francine: the vaccine raise. the phase 2 study confirms the immune response in the elderly patients. a phase 3 trial expected within weeks. new york city shuts schools once again. the country surges and cases from coast-to-coast. eu leaders will attempt to salvage billions in virus relief today. hungary and poland threatened to derail it.

good morning, everyone. welcome to "bloomberg surveillance." i am francine lacqua here in london. a lot going on, because we have christine lagarde testifying in parliament. we will bring you anything that comes out of it. the markets focusing on infections rising around the world. they are focusing around the fact that we could see a stimulus. let's get to the markets. i don't know if we have them. if we do, it could be great, and it would be a good time to look at them. overall,ok at stocks they are falling along u.s. futures, tougher restrictions, progress toward a vaccine. we have plenty more of course on that. astrazeneca at rising amidst positive news on its coronavirus vaccine. we are hearing from christine lagarde. we had an exclusive conversation days ago.

the focus is on the need for a stimulus. the focus is also on the need for markets to do a little bit more. she said basically the ecb delivered in the first wave. she is talking about the physical packages, on course for a fiscal, monetary cooperation. astrazeneca's study provokes an immune response in elderly patients. a phase 3 trial is expected within weeks. joining us now is richard horton, editor-in-chief athe the lancet. the astrazeneca oxford vaccine is a success. when we hear from moderna and pfizer? richard: we will definitely be getting the phase 3 results before the end of the year, but

this is a very important step, because the big worry with any vaccine is that it does not work so well in older people, and of course it is the older age groups who are particularly at risk of harm from this coronavirus. and the fact is, as you said in your headlines, that this vaccine does provoke a strong immune response, this is great news. it is another step, another brick in the house that we are trying to build for this vaccine. francine: richard, how is this vaccine different to the other ones? this is not mrna that we heard, which is a new type of vaccine. does it make it easier, if it is a success, to distribute? richard: that is right. we have 11 vaccines currently in late stage critical trials right now, and the great thing is we have different types of vaccines across those 11.

the dharna vaccine and the biontech vaccine, they are mrna vaccines, as you say. this is when you take a protein on the virus, and you attach it to another virus, and that gets whichtry into the cell, provokes the immune response. there are two other categories of an inactive vaccine and a protein-based vaccine, so this is giving us lots of opportunities for different types of vaccines, all with slightly different advantages and disadvantages. the good thing about the vaccine is you do not need -17 degrees to store and protect it. it will be much easier to distribute, and that will be good for the global distribution. francine: richard, what do you think is the biggest challenge we face right now? is it misinformation? i do not know whether there should be another tunnel of information, which means everybody understands what these vaccines oare or not.

everybody almost as what they want about this vaccine. richard: i think there are two challenges. manufacture ofhe 15 billion doses, which has never been done with any vaccine, because these vaccines, you have to get two doses per person, so 7 billion people on the planet, you need 15 billion. that is huge. the second challenges is the antes vaccination movement. the anti-vaccination movement has mobilized, it is growing, and it is dangerous. we need to see government, we need to see public figures really working hard to defeat this movement. the vaccine science is good, it is safe. we need to take it one step at a time, no cutting of corners, but we have to protect the progress we have made, and the anti-vaccination movement is a threat to that progress. francine:, richard, the anti-vaccination movement goes

as far as that i was writing statistics, 45%, i think, of people and france will not take this vaccine. numbers are increasing in other countries in europe and the u.s. who is the right person to actually, you know, is it regulators who need to step up in talking to the public? who is the right person to make the case that these vaccines are safe? richard: you know, we need everybody who has a leadership role in government, and science, schools, everyur part of society needs to be giving the message that the vaccine science is safe, and we are going to have an effective vaccine, and people should trust in that vaccine, so it is not just one person, but i would say that the responsibility of our political leaders is to really build trust in the public. distrust between the public and authorities that then

