the pound continues to sink. the big rollout. the u.k. vaccinates its first citizens in what it calls the biggest immunization campaign in history. however, stocks and those futures dip on a report that pfizer won't get more doses to america until at least june. good morning, everyone, and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene is in new york. tom, nice to have you back, just in time to look at brexit and the fact that talks are not going so well. we heard from boris johnson, speaking at the same hospital where he was treated for covid back in april. he talked about the vaccine and he said he is hopeful on a deal for brexit, but he said it is going to be tricky, so he doesn't sound that hopeful at all. an extra ordinary morning, folks. the huge news in the united states is politico reporting that president-elect biden will select a general from the pentagon to be his defense

secretary. we will talk about that. far more is the vaccine in coventry. i cannot convey enough the seachange that is this morning. francine: i was just reading about the pentagon appointment, and it could be a first, so we will have to delve into that deeper. should we look at the markets? tom: let's look at the markets now. equities, bonds, currencies, commodities. i will call it a call related churn. barely -13, the vix backs up. , excepte doldrums inflation expectations are ever driving higher. this will be a huge theme for the next few days for surveillance. inflation expectations, equaling the inflation-adjusted yield. -0.994 --stunning -0.0994.-- a stunning

the other thing i would carefully watch is the pound weakening for the third day, as optimism for a breakthrough in brexit talks continues to fade. i don't know if anything will come out of the meetings between boris johnson and ursula von der leyen. i want to show you gold because we saw a bit of support for that, 1865. to: it is an important date say the least. if you look at the work from louis pasture from over a hundred years ago, the cure for child diphtheria, obviously polio moving forward into my childhood. there are moments where you stand still. one of those moments was this morning before the prime minister of the united kingdom, the grandmother from coventry. >> it is strange, wonderful

really. i'm looking forward to christmas. expecting christmas to be with my family members, and we will see what happened in the new year. i'm looking forward to christmas, yes, i am. >> it is amazing to see the vaccine, amazing to see the shot in the arm for the entire nation. we cannot afford to relax now. an amazing set of events with the leadership of the united kingdom. sam fazeli joins us now. sam, for big pharma, this is a huge victory. i know we are all surprised by this, but for you as an informed individual, what is the greatest surprise of the success of big pharma? surprise, tomest -- and good morning to you on this hopeful day -- is that they managed to do this so fast.

i think the last time anybody develop the vaccine so fast was 220 years ago when the first developed.b was of course, he tested on his son. am mostthe thing that i excited by, how fast we have been able to cut the red tape and get this product through the process. the research that went into it took years. tom: what have you learned about the cold that is required to deliver this therapy? what have you learned in the last number of days about liquid nitrogen, the ability to get down there, where centigrade is lower or kelvin is mentioned? are continuing issues. we know how pfizer has managed to deal with it as in the u.s., and in the first wave of getting these things done, when you listen to cvs, who is actively involved in doing this in the

u.s., the first wave will be relatively achievable because they are at centers at hospitals where they have these kind of facilities. and then of course care home is where the vaccine is being delivered to them. so that is easy. the next level is the tougher one, when you are going in the next six to 12 months, that will be interesting to watch. francine: is there a danger that covid-19 is mutating? and will we figure out the origins of where it came from? origins still continue to be -- i haven't looked, to be honest with you -- but they continue to be where it came from, which is an infection that came from animals, which are many that can still come to us, unfortunately. -- what i amons going to be focused on is going forward as more and more we put this virus under pressure without vaccines. that is in the next 12 months

that i am going to be watching, if anything involved -- if anything evolves, in terms of getting around our immunity. francine: we have seen a number of reports, up to two thirds in certain countries, two thirds of the population don't want the vaccine. can they change their mind? does that seem very high? sam: two thirds sounds a lot higher than i have come across, but i suspect you get a lot of regional variations. bostontty sure that in and places like that, cosmopolitan areas, you would be at 90% acceptance, and in rural areas, much lower acceptance. probably because of partly the logistics of having to deal with it. ,o the issue is going to be what is the equation that we are going to have to solve here. how many people already have immunity through natural infection, and how many do we need to vaccinate to get to the level of herd immunity. -- getting that

