francine: a brexit deal was not on the menu. the dinner between boris johnson and ursula von der leyen without a breakthrough. the u.k. set a new deadline. facebook officials and a call for a breakup of zuckerberg's empire, that the acquisition of instagram and whatsapp were in eliminateto competition. germany hopes to contain the spread of the virus. good morning, everyone. welcome to "bloomberg surveillance." i am francine lacqua here in london.

first thing is first, a check of the markets, and the focus is on a stimulus, also very much on what we are seeing in virus cases around the world. that i look at brexit, and we see movement on the pound, yet week, u.s.latile sterling stable, 1.3306. now let's get to the bloomberg first word news. here is leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, francine. brexit leader say we have until monday to come up with a deal, prime ministerth boris johnson and ursula von der leyen ended without a deal. questions are still remaining over fishing rights, competition rules, and enforcement of a deal. now the u.s. lawmakers are working on a compromise pandemic relief plan but they have yet to resolve the deadlock over

business reliability and aid to state and local governments. house speaker nancy pelosi and treasury secretary steve mnuchin are still optimistic a deal can indeed be reached. european central bank is poised to deliver another blast of monetary stimulus later today. addcymakers are expected to 500 billion euros to their emergency bond buying program and extend it until at least the end of 2021. an 8.3s alongside trillion dollars spending package that you leaders hope to finalize later today. 's documents have been accessed inside -- in a cyber hack. the european medicine agency is launching an investigation alongside law enforcement. the attack is not expected to have any affect on the timing of the vaccine review. 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, facebook has been sued by u.s. antitrust officials and a coalition of states, claiming that they plan to illegally crush opposition by acquisition of instagram and whatsapp. matt with bloomberg intelligence joins us. matt, what exactly are the regulators after? francine, the difference as there are a lot of different regulators, and they are all looking for something from facebook in the tech firms. they are looking to create something in the market for the next wave of new entrants to come and challenge the domination of facebook, amazon,

google, for the marketplace, and if they do not do something, it is really an opportunity, so they do not see a lot of other are beingng on that used today, the european commission pushing forward with a new regulations that would look to the internet giant to more effectively police content on the internet, so that is a different aspect here. it is quite different from the approach going on, materialize in a different place. francine: how likely, matthew, is it that facebook will actually be broken up then? matthew: it is hard to say. it is clearly a real risk. my personal view is that it is unlikely to come to that, but i think definitely mark zuckerberg is going to be concerned about this kind of formal request. he will have to work very hard.

i think the bar for kind of providing enough evidence to force a breakup could be too high, but we will have to see. more likely they will probably be a multibillion-dollar find, and that generates some kind of restraints on the way that they behave, in terms of mergers and acquisitions. much,ne: thank you so matthew bloxham, bloomberg intelligence analyst. coming up, another day, another delay come i high-level fish dinner in brussels, and we know all of the fish uns and -- puns and jokes, it fails to make change on two sides far apart. we give you all the details, next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in london. now, another day, another delay. johnson ander boris ecb president ursula von der leyen dined on scallops last night, but when it came to brexit, they were unable to reach an agreement. leaders agreed that talks would consider in the next day despite major differences remaining. joining us from brussels, maria tadeo. maria, what should we actually expect from the next meeting? francine, that briefing will be key. every official that i have spoken to this morning agrees on that, the perception coming from the head of the european

commission, ursula von der leyen will be critical to where they go next. i will say the moon here is not that pessimistic. there was no deal over dinner, but no one was expecting one to emerge. the key here is that both sides agree they want to stay at the table, and they want to explore every possible way to get a tension,that that political emphasis is still very much there. where we could get a deal, however, francine, is a deal, compromise between hungary and poland and the russian and european leaders could happen before the end of the summit. as you know, that is the european recovery fund that is key, and they are hoping that will happen in the next 48 hours. francine: maria, if, you know, is sunday a real deadline, or could that be postponed? what is the real, real deadline for negotiating this? maria: right, francine.

