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. withoom you are putting in the construction that we hear,

that is the shoes, right? the shoe extension? francine: i don't know if you can hear it, but it is a neighbor's. it won't last very long. hammeringtle bit of there. we welcome all of you here, to the realities of the pandemic. the pandemic is front and center, but there is a lot of other news. i would note pacific rim currencies continue strong. francine: they certainly do, and there is quite a lot going on also in pound talks, so let's not forget brexit and the u.k. -e.u. relationship. les get to first word news with ritika gupta. ritika: the trump campaign is abandoning demands that almost 700,000 -- 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. joe biden is meeting national security experts, but his transition team is being denied access to officials and key departments. people who have left government during trump's term. angelaany, chancellor merkel has failed to push through a slate of tougher restrictions to tackle the pandemic, postponing major decisions until next week after being unable to reach a deal with regional leaders. instead, she urges leaders to limit public and private gatherings. fourrriving on the -- astronauts have arrived on the international space station after a 27 hour voyage on the dragon spacex capsule. it is a first time in sa 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

i'm ritikauntries, gupta. this is bloomberg. tom: thanks so much. let me look at the data right now, equities, bonds, currencies, commodities. a churn to the market after yesterday. a little bit of a lift in the nasdaq 100, futures -12, dow futures -63. we had a 22 handle on the vix. interesting to see how that develops through the week. in the yield space, a churn to the market, lower yields. and the dollar, fractionally weaker. a lot of dynamics in sterling, and i would note again renminbi out to new strength, 6.55 is miles from 7.00. francine? ofncine: global stock rally that had powered hopes that the vaccine would bolster economic growth, investors trying to

weigh off the near term spread of the virus. a couple of things that jump out at me. for -- first of all, tesla. the carmaker come after it was announced the carmaker will join the s&p 500 index on december 21, and then i'm looking at treasuries rising, dollar falling, wti crude oil advancing, and the pound rising on optimism over brexit deal. we have plenty more to talk about. u.s.-china tensions took center stage on the first day of the bloomberg new economy forum. the former u.s. president, bill clinton, urged joe biden's administration to take a more coordinated approach in dealing with beijing. pres. clinton: we should not assume it is goal going to be bad without trying to make it better. we have to take an articulated approach and try to achieve in cooperation with europe and the united states and the international bodies. joining us now is john

normand, j.p.morgan head of cross asset fundamental strategy. thanks for joining us. there is a lot to talk about, the u.s. economics, the biden administration. is there too much optimism priced into the market right now? john: i don't think so. everything that has come out of the therapeutic and the vaccine fronts in the past few months has come up better than expected in terms of quality of the results reported by the major drugmakers. it is right to think about the vaccine is really sealing the case for just being a less major wave of covid. and if you believe that is the case, you have to bet on a stronger economy without a lot of volatility next year, and that is what the markets are reacting to. i don't think the medium term pass that the markets are anchored by is justified at all. seeink we are starting to increasing lockdowns in the u.s.

this is going to cause episodic drawdown in risky markets, but i don't think it changes the direction of markets over the next several months. what kind of recovery are you expecting once we have a vaccine? john: i think once you have the vaccine, keep in mind that in the background there is probably going to be more physical easing by the time it is deployed to the general public. i think that is why 22 anyone is going to be where the global economy is printing above trend growth. monetary policy will remain loose, fiscal policy will be a drag but not enough of a drag to pull the trend. that is a pretty impressive environment for financial assets. yes, some of them are rich, but a lot of it constrains the upside as opposed to forcing prices lower. tom: you are right, hyper-detailed notes at a professional level, an

institutional level. that may take it back to the core question for institutions, and for all of our viewers, what do you do with cash? how do you deploy cash in the land of john normand? john: i don't think you hold much of it because anytime the economy is growing above trend, the bias on equity markets is higher, the bias on credit spreads is higher. handing down other financial assets cash, ex government corporate bonds, that will give you a fix. that is the best point of this. would you hold any cash at all? i think you should, sibley because many financial markets are -- simply because any financial markets are difficult to hedge where bond yields are so low. degrees a limited to that there is a limited degree to which one can hedge with treasuries. there will be some residual cash position, even though it may be small.