fors to the space anti-vaccine propagandists to exploit. resident biden coming in, his number one objective for him and his advisory group is to rebuild public trust, and then he can protect that progress we are all hoping for in 2021. francine: richard, are you confident that these vaccines, pfizer,ou know, the that moderna, or this astrazeneca-oxford one, will protect people for a long time, or will it produce an antibody response that only last for a couple of months? theard: well, you just ask $100 million question, and the answer is we do not really know. the coronaviruses that we know of exist already. you usually have immunity once you have been infected with those for about 40 weeks, so

about nine or 10 months, so it is likely that this vaccine will year,ou immunity for a but you may well have to have another vaccination the next year, just like we have with influenza. the good news -- the good news is it is unlikely that you will have to have a new vaccine every year, so influenza, of course, you have to have a different vaccine every year because it involves. that will not be the case with this coronavirus, but honestly, we cannot be 100% sure at the moment how long immunity will last. but my guess is it will be around the year. francine: richard, thank you so much for all the insight. richard horton, editor-in-chief at the lancet. coming up, new york city shut schools we will round up the latest on the coronavirus and discussed vaccine optimism and the markets. that is coming up shortly, and

this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in london. let's get straight to the bloomberg first word news with , leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, francine. the united arab emirates privately floating the idea of meeting opec's trust. whether this is a

warning of production or a general plan of action. there has been friction with neighboring saudi arabia since the summer, when the uae increased outputs above its opec quota. now the u.k. and canada are on , the brink of signing a new trade deal. that is to replace the existing agreement britain has through e.u. membership. last year, trade between the two nations was worth about 17 billion pounds. sources tell bloomberg an announcement is expected within days. the u.s. is facing another grim milestone with 250,000 deaths. the number of intensive care patients falling the most, and that is since may. 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?

francine: leigh-ann, thank you so much. now, we have just been discussing vaccine hopes, but more restrictions blew over the recovery. new york city has shut schools and crippled the transport topem, as u.s. deaths now 250,000. chancellor angela merkel warns the situation is very serious in germany. in u.k., prime minister boris johnson has been considering regional curbs after a national lockdown. joining us to discuss all this , chief investment officer at ccla investment. the market is focusing on the long-term hopes of a vaccine. it feels very binary. what are the markets misunderstanding? james: well, i think the markets correctly anticipate that governments and central bank are taking covid-19 seriously. there will be more support.

haveect ultra, did policies -- ultra accommodative i would sayd also the age of austerity is passed, governments will spend more money. companies are going to benefit from an environment where consumers are supported by government handouts, and the path to look forward to the post-covid world does provide a sense of optimism. when you looks, at the big rotation or the start of the big rotation that we, you know, that started a couple of weeks ago, what will be the catalyst for it to continue? does it just continue naturally? james: well, market participants, who have shifted labels -- and cyclic cyclicals are in essence betting that the worst is passed, that path will be relatively

straightforward, and the move this year will be the start or move of next year. for that to continue, we need three things, companies confirming they are experiencing a better tomorrow than yesterday, and i do not mean that is going to be difficult, but it is very easy for markets to run ahead of themselves and to buy the hope rather than the reality. the second issue is we have to see continued support of policy, richer valuations, so low interest rates, relatively low inflation, and the continued commitment by government toward the generation of decent asset returns, and that is very much the box top of social banks. the third issue is we have to see the base plates of household confidence began to rebuild. so we have had continued good news on covid-19. we have to see the savings rates have been high began to dissipate and turn into real spending. francine: james, is there a

concern that actually there's not going to be, you know, enough monetary support, central support if we do not have fiscal spending? is there a danger that if we get a vaccine, the market is mispricing, the start of very --w nomination? normalization? james: i concur that central banks can end up pushing on a piece of string. they can provide credit, they can provide liquidity. the velocity of the circulation of that money can be very, very slow. and that means the central banks will progressively deliver lower bang for the buck, in terms of monetary support, so it is critically important that governments are prepared to spend money. madame lagarde, european central bank's made this abundantly clear. we see this in u.k., where sunak has been bankrolled by the bank of