group of susceptible people done first, and then try to worry about how to broaden up the herd immunity. , thank youam fazeli for the insight on covid-19. it is quite emotional to see that first grandmother being vaccinated in the u.k. let's get to bloomberg first word news in new york city with ritika gupta. i take a cup british -- boris johnson will meet with european commission president ursula von der leyen. there are growing fears on both sides that negotiations may fail. johnson and von der leyen spoke last night, and both agree that a deal remains far off. on capitol hill, the pandemic relief plan talks have slowed down. there are differences on state and local aid in liability protection for businesses.

the relief measure would give -- would be attached to that. joe biden will be a formal step closer to the presidency today, the deadline for states to certify their electors to the electoral college. that is they are locking the names that people who would formally vote to make biden the president. all the states were president trump is contesting the results have certified their return. and he was a world war ii fighter ace. he became the first person to break the speed of sound. a new generation later learned of the exploits of chuck yeager through the book and the movie "the right stuff." he died last night. he was considered the finest test pilot ever and trained many of the men who were pioneers in space exploration. but he never had an interest in becoming an astronaut himself. chuck yeager was 97 years old -- chuc.

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: you absolutely nailed this. this guy was a hero in my house. it is very emotional for the family. i want to say one thing very much about general yeager. he was a war hero before he was a test pilot. this is bloomberg. stay with us. ♪

francine: this is bloomberg surveillance. to talk about the markets, we are delighted to be joined by rick lacaille. there is a lot to talk about with the rotation and play, some of the record highs we saw in equity stocks.

i pointed to a great piece that said if you look at some of the signs especially from asia, we are in a classic cyclical recovery story. is that true? >> it is true. ist week in china, there support of the idea that the economy that recovered pretty reckitt lily -- pretty rapidly. you look in europe, you have case counts going up very strongly there and in the u.s.. one story picture. francine: where do you find the best value? where do you find opportunities right now? rick: in equities and credit. we are overweight, risk on. we know we will be tested again next year in terms of news flow on covid and elsewhere. we like policy and growth when it comes to equity. they will continue to do well, and that puts us into u.s. and china particularly, so we are overweight u.s. and we are overweight to some a stent in

emerging markets in europe. china is the real focus because of the composition of its stock market, becoming more consumer orientated, and tech and health is not entangled in this u.s.-china dispute. tom: rick, tom keene in new york. the dow jones industrial average is boeing influenced, up single digits. we have solid double-digit performance in xp x -- in spx. how far behind his institutional global wall street? has it been a year where they simply have not performed, or have they enjoyed some of these gains? rick: i think they have enjoyed some of the gains, but there is cautiousness in an environment where the stock market is doing much better than the underlying earnings story. you have to have strong confidence that you will get an actual recovery and earnings growth into next year. we do have that confidence, but we are tempted by the knowledge that fiscal stimulus isn't there

yet. you have a complete lack of ,oordination at the moment approach is that different countries are taking. we have gained from equities, and we think some of our investors have, too. tom: is the framework forward a single digit return? you and i have aged with people telling us single digit return is the expectation. are so many double-digit returns out there. are you waking up to a double-digit return, or are you back to an actuarial assumption? singlee are back to digits, but single digits compounded can give you a lot of wealth, particularly if you have inflation at low levels and alternative assets not delivering much. but at the end of the year, you can have double digits because you are bringing forward returns from the future when discount rates have dropped. get yields are low you can extra ordinary positive returns.