we are told when it comes to deadlines, many have come and gone, but now it is ticking and, purely because the u.k. parliament will have to redo this, that european parliament here will also have to look at this, and they are dead serious, francine, about this, and they want time to look at that hypothetical deal before they vote it through. that will take it to december 28. they are cutting this very close. european leaders today, by the way, will say after that briefing from vonda lyon, they believe things do not look good for a deal, they will focus on a no deal instead. francine: thank you so much. maria tadeo in brussels for us. tuchman,s now is itay global head of fx at citigroup. upcominghink this sunday is quite an important date, although, as we have seen

in the past, as you mentioned, and a lot of important dates have come and gone, but time is running short. we still very much feel that a deal is going to happen, and we feel a 70%, 80% probability that there will be a deal, although may be a skinny one. particularly the eu walks away from the table. throughout the entire brexit process, the eu has been at the table, ready to negotiate and negotiating, so i think that is the real big marker. our expectations is a signal that there is a deal or a basis for a deal which will be ironed out very quickly. that should be positive for the pound. we should get a few percent rally. francine: itay, when you look at what is happening to pound, you are expecting a deal -- i think you are one of the more optimistic that we have spoken to on the markets. how much can the pound strengthened by? itay: in the short-term, i think there is a sort of a narrow deal. you might get a couple of a percent. the real question is -- what

from their? i think there is a lot of pessimism in 2021 fro among the community. clearly the covid pandemic adds to that. my sense is more optimistic than most. u.k.nk the pound has been, assets have been very under owned globally, and i think there are a lot of investors waiting and seeing how this will play out in order to look at what fairly cheap u.k. assets, for example, in the equity market, to want to buy into, so i suspect the market consistence for 2021 might be too pessimistic. we can trade to 140, for example, if we get a deal and this plagues out -- this plays out. francine: looking at the and itity cycle, certainly widened the most in favor of the shorter end. doesn't show that markets believe sunday is the real deadline? itay: i think it does show that

the market believe sunday is more of a real deadline band some of the real deadlines. finalr it is the absolute final, it is certainly a meaningful date. francine: we are both talking about real real deadlines and final final. [laughter] what are your top picks the currency space? itay: we love the cyclical and commodity currency. we are very bearish the dollar. you know, aussie dollar in the g10 space is one where we continue to think that there's plenty of upside. trade,ome in terms of sie,at a seven-year -- aus in terms of trade, are at a seven-year high, asynchronous global recovery, should be a reasonable rally in the aussie dollar would continue a bet. ing markete emerge space, we like the mexican peso.

somethingexico goes like $18, $18.50, very tied to the u.s. and a vigorous recovery in 2021. those are two top picks. in the euro, we think it could go to $1.25, $1.28. reserve managers will have to buy it. francine: we will talk about euro and ecb shortly. do you avoid the dollar at these levels? itay: we are still bearish the dollar, and we think this move has legs, both in the near term and the medium-term, there is many of downside to the dollar. soncine: ok, itay, thank you much. itay tuchman of citigroup stays with us, and we will talk about the euro and at what point it becomes medic for the european central bank. coming up, rescuing the eurozone. stimulus.und of we have that story that, and this is bloomberg. ♪ , and this is bloomberg. ♪

-- we have that story next, and this is bloomberg. ♪ berg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua here in london. now let's get straight to the bloomberg business flash, here's leigh-ann gerrans. hi, leigh-ann. leigh-ann: hi, francine. -- has agreed to by german silicon manufacturer -- it is another deal in a record year for the industry that represents a 10% premium to the

price on november 27 when talks were disclosed. airbnb has priced its long-awaited ipo, giving it a value of $47 billion. the firmest seizing on investor demand as its business roles back from the pandemic slump, and already record year for listings with more than $160 billion raised on u.s. exchanges. and elon musk is upbeat about spacex's new test flight, despite a fiery end. the mission for its next generation starship went mostly smoothly until the landing, when it failed to slow down enough, crashing into a massive fireball. is planned for future missions to the moon and to mars. somely, pfizer says documents have been accessed in a cyber attack. it is the latest attempt to