england. and i believe it simply would not have been possible had we -- had the unlimited comp quantitative easing on the 23rd of march. in the u.s., there is a real issue as to how much team biden will be able to spend. spend at they will least $3 trillion, and that will be enough to drive the u.s. economy's genuine recovery. francine: james, what do you do with inflation in that case? i thinknterestingly, inflation remains remarkably low. i think it is now on an upward trajectory from very low levels. but there are some structural issues that hold inflation down. demographics, globalization, which continues to be a force, despite the fact of last-minute wars, aging demographics, but also part of the challenge that so many economies face and of course disruptive technologies.

against this backdrop, i think they really big issue is will companies invest in additional productivity, and if they do, inflation stays low. francine: james, thank you so much. james bevan from ccla investment management stays with us. we will have plenty come of course, on europe and concerns on the budget. coming up, eu leaders gear up for what looks like a grueling battle of pandemic relief. we discuss that next, and this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua here in london. now, the european union is facing what looks like a persuadebattle to hungary and poland to pullback threats. which much of the countries in lockdown, the two eastern european countries and say they will veto a key plan to the bloc's economic package. france says hungary and poland can be cut out of the brexit plan altogether. still with us is james bevan from ccla investment management. james, i have questions regarding brexit, but what does this tell us about the economic policies in europe? right after the summer, a lot of investors were extremely optimistic about europe. is that going to change? james: i do feel that there are some serious issues within the

construct of the eurozone, and as madame lagarde has pointed out, what we have is a reform, a neutralization of debt. is a particular challenge. people talk about italy's budget balance and challenges. i would put forward that the italian economy needs a lot more spending than what is under the eu rules. eurozonete that the project is still very much at risk. francine: and, james, what does that mean for the euro? hass: i think that the euro the capacity to strengthen against both the pound, because of brexit risk, and strengthened against the dollar, as the u.s. challenges its post-covid strategy under the biden administration. but i think that will be fragile.

what we expect over the next 12 months is much greater volatility of currency, and that currency volatility will go hand-in-hand with more market volatility, more generally. francine: james, when you look at, you know, some of the bigger companies in europe, is there any value to be made? it is still one of the, you know, regions that is still trying to focus on the green recovery. we have all heard from christine lagarde about what she wants to do with bond buying purchases, focusing on green things. is that something you want to be invested in? james: oh, absolutely. i do think there is a falling went from environmental, social, and government factors, people turn in this combination of regulation, mitigation, action means that higher environmental standards will be ever more pressing at the company level. bet, to me, means we should focusing on companies like schneider electric, which is clearly a play on a more

widespread recovery. i think the play in europe, particularly risky at the moment, is going back to support europen banks. i think they will make more money in the climate of sentiment and interest rates on an ongoing basis. francine: is there anything else we should be looking at, james? when we look at brexit, you know, there is another deadline looming. we do not know whether we get a deal. have u.k. assets been oversold? james: i would say there is a bifurcation of opportunities within the u.k. there are local companies, the unilevers of the world, that i think will prosper in the long run as global companies. they just happen to be located in the u.k. there are other companies that are not u.k. companies that will benefit from a domestic economy reopening, such as heineken. i do not think there are

opportunities within the u.k. domestic economy that threatened domestic policy, and i am thinking particularly of u.k. house builders such as fairway. , the chancellor of the exchequer in the u.k., bank of england holding money rates low, likely to announce an additional 100 billion of quantitative easing on top of what was announced in the monetary policy committee meeting in november. against that backdrop, a relatively thick supply. i think the opportunity for house builders -- francine: great. james, thank you so much. james bevan, chief investment officer at ccla investment management. we will be back with plenty more on the economy. this is bloomberg. ♪ 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. more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get to the bloomberg first

word news with leigh-ann gerrans. leigh-ann: good morning, francine. the covid venting being developed by oxford university and astrazeneca shows a strong immune response in older adults. phase 3 results are expected and the coming weeks. they will determine if it can meet the high bar set by front runners pfizer and modernity. new york city is closing schools after the positive test rate hit a critical threshold. it is also a warning of 40% cuts to the subway without aid from washington. governor cuomo says if the infection rate increases, non-essential businesses could also close. australia says it will not compromise after beijing ramped up reduces him of the government. china is -- after beijing ramped up criticism of the government.