tom: i am going to rip up the script and go bridgewater on you , leading this charge at davos, which seems like forever ago. if balloons are useless as a bunds are useless as a hedge come does john morgan -- does john normand and j.p.morgan come up with an alternative? john: i would not claim to come up with them because they have been around for decades if not longer than that, so this is basic defense of assets in currencies like the yen or the swiss franc, defensive assets in commodities like gold. i think treasuries have some residual value. they cannot yield zero yet. they may yield 90 basis points, but there is some scope with those yields going down if the economy disappoints and the fed extends that the average maturity is purchased.

treasuries have a lot less usefulness than they used to have, but that may combine with other defensive assets in currencies and commodities like the yen and gold. does the market find yield in 2021? john: i think it is only in credit and emerging markets. reddit meaning high-yield, high-grade. i think there -- credit meaning high-yield, high-grade. it is basically about high-yield, probably em local markets. you cannot find any central banks that are going to be easing policy next year. it will probably be the em's that will have reasonably high interest rates -- mexico, russia, china, perhaps indonesia. it is obviously just a subset of the fixed-income universe compared to what people are used to thinking about as the yield option in this kind of environment.

francine: overall, when you look at some of the dynamics of the biden administration, are there sectors that will be hit more than others that we are not realizing yet? so, becauset think the biden administration becomes hugely impactful on a sectoral basis if there is a democratic sweep. so if the two georgia seats went to the democratic side of the ledger, and the sweep dynamic became reality, then you could talk about regulatory changes and a number of changes on the environmental front that would amplify the rotation that is already going on because of the vaccine. for most of 2021, the rotation you are going to see is mainly driven by the vaccine as a global phenomenon, not a biden phenomenon, and there is a rotation that happens because of the global economy. if you want to talk about something that will endure beyond the middle part of 2021, in terms of sector rotations, i think that has to be based on the swing. we will see how the senate races

turned in january. -- turn out in january. francine: norman stays with us. can you hear that? it is quiet. i think the neighbors are watching bloomberg. they heard you mention that they did not like all of the noise, and they stopped. tom: a union three hour lunch. francine: probably. newng up today during the economy forum, christine lagarde. tom: 40 pair of blinds. london,: 4:00 p.m. in 11:00 a.m. in new york. there are maybe new gold escalators being built next door. i will look into it and report back. don't forget to watch the bloomberg new economy forum today on the social channels, on twitter, facebook, and also on the terminal. this is bloomberg. ♪

tom: good morning, everyone. bloomberg surveillance. lots on a tuesday to speak up with markets on the move. john normand is with us, talking about relationships, correlations across asset classes. i want to cut to the chase, which is the great underestimation coming out of any crisis and maybe even a medical national disaster. is it people adjust. is there a great -- is that people adjust. is there a great adjustment going on now that is massively underestimated? governments adjust, adjust, and indeed the public adjusts, and that leads to a better outcome outside the gloom? john: i think it is too early to tell, but this will come clear

over the next couple of quarters. companies have become arguably more efficient about delivering whatever service they focus on through the pandemic. they move to greater efficiency through staff working from home, they moved to a digital platform --many cases delivering a keeping costs low in 2021, what we might be surprised by is how strong profits are and how resilient margins are in 2021 as the economy picks up. even if we do not see the pace of growth, which is two or three times trend, we might see an above normal profits recovery and margin expansion because they have retained is more efficient business practices well into the post pandemic era. question,is an unfair i'm going over to it, and this goes over to joyce chang and maybe market equity analysis.