steal research on coronavirus. the european medicines agency is launching an investigation, alongside law enforcement. the hack is not expected to have any affect on the timing of the vaccine review. and that is your bloomberg business flash. francine? francine: leigh-ann, thank you so much. now, the ecb is supposed to pump another round of stimulus into the eu area later today. policymakers are expected at 500 billion euros to the emergency bond buying program and extend and until at least early next year. the economy has been hit by new virus lockdowns and continued uncertainty over brexit. still with us is itay tuchman from citigroup. itay, thank you so much for sticking around. when you look at some of the euro levels you gave me earlier, will you see some kind of verbal intervention from the ecb? is a higher euro problematic for the european central bank, or is it just, you know, the timeline of how it gets there? itay: you might see some mild

rhetoric on the euro, and obviously, you know, the ecb does not want a higher euro, but i do not think we have reached that point where currencies have become better than your neighbor and into the major monetary policy position. i think fundamentally, the ecb is looking at the eurozone economy, quite worried about a second lockdown, yet there is not much more they can do outside of what has been telegraphed, you know, with a bigger package and the extension. the challenge is -- how do they actually act in a way that could impact the euro? there are very few, i think, likely tools at their expos disposal, and they will have to act. francine: there is, you know, the market is questioning whether they will be, you know, whether it is extended for six months, 12 months, and a combination of things. number think the pep

to 700ably 500 billion billion. the question is -- do they do anything outside of that? the probability, for example, of a further rate cut is very minimal. that will be a big surprise, but i think this ecb meeting is more likely to be along the market expectations. we were expecting some kind of resolution on the eu recovery fund. does that strengthen the euro? i think these sorts of dynamics have been strengthening in europe. assets, which has been long demanded by the marketplace and particularly demanded by folks like reserve managers, who, over many years, under waiting the nderweighting the

euro, and now you have europe moving more toward, again, not a grand bargain, but more integration for europe, and it will bring flow into european assets, particularly that one. francine: how do you play, itay, some of the central european currencies? is there anything for, you know, some of the neighboring countries' currencies? itay: i do not have a strong view of some of those currencies, quite tied to what is going on in the eurozone. the pandemic choice and is right -- quite concurrent. stories in asia, latin america, higher data em currencies. francine: i know -- i think i saw in your note that you actually like renminbi. how do you play yuan? itay: for me, you have to be a long-term owner of china, of the

remember he come and it may be a once in a generation move in the giants currency, because -- of the renminbi, and it may be a once in a generation move in the chinese currency, because it is not about your neighbor, chinese are very strong investors, to put money into china and to leave it there, with one of the few places that have a tight monetary policy, and so, you know, i think you could be in the realms of a multiyear cyclical moves in they were men be that you really want to be a part of -- in the renminbi that you want to be part of. francine: what do you think about oil currencies? itay: i think you want to own them. i think you want to own them all, at least in the short term. personally, i am quite a long-term bear on oil because of the real dynamics afoot around renewables. in the short-term, you are going to have a strong recovery in

2021, you will have a lot of people get on airplanes, a tourism recovery the world has never seen. you have a lot of very near term demand for oil potentially coming and maybe late q1, q2 of next year, and the oil price might rally a lot. it is going to boost oil-based currencies, and we are quite bullish. francine: this is short-term. what is the medium-term? do you have to have a call for when we see peak oil? will look, i think some transition their economy away from oil, for example, the ruble, very unlikely that that economy will turn away from being such a hydrocarbon based economy. but you see, for example, what is going on in the middle east, where it is very obvious and clear that a lot of those countries are thinking beyond the oil market. you know, for example, the deal between israel and other nations is a huge game changer for the

region, very indicative of what some of the forward thinking, oil-rich economies are doing with that long-term goal. francine: thank you so much for joining us today, itay tuchman, global head of fx at citigroup. coming up later today, we bring you full coverage of that ecb meeting. of course we have a look at what exactly means for euro. christine lagarde later on, of course in that news conference. we will see what it means for the structural euro and if leaders can agree on something in the eu recovery fund. this is bloomberg. ♪ s is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get to bloomberg first word news with leigh-ann gerrans. leigh-ann: facebook is being sued by u.s. antitrust officials