tensions have been escalating since prime minister scott morrison lead calls for an inquiry into the coronavirus outbreak. china has hit the nation with a wide range of tariffs. pimco is being sued by a pair of female workers accusing the money manager of having a fraternity culture. they say the company marginalizes, demeans, and undervalues women and encourages gatherings at clubs. the expectation is that women must have a choice between children and excelling at their career. the company has denied the allegations. 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: thank you so much. all week we have been bringing big conversations from speakers at the bloomberg new economy

forum about life after the pandemic. the blackrock chair, chief executive larry fink talked about stimulus and what the means what it will mean for the market. >> i would say overall the market likes a divided government. they want to make sure there are proper checks and balances. we have seen in the past when we have a government that is totally controlled by one party, we have seen more extreme in terms of positions that they have made. and so i think that divided government, but i do believe inongly that the market is desire of more stability, of less volatility. they are looking for a voice that moderates, not a voice that incites. i truly believe president-elect biden can be that voice of reason. all listenedf we

to his speech last saturday when he is talking about one america, not a red or blue. encouraged bye is having a leader now that is more inclusive, a leader that could probably bring a little more global harmony. i think we are all tired. we are tired of the volume we hear out of washington. we are obviously very tired about covid. and we are worried about where we are going right now in these coming weeks. for a neware looking leader to help us navigate covid , and moving forward we are looking for a leader who has a stronger opinion on climate and is willing to work with the world on moving forward, both in climate and all other global issues that are facing our world today. markets are assuming that a stimulus bill of at least a trillion dollars will pass in the lame-duck, and maybe another

stemless bill will happen in the administration. if there were to be no stemless bills of size, you would think the market would have a vet -- a bad reaction to that? larry: i would think the markets would react. we as an economy, and most developed economies are overreliance on monetary policy. we have seen great support to the capital markets and we have alden benefiting from that. if we want to create a more equalized economy -- we have all been benefiting from that. if we are going to rely on monetary policy, that is another example that is creating more income inequality because those who own equities, those who own financial assets are generally wealthy people. the poor do not own financial assets, so the divide because of the strength of the equity markets and the job losses that we have witnessed has really created even more of an income

inequality. now, i am fully supportive of monetary policy, so let's be clear, i believe what jay powell and the federal reserve have done is nothing but amazing. but if we are going to try to really rebuild our economy, we truly need a very targeted fiscal stimulus. for those who are still unemployed, and for some of the cities that are most impacted. and i believe a targeted fiscal stimulus is going to be in order to really begin a more equalized economy. that is going to be essential for the biden administration. bill we do have a stimulus that is significant, that is going to increase the debt. it is already $27 trillion and the annual deficit is about $3.2 trillion. in terms of money that we are borrowing right now. how can we afford this, and why are the markets not worried about this in norma's amount of -- about this enormous amount of

debt and fiscal deficit? larry: if anything, you can see from the private equity side, from the full alternatives in liquid markets, there is actually a shortage of high-quality investments right now. say the markets are correct and not worrying about the deficits today. what we do need is through stimulus, we need to get growth going. growth, then the deficits that are ultimately north of $30 trillion will have less impact if we have a broader, larger economy. if we can't find a way to create growth in the coming five years, we are going to face the impact of this rising deficit. nexte same time in the five to 10 years, we are seeing an aging global population,