but we need to think about long-term growth and how that is thegoing to be as it was in 1960's, 19 70's, 1980's. slower returnsto in the long run. francine: is there a slower recovery than we think echo rick: when you come from a point where you let go a lot of labor and you have very weak demand for your products, even some growth translates very quickly into earnings. so you will see a wide range of outcomes across emerging markets in the u.s. but on balance, we think they are right. the consensus is right. it could be too pessimistic in terms of moving into 2022. we think that operational gearing that firms had won't necessarily be a good story for employment growth, but it will be a very good story for earnings growth. chartne: i have a great

which i will show you in a second full-time it is clear that the market is positioned for the ecb to go big tomorrow. what happens if they disappoint? rick: well, you don't need to tell me, they probably won't disappoint. they are probably very aware that market expectations -- but if they do, you will see a setback in europe. i think the biggest issue is not monetary side of the ecb. it is the fiscal side. i don't think we have an adequate physical response yet in europe. it looked like we were going to get a pan-european deal. it is not really big enough. and even now you're seeing backsliding at the national level, where what you need is more. investors will pay more attention to physical than they are monetary at the moment. tom: rick lacaille, thank you so much. we hope you can continue with us. coming up, futures at -14, dow

futures at -83. from goldman sachs, peter oppenheimer. this is bloomberg. good morning. ♪

everyone.morning, francine lacqua in london, tom keene in new york. futures in the doldrums. i want to point out one important issue. excuse me. we'll yield staggers to new low -- real yield staggers to new low levels.

-.98% is a big deal as well. richard lacaille with us right now. state street global advisors. you are going to take on new duties for state street in march, focusing in on esg. it sounds like a wonderful challenge for you. there are so many people who say it is great, it is a fed. do you see a proven track record that you can create alpha with e, with s, and with g? rick: absolutely. there is a great successor in lori heinel, who will be a terrific ceo. what i have seen in the less years and what academics have shown is market efficiency in esg. it won't last forever, but there is the potential there. we certainly will exploit that. in my new role, i want to help out clients, asset managers, and state street exploiting those opportunities.

there is a world of change and opportunity. it is significant. it is not a political issue, although for some it is politicized. it is a real investment issue. tom: you explain it nicely. is the alpha generation now a timeline because nobody is in board and once they get on board the alpha disappears, or is there an interior affability there that we don't see? rick: i think it changes over time. in the next five years the market will get more efficient. life moves on. you look at other things that are becoming more significant, and in a world where intangible values, such a large part of peoples wealth in terms of capitalization of markets, then i think there is always something new, because reputational issues can be very significant and damaging value or creating value. and i think as our knowledge

improves, there will be new areas, if you like, new information that is underexploited. francine: what is this? rick, we spoke with you for 15 minutes and we have not ask you about brexit. our u.k. assets attractive if we get a last-minute deal? rick: sterling instantly little bit cheap. if you get a deal, sterling, i think assets themselves have challenges. i think frankly the u.k., the mix in terms of the index is quite cyclical. if you have an enormous corner in fiscal stimulus, it will do very well. but in some respects it has got the wrong mix for this kind of growth and policy environment where technology is very much in favor. so that is an unfortunate place to be in. as you are grappling with europe. francine: what do you mean the wrong mix? is there something they can do in terms of tax cuts to become more attractive? we used to talk about the u.k.

becoming a bit more like singapore. will that make sense for the composition of the economy? rick: i think there is an effort between the banking industry and the asset management industry, regulars, treasury, the bank of england saying what can we do, to harness capital more effectively to get better long-term growth? part of that is looking at patient capital, the way we can get capital involved? -- the way we can get capital involved that will be more effective, where you have to manage the money, you have to bribe -- as if you have to provide liquidity tomorrow. i think that has held back some of the long-term investing u.k. really needs. tom: rick lacaille, what do you do with oil? is oil going to climb on board esg, adapt and adjust, or do you have to go with a decade-long underweight? rick: we are going to be using oil for some time. it may not be a great news item

in some ways, but oil will be around for a variety of reasons for a while. the oil majors are taking a different view. some have diversified their energy mix. some like exxon have said we do not necessarily understand renewables, we are not going to double down on renewables, but we will manage it as best we can. we need to navigate as investors what is the best long-term strategy for those and how do we engage with those companies to avoid the kind of cliff edge that we see with standard assets. we are getting better engaging with those companies. is peak oil sooner than we think? all you need to know is that it is going to happen. therefore how much capex you want to commit to relatively expensive long horizons on oil -- not so much. aramco will be around for a long time. tom: rick lacaille, thank you so

much. we greatly appreciate it this morning, with state street global advisors, their chief investment officer. it is always an interesting conversation with mr. walsh of boston. martin walsh over the battle over the pandemic. look for that around 7:30, i think we will do that. and bonds, steeper yield curves, yields churning. negative seven, negative eight, negative nine on the real yield. please stay with us. this is bloomberg. good morning. ♪ businesses today are looking to tomorrow.