and a coalition of states who want to break up the company. they are accusing it of a legally crushing competition and want to unwind its purchases of instagram and whatsapp. the complaint is revisionist history. have liftedpoland their veto over the use of a landmark stimulus package. that is in exchange for a delay in the sanctioning process that could strip them of the funds. the two countries opposed tying sections cannot be triggered before the european court of justice has them -- has a say on the rules, and that could take them more than a year. china plans to sanction more u.s. officials and place new travel restrictions on american diplomats. the move is in retaliation for measures taken by the trump administration over hong kong. china did not provide the names of those it is sanctioning.

in thecludes people executive and legislative branches and their families. 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: where do we go from here? last night's dinner between boris johnson and ursula von der leyen ended without a brexit breakthrough. sunday's new deadline for negotiators to come up with an agreement on trade. the key sticking point, fishing, state rules remain. von der leyen says the two sides are still far apart. go to guntram wolff, director of bruegel. i'm not really sure what to make of this. -- if there are a remaining big differences now, what will change between now and

sunday? is it just another deadline that will come and go, or is there real will on both sides to find something? the way i think about this is really about a game of brinksmanship. both sides have positions in strong views on critical issues, and both want the other side to fold, essentially, and to give in as much as possible. so the three hours -- nobody can tell me that there was really something new being discussed. these issues are all on the table. they have been talking about them for years. it is crunch time, the last days during which an agreement has to be found. so by putting up pressure, by setting a new deadline, which really becomes almost the final deadline, i don't think there is much to go after that. reconsiderveryone to

where and what side and at what stage you want to fold and at what stage you want to fold. francine: are both parties ready to walk away? who has to move most? this is maybe political posturing to show back home to their political's constituents that they are working hard. with a move -- will they both make concessions? have to lose, would lose quite a bit. but the u.k. site is losing more in the case of a new deal. the tendency from a purely economic point of view would be for the u.k. having twofold more and having to give in more than the e.u. side. but of course the domestic politics is again a different thing.

u.k. prime minister has a fairly strong political base for his strategy, and in europe it is much more diverse, as you know. but i think it was quite important that the german chancellor weighed in. the day before yesterday, also with a clear statement that we are ready to walk away, and if germany is ready to walk away, france is more than ready to walk away. at the end of the day, i think the e.u. is very tough on this and i think they are really because soo speak, much is at stake and there is a ,enuine fear that is state aid control, and the level playing field is not fully guaranteed, that then the u.k. could see major divergences, perhaps even the entry of chinese firms via the u.k. into the e.u. market. a lot is at stake, and the e.u. does not want to get this wrong.

francine: do you think we have a deal? if we don't have a deal, are we prepared? we saw white paper from the e.u. site yesterday saying what -- some of these services will be disrupted, and there is still continuity in january. is it now too little, too late? mean, there but, i is no question to my mind that if there is no deal it will look under pretty and we will see consequences that are, especially in the beginning, quite burdensome because people are not prepared. the big companies are prepared. the small, the sme's, are not prepared. the sme's will all of a sudden face customs formalities, and so

on and so forth, so i really think there will be in effect for the sme's also for the fisheries, the french fishermen, all of these people will feel, i think, the impact of a no deal, especially at the beginning, and in the medium-term it is the regulatory diversions that will matter. that will also way on the economy on both sides, but again , overall the u.k. site has more to lose than the e.u. side. francine: what do you make of the e.u. recovery fund, we understand that the possible loss of the deal has unlocked the fun, but the growing split at the heart of the you, how does the block move away from this? i think theean, e.u. recovery fund is of course a huge issue politically, more important than brexit. it is politically more important because it is important for the

recovery, but also the way it is ce forured sets precedents future schemes. the fact that poland and government -- and hungry have agreed to the e.u. recovery fund and have agreed to a mechanism that ensures that payouts are done in compliance with the rule of law, i think is certainly a positive step, a step in the right direction. it is true that there has been this decision to inject the european court of justice in between, which could slow down things, but overall i would say it is still quite significant that now the e.u. can actually stop payouts to a country based on concerns about the rule of law and get the backing from the