especially from japan and china. they are going to go from savers to spenders as their economies -- as their population becomes older and they are retiring and they are going to be utilizing that savings for living in retirement. this is going to be a problem if we don't find growth. francine: that was the blackrock and chief executive officer, at the bloomberg new economy forum. coming up, and exclusive conversation focusing on the green transition. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's kit to the bloomberg business with leigh-ann gerrans. leigh-ann: good morning. britain is cutting almost 11 -- cutting 11,000 jobs. the industrial conglomerate is fighting for survival with its steel business continuing to hemorrhage cash. last week bloomberg reported that it was in talks are over 5 million euros of government aid. norwegian air shuttle is taking -- seeking creditor traction over ireland after a surgeon coronavirus cases stopped hopes for an early recovery. it was already trying to rein in debt when the violence hit -- the norwegian government refused a second bailout earlier this month. chip sales will decline slightly in the coming quarter.

porters are falling from a chinese customer that analysts speculate is huawei, known for its gaming processes. data center has become one of the largest sources of revenue. that is your bloomberg business flash. francine? much,ne: thank you so leigh-ann. let's bring you another interview from the bloomberg new economy forum, and a panel of pathways to a low carbon energy future. our next guest also spoke at the forum and runs one of the world's biggest industrial companies. joining us for an exclusive conversation is the chief executive of schneider electric. john pascal between, -- john pascal tree qua. is this just all talk for the moment or will this help for a greener economy?

>> hi, francine. i don't know if you can directly equate covid with -- at schneider that is one of the biggest catalyzes for the green economy, digitization. as we make everything around us , agreeing toicient a greener future, smart manufacturing, smart homes, smart infrastructure. everything is to be much more digital, to have a change in efficiency that drives the cabin reduction. covid has been a massive -- we all face issues of residency, while operators could not go on site. our pace ofmakes

digitization, of systems for our customers has increased dramatically in the past seven months. francine: what about demand for electric cars. you are one of the makers of the easy fast chargers. how have sales in that category gone? jean-pascal: you make a very important point. speaking of covid, it does accelerate digitization because people have kind of seen the origin of the covid, which is population particularly on globalization. have rather seen an increase of awareness for sustainability. let's not forget that the sustainability was really the big item on the agenda of

companies on society. so we have seen the sustainability subject has only grown. when you look at the way to resolve the issue of sustainability, making the world more sustainable, it is about digitalization, and i spoke about that before. the second one is electrification because electricity is the only energy with low decarbonization. so if you combine those two, digitization on electrification, which is the not -- which is not the same electricity as before -- is decarbonized, decentralized, digitized. then you have the path to sustainability. so you're perfectly right. we need a maximization of electrification in physics. you have more countries today in europe which are passing rules or regulations that will make

buildings all electrical. so we see it schneider, a future that is more digital, more electrical, to be more sustainable. with the does it start focus on cars? are you cheering the van from the u.k. on combustible cars, and all these incentives from germany on cars? how much of a difference does that make? does it ring the transition forward by five to 10 years? pascal-pascal: it is an important -- jean-pascal: it is an important part of the transition. cars, thebout adoption of electric vehicles seems to be accelerating in for a very good reason. the energy efficiency of a car, which sources its electrons from a carbon resource of electricity

within renewable or nuclear, is excellent. it is above 90%. which is around 30%. so with the evolution of technologies, the price of the electric car will be lower than -- two or three years. veryearly there is a promising path for electric cars. they do not emit carbon. they don't admit particles. we make or create cities that -- building will have the same kind of evolution. going to when are we see more investment in industry? is 2021 the right date? are you hearing the right noise in terms of u.s.-china trade?

