by this rollout of things like the new iphone. francine: if you are expecting a weaker dollar, how do currencies fit in that portfolio for 2021?

mark: well, you know, i think that it is a backdrop that people have to understand, but i think in terms of their portfolio allocation, we would of the g10 currencies could do better, but also some of the higher-yielding currencies in asia are more attractive. one of these themes is hunt for yield, meaning that we would expect that some of that money could, for example, flow into these higher-yielding asian currencies on the back of that as people go further abroad to try and earn a yield. francine: i was interested in your call that you actually like some of the u.k. assets. is that because they have been oversold, or is it a matter of protecting yourself with the downturn elsewhere in the world?

mark: i think it is oversold. they have a recovery -- they have not recovered in part because the index in the u.k. is so cyclically oriented, and so -- and then of course we expect that there will be some resolution to brexit going forward. so all those factors can help. this all comes against the backdrop of the continued fiscal and monetary stimulus, which we think is going to be in place. so as people rotate out of the stay-at-home trade, we don't think that the market is necessarily going to selloff, but that people are going to look for the things that just need to catch up to what is happened -- to what has happened in some of these high fluting sectors of the market. francine: how do you protect yourself if things do not go to plan with the downturn?

mark: right. i think one of the areas we see our investors turning too often is gold. i think particularly of things is one going well, that of the places to diversify. the other thing that we see a lot of clients doing is using what is still relatively high volatility to try and harvest some of the premiums that they can achieve with structures, option structures, as a way to kind of cushion the potential for some of the downturn. francine: very quickly, what do you think is being mispriced in the market? is there something investors are not focused on right now, or overly optimistic about? mark: well, i think what they are mispricing is, you know, in some ways a desire for people to return to normalcy. when you have a vaccine that is this effective, i think in some ways that is being mispriced.

mark, thank you so much for thought rk felly, -- mark haefele. lynn burke surveillance continues in the next hour. tom keene joins me out of new york. don't miss our conversation with the ecb president, christine lagarde, back at the new economy forum. that is a little bit later on. in the meantime, a global stock rally powered by positive news of the vaccine past today. this is bloomberg. ♪

francine: the rally stalls. moderna's highly effective vaccine sends u.s. stocks to

record highs, but optimism is tempered amid fresh restrictions across america. full speed ahead for tesla. the electric car maker is set to join the s&p 500 next month as its biggest ever new member. and u.s.-china ties take center stage at the bloomberg new economy forum. bill clinton says xi jinping's long-term reign has upended relations between beijing and washington. good morning, everyone, and welcome to "bloomberg surveillance." tom and francine from london and new york. it maylook at the rally, be taking stock of some of the valuations, may be focusing on the fact that if we have a vaccine, we could have a lot more infected and a lot more people dying until we have a workable -- tom: the dynamics in the pandemic are real, and the job economy is important. what we know is francine is running a construction site. the room you are putting in