european court of justice for it. isterms of the structure, it .eally, again, a push the central authorities have more say over what is happening at the national level, and i think that is the right direction of travel in a situation where so much joint money, e.u. money, is distribute it to all of these countries, where you cannot just distribute money to e.u. countries without strict oversight mechanisms, and we have gone a good step in the right direction if that compromise goes through. francine: longer-term, will we see -- will it expose the ability of the you to have influence on climate change if the block is uneven with this relationship, which is less than desired with certain countries? mean, look, i think the e.u. is not a state.

that is very clear. the e.u. is a group of states, but it has in some dimension from some state powers, and when it comes to foreign policy, we still have unanimity rules, meaning every country can veto, as it is with the budget. but the relation and what we have learned from the budget is talks andknow, money political pressure talks, and, yes, one can overcome resistance from a minority of countries, and when it comes to climate change, i think a large majority of e.u. countries is committed to really moving ahead. it is also committed to use it as a foreign policy instrument carbon border adjustment mechanisms on third countries that do not comply with the higher e.u. rules. and i'm sure that the geopolitics of the green deal will be big and will come forward. francine: thank you so much,

guntram wolff, bruegel director. of companies say they have seen disruption to their supply chains this year, but will covid bring lasting change to the way goods move around the world? we will discuss that next, and this is bloomberg. ♪

francine: this is "bloomberg surveillance." how will the coronavirus reshape global supply chain? surveycompanies in a new reported some disruption to their supply chains this year. to 4000rmes group spoke firms across european countries and the u.s..

of the european countries and two thirds of the american ones say they will find new suppliers. less than 15% plan to return production from overseas. we are delighted to be talking about this supply chain shift verstraete of euler hermes group. when you look at supply chains, how much of these supply chains have shifted pre-covid-19 because of the trade war between the u.s. and china? : very few, because first of all the shift of supply chains is not something you can do overnight. organizationale changes, quite some investments as well, and while there were a lot of indications that trade barriers would increase, and thus reinforce or incentivize people to do some reassuring,

what we have seen so far is that instead of doing some reassuring, companies are much more open for reducing the delays, reducing the differences, but we have not massive move into re-shoring. so where are they trying to move to? when you look at covid-19, it is passed when we look at 20 to anyone and the arrival of vaccinations. what are companies worried about? are they worried about the next pandemic and how to be more nimble? what are they pointing to? wilfried: what they are looking ,t is to secure supply chains and as we have seen earlier this year, when there was also many restrictions being put in place

in china, suddenly a lot of companies were forced to stop production because they could not get the necessary materials to continue their own production. so what we see is that people are looking to diversify suppliers, and that is also looking at new supplies, not necessarily completely changing, but to have -- to be less dependent on single suppliers. because we have observed that suddenly -- just look at what happened also in the pharmaceutical world. suddenly people discover that oneof -- came out of country, in this case china, and so we are getting back to the very basic question, never put your eggs in the same basket, and diversify your supply chain. that is the first one. the second one is to do some

near shoring, have some plus suppliers that are closer so that you reduce the risk of transportation and delays in transportation. francine: is all of that inflationary or deflationary? wilfried: it is inflationary, absolutely, because when people have been looking at -- notably supplier, it is not necessarily about the quality, it is more about the we also have observed that by concentrating the supply from a limited number of suppliers, you can of course have more leverage in negotiating price. so it was all about getting the cheapest products for your own supply chain.

but at the same time, when the supply chain is disrupted or broken, the expense in terms of revenue is huge. seeing,we are especially in machinery, telecom, also., energy, utilities, there were huge disruptions, which was much less the case, for example, for chemicals and other companies. francine: thank you so much. we will come back to you and ask about how that impacts esg thinking when looking at new supply chains. wilfried verstraete from euler hermes group stays with us. guestl speak later with a on the u.k. and the changing europe. on the new deadline. not sure if it is a real deadline. that is at 10:30 a.m. london

time. up next, we will discuss the european insurance industry after covid. this is bloomberg. ♪