is the great adjustment that we are under a digital adjustment? of a it is a continuation digital adjustment for many sectors, and sort of an adoption of digital practices in sectors that were not following that path previously. my expectation that a lot of that shift is permanent, that the pandemic basically forced businesses to do things that they should have been thinking about anyway, and they will probably see that benefit in terms of what is reflected in margins and profits over the medium term. what is yourn, take on europe? there was so much optimism after the green recovery deal and the questions about how much money will be deployed and when. what exactly happened on european assets and euro specifically? john: i think there has been, first of all, a second wave in europe which came much more

intensively than the people would have expected. everyone would have expected that europe would experience some measure of a second wave in the fall, but the bigger of that -- the vigor of that was beyond most people's projections. this is why you will see significant underperformance of the euro area economy and the current quarter versus other parts of the world. that hasn't had a very durable impact on markets. that was basically a phenomenon that affected european equities in the month of october, but not in the month of november. basically because the vaccine success has supplanted that. i don't think there is a huge amount to differentiate european from u.s. markets going forward, mainly because the vaccine dynamic is so dominant that it is eliciting all votes even though over the short term there is a pretty big gap where european growth is going to be this quarter versus some other parts of the world. european markets have gotten pretty lucky that the vaccine

story is driving everything currently. francine: have u.k. assets been oversold? we could have a deal. it is unclear how negotiations are going, but they seem to be more on the positive side today. john: i don't think they are oversold because u.k. assets need to reflect a reality that even a deal between the u.k. and the e.u. is a hit to long-term growth. it is not as big a hit as a no deal scenario would be, but it is a markdown nonetheless. i struggle to see the outcome from the u.k.-e.u. negotiations. if you see an upgrading u.k. growth, it is because of a joint phenomenon -- it is a phenomenon of joint monetary easing or fiscal easing or vaccine develop us. but i don't think any idiosyncratic pro u.k. market

next year.l increase tom: i am fascinated where you calibrate where the euro is too strong or the yen is too strong. do we grossly underestimate how quickly governments are going to adapt to stronger currencies off week banged dollar -- off weak dollar? john: i think there are central verbalo have used intervention versus actual intervention to resist currency strength. the g10 central banks tend to use verbal intervention much more than actual intervention. that is what if a currency appears expensive or appears strong, i don't think that is necessarily a strength -- a -- i think it is highly unlikely the central bank is adjusting monetary policy or undertaking fx intervention in order to reach that trend. i think the intervention is really one that is very much about e.m. central banks, asian

central banks. tom: john normand, thank you so much. always a wonderful brief here. he is with j.p.morgan. nasdaq futures green, red a green on the screen as well. dollar fractionally weaker. on central bank discussion, what a wonderful discussion with stephanie flanders yesterday, with leading central bankers. let's follow that at 10:00 a.m. with the leading central banker, alan -- adam blinder of princeton university. stay with us worldwide. this is bloomberg. ♪

ritika: this is bloomberg surveillance. 500a is joining the s&p exmouth as its largest ever new member. it follows months of speculation which helped the company valuations skyrocket to almost $390 billion. it will be one of the index's .ost influential members outlines widening losses and plunging revenue due to the pandemic. it is projecting optimism for rebounding 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 is dollars. easyjet is extending terms of its u.k. government back loaned

-- back loaned fulsome in the face of new lockdowns in europe. britain's biggest discount airline is posting a loss of over $1.1 billion for the year through september. it plans to fly number than 20% of his usual capacity this quarter. that is your latest bloomberg business flash. tom? francine? francine: thank you so much. we are getting breaking news, priced in the markets which is why we saw pound move. we understand brexit negotiators are very close on a trade deal. we understand they are zeroing in on a trade deal as early as next week. points ont sticking whether that will actually go through. tart -- talks are continuing in brussels, and officials are planning for the possibility of a breakthrough to be announced as soon as next monday. i know the sticking points are fisheries and fishing waters. that is one of the most thorny topics we will see, and we will see what is decided on that. i wanted to show you pound and a