will the joe biden administration make a difference to vaccine's, make a difference in how vaccines -- with vaccines and how people will invest in industrials? the world is quite bifurcated at the moment. some industries are getting accelerated by covid. so the dynamics are very different from one segment or one market to the other one. then there is a more structural, fundamental element of evolution which is industry 4.0. industry 4.0 changes trader -- dote dramatically the way we manufacturing. you have a lot more software in the process of industries. movement started before

covid. when we speak to our customers today, they always ask two big agendas. one is going to be sustainability, and the other is digitalization. the good news is that they go together and we can link those two into one consistent agenda. but look. schneider's massive displacement of our customers to software, reminding that three years ago we created a company called -- we merged the software business of schneider together, listed in the u.k.. success duringhe the summer. we are realizing the acquisition of another company which is complementing very nicely our software. allowing our customers to

completely digitalize the process. industry the agenda of 4.0, everybody has realized recently, including tensions thaten geopolitical block it needed to be more local. it is partly because of trade tensions, but it is also because if you want to reduce your carbon footprint, you need short serve yourn, to customer in a personalized matter, -- in a personalized manner. you also need a short supply chain. digitalization allows you to -- more original supply chains. much,ne: thank you so jean-pascal tricoire. we will have to get you back on. we are short of time today. coming up, more on emerging markets. it has already cut the benchmark

rate by 300 basis points this year. we will look ahead to the latest decisions from the central bank. that is coming up shortly, and this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's talk about south africa and sovereign debt. speaking to us on the sidelines of an investment congress in johannesburg, the president says the government is in talks with 1.3ns on freezing wages for million state workers as it tries to control spending. >> i'm certain that we will be able to bring our debt levels down. it is what you could call a debt crisis. we are open and honest and telling the nation that we are in too much debt, in a country that needs to grow. it needs to reduce its debt. let's get more with dani burger. how dire is south africa's debt situation right now? that this is something

economists and ramaphosa has been talking about. all expectations are that it will continue to grow. this has put south africa in a place where they need to reform or face a sovereign debt crisis. even going into the coronavirus crisis beforehand, they were facing recession, unemployment, at a 17 year high. what the coronavirus did was made it really hard to collect taxes, and this only exacerbated the debt crisis that south africa was facing. they have done things that they have not historically done, like take a loan from the imf, and a lot of the debt is tied to as calm, the big state utility power company. that is something that goldman sachs has said is the biggest threat to south africa. while debt is very high, you don't have a lot of in south africa. that is what this chart is

showing, imf predicting we will see investment at the ratio of gdp, one of the lowest on record at just 13%. in southce minister africa also expects debt to peak in six years from now at 95.3% of total gdp. that rate decision later today, what are we expecting? dani: economists do expect south africa to keep their rates on hold. performedsts gdp above expectation, but south africa faces issues with their economy because of the more advanced economies with their inputs and exports in the final quarter. the bank aggressively loaded rate cuts in the beginning of the year, so that is probably another reason they are likely to hold still at this meeting, francine. much.ne: thank you so

dani burger with the latest on south africa. this is what markets are doing. stocks are falling, u.s. futures are seeing a little bit of pressure. there are tougher restrictions in many parts of the world, including new york with the pandemic resurgence, and that seems to be overshadowing progress toward the vaccine. it depends on what the market decides to focus on. bloomberg surveillance continues in the next hour. tom keene joins me out of new york. stay tuned for more from the bloomberg economy forum as well. this is bloomberg. ♪

francine: the vaccine race.

a phase 2 study confirms that -oxford vaccine provokes an immune response in elderly patients. a phase 3 trial looking at its results is expected within weeks. u.s. deaths from the coronavirus reach a quarter of a million. new york city shuts schools once again. the country deals with a surge in cases from coast to coast. and e.u. leaders will attempt to salvage billions in virus relief today. hungary and poland threaten to derail the plans. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. we will spend a good amount of time looking at the resurgence or the continuing restrictions because of the vaccine in the market today. focusing on that instead of the encouraging news we had from the vaccine. working parents are having to deal with new york schools, and then we look at europe and some of the reversals that may be in jeopardy because of poland and hungary.