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forward-thinking enterprises, deserve forward-thinking solutions. and that's what we deliver. so bounce forward, with comcast business. a 19-year-old woman was the first in line with the u.k. became the first country in

the west to offer coronavirus vaccination. the national health service called it its biggest immunization campaign ever. prime minister johnson warned that mass vaccination will take time. the u.s. is averaging as many deaths from coronavirus as it did during the april peak. the seven-day average of reported fatalities went over 2200. likely go further due to a lag between infections, deaths, and when deaths are reported. bloomberg has learned that president biden will name defense secretary. austin was the first black general for u.s. troops in the middle east. a chance to restore the nuclear record in iran. any progress towards preserving or enhancing the deal would

depend on international cooperation. is dangerous, because iran has more enriched uranium. global news, 24 hours a day on-air and on quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine: policy leaders had to brussels the salvage negotiations. .oris johnson is very hopeful he also said they are very tricky. on the brexit steering committee and a member of the u.k. parliament spoke to maria today, though took a different tone expecting no deal to take place. money is now on having no deal. whoas a prime minister wanted to make a last-ditch attempt.

the scenario on saturday. the negotiators were given 48 hours more, and the result is nothing new. francine: for more on brexit let's bring in a bloomberg brexit editor who has been working nonstop for the last three and half years, if not more. we are once again down to the wire. once again the prime minister is trying to salvage these talks by going to brussels. when is the deadline of when this needs to be dealt with? is it the next couple of days, or into next week? >> i think it is dangerous to talk about deadlines with brexit. they have a tendency to be remarkably elastic. highlynsition is unlikely to change. but i think people were expecting was it would take a number of weeks to ratify any

deal. boris johnson is expected to go to brussels in the next couple of days. leadersa summit of eu key to keep brexit out of the negotiations. they have other things to talk about. which suggests that wednesday is looking like the day there is a decision one way or another. borisne: what is johnson's political calculation? becauseneed a deal economically things are going great because of covid-19, or can he not afford to lose the right wing of his party? is it likely we will get no deal? under certainting constraints. he has a majority, but it is a majority of the people who signed up to brexit, and that could make compromising difficult. it is not inconceivable if you

were to compromise he could face a rebellion from his own mp's. that said, we have seen the news that the vaccinations are being rolled out. begins to put the coronavirus behind him. does that give him more space to work out a deal? it is unclear what he will do, and he may not be clear in his own mind. tom: i want to revisit what francine was alluding to. should the prime minister be talking to brussels or key nations? the federalismby of this on the continent of europe. who exactly should he be talking to to get a best outcome for his united kingdom? ed: that depends on who you ask. i think that the british position throughout the process, the hope has been talked to angela merkel and emmanuel macron and settle a deal between the big three.

they have been remarkably united throughout this process pushing back from that saying no, the u.k. must go to the eu negotiating team. clearorning it is quite the existing changes to his mandate and they want the u.k. to go through that. it will be interesting to see if johnson finally gets merkel and macron and if they listen to him and do that deal. that is what this is boiling down to. tom: what will be the chancellor of germany a? 's response? ed: she has been calling for compromise from both sides. we know the three key issues, progress.ave made no to get a deal with require a compromise on both sides. if they are prepared to do that

is another matter. francine: we know prime minister boris johnson and the commission president spoke by phone yesterday and managed to get a breakthrough. what does going there in person change, apart from showing they are trying their best? ed: we have got to the point recognize thees negotiating process has gone as far as it can do. we are dealing with fundamental differences between the two sides that can be negotiated way through technical discussions. political leaders now have to broker a compromise. this meaning is a recognition of that. suggests a little more time for the ultimate deadline and using it to get more concessions from each other. that is where we are at in this process. .hanks so much

next, we will talk about the european central bank and maybe touch on brexit. we are delighted to be joined by the former ecb chief economist.