little bit of movement on european stocks. tom: buttressed against sterling strength on dollar. the relationship not quite as enthusiastic where eurosterling has some real run to move to get ,hrough resistance at about .89 vice president pence to get through .89, sterling as well. coming up, william dudley of princeton university come with adam blinder -- with alan blinder. on the mysteries of our central banks. stay with us. futures -14. 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. >> the notion that the fed can at thishat is required point to support the economy is

just wrong. the fed is pleading for fiscal relief. i believe it is essential. >> the big thing toward preventing financial collapse, central banks act definitively to do that. that is all that was ultimately historically important. the mistake is for them to vastly exaggerate their continuing relevance. lack, starting at the zero to providecapacity meaningful impetus to their economies in any way consistent with any concept of central-bank functioning. they do not have the capacity to affect to a degree of inequality. they do not have the capacity to vaccinate. they do not have the capacity to fight climate change. acknowledge the

limitations of their influence. tom: should have been one our panel yesterday. this was a powerhouse of central-bank thought. with stephanie flanders of bloomberg news come over senior executive editor. what i love is you went right to old world balance sheet dynamics. we don't do that in america. it is a british thing. week loan demand. it is the opposite side of the american dialogue. which of these esteemed people say about the fact people are scared stiff and there is weak loan demand? >> it was striking. panel i was talking about the limitations of central banking. i have been banging on for the while about stagnation. was you of the thesis had a huge amount of this savings around the world in terms of the shrinking amount of

investment opportunity and that was at the heart of financial instability, inequality and the slow growth we have had these years. on this panel was janet yellen come strongly to agree. , and mervyn king had slightly different views about what the response was. i think it was fiscal when it came to janet and summers, as opposed to the others. if you had heard that years ago you would have thought the argument had moved. governor king to about this, "the end of alchemy," one of the greatest books about the disaster we are in. how close are we to wage outright nominal

or real wage deflation? >> in different places we are seeing different things. the search for wage inflation has been on for years. we thought maybe we would see it more this year, and then we had the pandemic. to be a focus, one of the things we try to get into as a panel is whether central banks make clear to people that that is what they are focused on. main street, wages, and not so much wall street, which is of course the dynamic when we see them propping up stock prices. francine: good morning. how much power do they think central banks have left? how much of a tool do they have? >> these are people who talked repeatedly about the limits of central banks and how they can't do everything. thatme sense he would say was recognized this year and the fact that it was government

fiscal firepower that came to the rescue and it was central banks that underwrote that. i think there is a recognition now that it has to be a two sided thing. all of them are concerned that we looked first to central banks to solve our problems. francine: why are they not worried about the explosion of debt? >> it didn't come up. it wasn't that long of a panel, but if you look at the numbers you might be surprised. it was striking to me the absence of concern around that. that is thereto was a lot of concern from raghuram rajan and others about emerging market debt. aboutis growing concern what this pandemic in the end is going to do to private and public balance sheets in emerging markets. but for advanced economies, they

do not think that is a priority. the international monetary fund seems to agree. i look at where we are in central banking and there is so many ways to go. let me give you an open question, what is your outcome for the linkage of fiscal and monetary policy for 2021? is different,tion but what is the view of how central bankers, as the adults in the room, direct fiscal policy? linkage is pretty clear when you just do the numbers. we had economists look at the amount of extra borrowing you have had by governments this year is the result of the pandemic. compare that with what their central banks have done in terms of expanding their balance sheet, quantitative easing.

the numbers are similar. every banks as they had their own reasons for doing this, we helping to all of that extra borrowing. that is what you are going to see going forward. betweennd, coordination fiscal and monetary but a desperate effort by central banks to defend what they are doing on their own merits, and not for loss of sovereignty. tom: did you talk to janet yellen? is she our next secretary of the treasury? >> she would not give me an answer. setet is that her still that her skill set is better for the fed -- her skill set is better suited to the fed. tom: thank you so much. wonderful panel yesterday. we are going to continue here.