>> i truly hope that an agreement can be found, because even with an agreement it is going to be very painful and difficult. but with a hard brexit come it is going to be really painful, especially with people losing their jobs. that is the last thing we need right now. i truly hope an agreement is possible, but of course not at any price. there are limits to what the european union can do. that was the european commission executive vice president speaking yesterday on the brexit threat, and also the white paper from the european union, actually looking at contingency plans. these are contingency measures to keep the planes flying and the goods coming into the u.k., and from the u.k. into the e.u. in case of a no deal brexit. a reporter in brussels had also spoken to officials yesterday with knowledge on the matter, and they had laid out these contingency measures that would if anrucks on the road

agreement was not reached by the end of the year. let's get more with our guest from wilfried verstraete from euler hermes. we can focus on the future of the european insurance industry after covid. let's go back to what we were talking about on the supply chain. as more companies look to diversify, to not have all eggs in one basket, how much are they thinking about esg? how much are they thinking about more climate friendly supply chain? alfried: it is definitely topic that is very high on the agenda. underestimate the pressure that comes from the -- about esg. i think people do understand that it doesn't make a lot of travelo have goods several times around the world before they reach the end.

we know in terms of esg impact, transportation of physical goods is one of the main contributors to the negative impact on climate change. so companies definitely are looking at not necessarily re-shoring everything to their home country, but at least to have shortened the supply chains and to look much more for suppliers that are within a reasonable range of their own production and customers. you see theere do insurance industry going into next year? there is a lot of hope that the economy will pick up because of the vaccine. and also in germany -- is it going to be easier in 2021, or are you worried that we will see surprises? wilfried: it is extremely difficult to forecast because

until a few weeks ago, there was hope that we would continue the decline in number of new cases of people being infected. what we see in the last 10 days is that we have reached a kind of plateau, and that in many countries the number of cases is no longer decreasing, and even slightly increasing. so all hopes are now put on vaccines, because it will take at least i suppose one or two months before we can see the first positive effects of the vaccine. and then of course the whole question is, how many vaccines will be available, and how do you logistically organize to vaccinate an entire population. who comes first, who comes last? what social impact might that have? we are not out of the woods yet. hascine: i know germany extended the backstop for credit

insurers, i think do next year. will that need to be extended further, or do you worry about bankruptcies in the next six to eight months? wilfried: there will be at some point in time a huge rise in the number of consultants. what we have seen in the -- what we have seen in five or six months from today is that the number of insolvencies has dropped significantly. it is totally counterintuitive, but that is the reality. and there are several reasons for that. first of all, to use a broader image, you can see that many, many companies today are under artificial oxygen. and you know you have -- i don't the discomfort of what we are talking about, but you have a huge number of zombie companies. any companies that under normal circumstances would have gone bankrupt, but are kept alive

thanks to a large number of measures that the government has taken. one the moratorium insolvency declarations. the huge amount of direct or indirect loans that have been granted to companies. the huge subsidies that many countries have on -- and so forth and so forth. francine: thank you so much. you so much, we are out of time, unfortunately, but we will have to get you back on time very soon. wilfried verstraete am a chairman of the board of the euler hermes group. coming up next, more this is bloomberg. ♪ -- coming up next, more "bloomberg surveillance." ♪

francine: a brexit deal wasn't on the menu. the dinner between boris johnson and ursula von der leyen ends

without a breakthrough. the u.k. and the e.u. set a new deadline on sunday. the u.s. vs. facebook. officials call for a breakup of mark zuckerberg's empire, arguing his instagram and whatsapp acquisitions were intended to harm competition. and deaths in the u.s. from the pandemic top 3000 a day for the first time. in europe, germany admits it's failed to contain the spread of the virus. good morning, everyone, and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene in new york. tom, also back from the festivities -- tom: i survived. francine: we look at what happened in brussels. observers say we have a new deadline of sunday, but that could be extended by a couple of days. but the facebook story, i have to say, made me stop in my tracks. you and i have been doing this for many years together, and every time there was regn