francine: this is bloomberg "surveillance." there is a thing called the ecb qe,ding on interest rates, more is expected later this weekend. we are delighted to be joined by peter praet to talk about inflation, growth, and what the ecb's next move is. economist ecb chief

now joins us. thank you, as always, for making us a little smarter on the thinking that we should be following through looking at the european central bank. peter: it is important to see that the decision to recalibrate measures has already been taken. what we discussed today will be calibration. about projection. projections is a signal, how the ecb seems the longer-term process. the short term has not been very good with the second wave. the recalibration would be looking at preserving the easy financial conditions you have today in the context of the strong issuance of public debt. the ecb has been buying most of

the net issuance of public debt recently since the covid crisis. i think that will continue in the longer-term. probably for an additional six to nine months. on which the ecb will insist very much is the bank lending channel. there is a scheme of funding for lending, a very generous one. enterprisesbiggest covideen lesser than the shock. you know the situation of european banks remain relatively weak in terms of profitability. the ecb wants to continue the action for lending. in theterests me more communication of thursday is the

theing, the guidance, longer-term guidance on policy. the ecb has used very strong words recently like preserving very easy financial conditions. that is quite strong as a statement. possibleiding any crowding out resulting from massive issuance of public debt. these are strong words. francine: there was a survey of economists, caroline locke who follows the ecb in frankfurt wrote a wonderful piece saying that according to economist the ecb has become a yield curve controller. has it? peter: i think that is exaggerated. they want to preserve financial conditions, but it goes much further. the explicit commitment to keep the rates as small as they are. this is conditional on the economy situation. that you a guarantee

would get the yield curve control. it is very conditional on the events. it is true for the time being they want to preserve the present financial conditions you have today. the yield curve as it is today and try to preserve that. that is why it looks like yield curve control, but i would say yield curve control is one step further. you get an additional guarantee and do whatever it takes to keep the curve as it is. no, i would say it's conditional. think of the vaccine. six months from now you may have a different environment. the ecb wants to preserve this flexibility. tom: peter, i look at the reflation and clearly there is evidence of the reflation in the united states in five years and even stability and reflation in europe as well. what is the risk that reflation turns into stagflation? the risk ofnk that

inflation is relatively low for the next two years. i think that the markets arrive somehow to think about scenarios. i don't think these are the main scenario, but you have to be ready for the unknown, the unexpected. 2021nk what will happen in is when things start to go much better there is a lot of repressed demand from the consumer and business sides, and themay have at some point demand putting some pressure. i would call them temporary price pressures, but the markets may react very strongly. it will be interesting to observe what will be the reaction of the central bank if you have what i would call temporary price pressures. in: price can be expressed strong euro.

is christine lagarde going to 1.26 euro?l with peter: the u.s. is in a very flux situation. it is a two-way risk when you look at currency. we have to see also what happens in the u.s.. part of the appreciation of the euro that you see today, i would argue this is the biggest part of the appreciation of the euro, reflects their fundamentals compared to the united states based on the fact that you have more risk-on attitudes. the flight to the dollar has been reduced globally. the ecb will repeat the verbal message of it is important to follow the currency. i don't think there's much you can do about this.