futures -14. right now, ritika gupta. ritika: president-elect biden says containing coronavirus is vital to the economic recovery. spur a rebound in 2020 one, also urging congress to pass a stimulus bill this year to deliver immediate relief to americans. biden it should be like the two point $2,000,000,000,000 heroes act. outline of a future trade deal between the u.k. and eu's -- both sides according to ireland's prime minister. it is not clear if boris johnson wants an agreement. the u.k. wants to see realism on the part of the eu in the talks. flexible working could be the solution for businesses women,ing to recruit according to a new study. women applying for management

jobs jump to 20% after the insurer advertised the roles with part-time job share options. strongest storm of the hurricane season has said central america. it made landfall monday in nicaragua bringing catastrophic ringed -- wind and torrential rain. enough tois powerful cause deadly mudslides and trigger a humanitarian crisis. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am really could give to, this is bloomberg -- i am bristow group to come of this is bloomberg. tom: within the headlines, there riske telling reality, the of the house for speaker pelosi, the battle of moderate democrats and liberal democrats. with us, brendan boyle of

pennsylvania. ♪

>> a competitive approach to china was inevitable. keeping it healthy, not pernicious, it is vitally important. that will not be easy. in some places with some cooperative action -- into catastrophe. >> i believe both sides are capable of the highest -- of clemency in the early stage of a biden administration. >> we should vote on an economy

that works for all. system safeguard the under the wto and unequivocally reject protectionism. --when an economy becomes and your interests are all over the world, you have to protect your own interests. >> the american administration is about to change, but the clock will not be rewound. >> i hope that we will -- he will be able to focus his mind andeveloping a framework for overall constructive relationship with china. the last four years have been tumultuous. >> some forces are against the -- they have willfully walked away from its national commitment, posing challenges. >> i do not think we are going into a world of deep protectionism going forward.

i see more regionalism. topcine: some of the business and political leaders speaking on the future of the u.s.-china relations at the bloomberg forum. also, we speak with the ecb president at 4:00 p.m. london, 11:00 a.m. new york. re-calibrate monetary stimulus. to stephaniek flanders, bloomberg senior editor for economics. thank you for staying with us. how does ecb recalibrate given the challenges ahead? what they are looking at is -- well, what is interesting with what we have heard from christine lagarde is a rejection of the idea that their existing approach needs to be retooled. -- forld argue there is them to continue to use all of the instruments, including bond

purchases they have introduced this year. a little skepticism about that given the scale of the challenge. when you look at the forecast is now, even as the euro zone bounces back from this second wave of shut down as we hope and expect. if you look at the vaccine, will it come too late to actually support the economy? how much more damage can we see on european economies? is there anything apart from cheap credit the ecb can do? stephanie: they are going to have to think -- or, continue the conversation around fiscal support. one thing that is good about the bying is it has been passed eu standards, but still not getting the money out of the door yet. some of the key economies, the worst affected economies in the

euro zone is going to be a big boost to the share of gdp if they get the money out the door. the focus will shift their. what are they spending the money on? things that will support growth, not just hold the economy together? tohink governments are going be under pressure to keep up these job support programs. ath any luck, we will see bounce back at the year from the lifting of restrictions. most countries look like they are on course to have a partial lifting. tom: 15 years on, i can't believe i am saying that, 15 seminal from garber's paper on adjustment. if they didn't write that paper, how does europe adjust with negative interest rates? i do not see it in the textbooks. i do not see it applied. stephanie: partly through the

fiscal, that is why the recovery plan is significant. risk end up with a form of sharing, fiscal policy, european fiscal policy, we are going to have eu funded bonds to support that plan. then we see a capacity to adjust. you are right, the countries by themselves without control of their own currencies are going to struggle to come up with enough impulse. with the support of that plan, maybe you can chart a course. it does not suggest the ecb is going to move back to normal soon. given where we are in the u.k., we are negotiating, though we seem to have positive itse coming, how likely is that a 2021 will see negative rates in the u.k.? >> we had a little pushback from

that from the bank of england. had dueimed they diligence in their market review. they do not think about whether or not -- with the implications of the market would be on negative rates. i sense it is on the near horizon. they have known about adjustments to non-transition area brexit, proper brexit in january for a long time. a know that is going to be jolt, even with the deal. it is a big change in trading conditions. i do not see it near term, but it is part of the toolbox. thank you so much. flanders, bloomberg senior executive editor for economics. joining us later for more of the bloomberg new economy forum,

indian prime minister narendra bridgewater,io of you can watch that all live on bloomberg.com, the bloomberg terminal, facebook or twitter. this is bloomberg. ♪

have a vaccine stored in a regular fridge like you do insulin. every pharmacy, doctor's office has that capability. it is a game changer. the vaccine tom: does not require dilution. tom:the joy of vaccines. -- tom: there are two vaccines out there and more to come. we need to step away from the frenzy and speak to dr. for sally. just wonderful on pharmaceuticals.

santa's alley -- i want to move away from a dirt and pfizer to the other kinds of vaccines. messenger rna, or can more traditional vaccines be part of the game forward? yes, they can. at the end of the day, we need to see how these vaccines behave over the longer term. at max we will have about 2 billion doses by the end of next year. that is far short of what is needed globally. vaccines, alsor in case the longevity or durability of these other as what are not as good we would hope to see. perhaps other vaccines are needed to boost them. tom: how close are we to other

vaccines? are we going to see spectacular joy, where is it a long slog ahead -- or is it a long slog ahead? astrazeneca and johnson & johnson just put out a note this morning saying they are worried about the astro trial data we are expecting by the end of the year from the u.k. in brazil. that data will be in the first quarter. the infection rate is so high we may have to get that earlier than before. young of, we get more trends -- more traditional vaccine data. pfizer and moderna have set a high bar. moderna, pfizer and here we have two vaccines that have such great trial data, is it quicker to distribute? how are these vaccines different? >> they are actually a lot more

similar than different. they use similar technology. the piece of our innate they use is similar. a one needs a slightly lower temperature to be kept at because they have not studied it. not evolve.ey might we will have to wait and see how they differ in terms of durability or details in terms of which is better for older people. i'm going to assume until we see different that they are going to be pretty much the same. what are some of the questions you still want to know about these vaccines? the markets are very obstinate -- very optimistic we go back to normal. are the questions we do not know? can you pass the infection even if you take a vaccine? long for a tv too

hit, but you hit on one crucial one. if you are vaccinated and you do not get symptoms, are you still infectious? that is something that has to be worked out. unfortunately, i do not think the trials as they are today are answering that question in detail. someone else needs to study that. also, how long does immunity last? if i take today, mi good for one year? two years? from bloomberg intelligence. thank you. up, coming into 23.1 0% with a 22 handle. let me give you the level on dow futures, 29.768. we are on the 30,000 watch, i

admit it. , 0.89% minus .86%.lt mentioned,cqua 1.32%. application of central-bank theory to fiscal markets, also to the interest rate market. -- will joinuddy us. this is bloomberg. ♪ mberg. ♪ 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. tom: this morning, no room at the hospital.

has exhausted nurses and doctors. sweden -- philadelphia has closed high schools. i awoke will limit gatherings. iowa -- is his own trump secretary of offense and defense. he wants to "strike iran and withdraw troops from afghanistan." tom keene and francine lacqua. much to talk about. the news flow at this moment is quite extraordinary. we are expecting home depot earnings. same-store sales up 26%. i don't believe that. we will have to see if it is true.