tom: let's come back. is with us and much more to talk about about europe and the global outlook in 2021. that will be a theme with edward formerlyevercore isi with cj lawrence. what is he saying cj lawrence for? futures -13. this is bloomberg. stay with us. ♪

ritika: this is bloomberg surveillance. its is pulling back from vision of a fleet of self-driving taxis. they are selling its autonomous car division two aurora innovation and taking a stake in the startup. uber is scaling back on its ambitious side project while it focuses on turning a quarterly profit. record low fees set to be

squeezed further next year. more than half of asset managers plan to reduce charges according to a survey. more than one third of the money managers say that they will explore exchange traded funds, which are cheaper. there is one more sign the elon musk may be relocating to texas. the billionaire has moved his private foundation to alstom. that is the same place where elon musk's electric car company is building an suv factory. that is your latest bloomberg business flash. we are talking a little about what the ecb should or shouldn't do this week. is there a level that could be problematic for the european central bank and what can they do about it? is it a level or the pace of change? peter: i think the most important is the pace of change.

i would argue the level that we see today reflects largely the evolution of the fundamentals. the pace of appreciation has been i think qualitative and moderate. i was never much in favor of talking much about the currency and trying to avoid doing what is necessary for your economic and financial conditions in the union and not so much arguing on the currencies. it is true that the momentum of the currency moves is quite an important variable, that i would say today this is relatively reasonable range. we will have to see what happens in the u.s.. i would also al argue that we shouldn't talk too much about the currency for the time being because the policy in the u.s. is uncertain. we will see what happens and how fiscal markets react to that. i would keep calm on the

currency issue. it is a variable you have to monitor, but i would argue this is more or less ok. francine: does qe still work? we had qe for such a long time. distort and doe more harm than it actually does good? been quiteink qe has important, but basically today if you want to support demand, aggregate demand, you need for school. i think that the comments that you mentioned in general, the fiscal stems will be key. with the ecb is doing now is basically trying to keep stable,l conditions very accommodative as they are today, but in the context where there is an extremely strong issuance of public debt in general. the ecb absorbs this issuance of public debt, trying to stabilize financial conditions as they

are. i don't think it makes a lot of sense to do more in terms of monetary stimulus. conditions,ncial accommodate as they are today, you may need to spend on the next six months. that is a possibility, but i worksmonetary policy pretty well, but in the context of fiscal policy. not alone, but in the context of fiscal expansion. the future will be a difficult question. heroes was my professor bloud. he talked about the history of ideas. do we have an idea in our economics for 2021 or are we making it up as we go? peter: it depends. fort we wouldn't think 2021. two questions, the first is to

see how much damage to productivity did the covid shut down lead to? you can also argue there is some acceleration of digitalization on productivity. i think basically the impact on productivity may be not bad. that is the minimum. the not the most productive part of the society, the most important for leisure, but if you talk about restaurants they are not the ones contributing to productivity in a country. they contribute to welfare, but not productivity. i think the productivity sector of the economy has been very sheltered, and i think some of the aspect of productivity like digitalization has been accelerated very much. i think a more optimistic view once we get out of this crisis,

but also you know the fate of the productive capacity. a difficult, bumpy way, i'm sure. tom: one final question. what will you look for from the ecb and the next two meetings? peter: i think in the next two meetings in 2021, what is .mportant is to advance the ecb is going to review strategic limits. i think that the timing has to be for some of the aspects of to berategic review brought forwards. i think in december it would be important to solidify what are your targets and objectives? think this is absolutely to be classified. the other thing i think it is trying to reunite the different qe programs into one program for later this year. i think these are the two challenges. tom: thank you.

very informative. greatly appreciated. the former chief economist with the ecb, peter praet. much more on the markets. the view from bnc paribas. futures -12 down. a little bit of strength over the last number of days, really in the doldrums again. the euro locked in. stay with us. this is bloomberg. ♪ in a land not so far away, people are saving hundreds

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have it at 90, you can have it too." from covington, england gets the first vaccination. millions will follow. most americans will be vaccinated by "next summer." it is the december doldrums. the real yield, adjusted yield ever more negative. he is not a civilian. he is rather a battlefield commander. joe biden picks general austin to command the pentagon. francine lacqua in london. much to talk about in america. the prime minister is celebrating this vaccination moment. i heard in all of the reporting that the first vaccination is so important and so emotional it has pushed aside the brexit talk. is that possible? francine: maybe for a couple of