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 regulation in europe, you would say that is

very un-american, he would never happen in the u.s. they are trying to go after your tech giants as well. tom: we have seen this before, and i will never forget -- i cannot remember when i was sitting, when there was a single headline across bloomberg, that the department of justice dropped its case against microsoft. i have no wisdom on this other than to say we have seen this before, and it does go back, in the culture of the country, to standard oil. what i would say is there is a stew of news out there led by the ecb anticipation, and what i'm watching more than anything is the german two-year yield. it signals disinflation, and again ever lower, greater negative yields. francine: the ecb meeting is quite interesting because i think there is no one that i have read who is anti-consensus. everyone is expecting more on pepp, more on tro.

let's get to the bloomberg first word news in new york city with karina mitchell. the federal trade commission and a coalition of states have taken a major step on the possible rake up a facebook. filed that they formerly filed -- regulars want facebook to sell off instagram and whatsapp. the complaint revisionist history. president trump has asked the campaign to join a texas lawsuit challenging the presidential election. texas is trying to prevent electors from taking part in the electoral college vote. next monday. brexit negotiators now have until sunday to come up with a trade deal. that was the result after a dinner between british prime minister boris johnson and european commission president ursula von der leyen ended without a breakthrough. they agreed the talk should

continue despite major differences. by sunday they said a decision will be made on the future of negotiations. airbnb's initial public offering is adding to a record year. the home rental business prices long awaited ipo above a market of 3.5e 3.5 -- a range billion dollars. so far this year company companies have raised a record $163 billion on foreign exchanges. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am karinantries, mitchell. this is bloomberg. tom? tom: thanks so much. the data check, equities, bonds, currencies, commodities. and also fish i cannot pronounce. turbot?ou pronounce it's a fish. francine: i don't know how to

say it, tom. i know it in french. tom: we have interesting conversations in europe. help me line-up what we've got in europe. europe-dollar, 1.2105. the greater negative yields, the inflation-adjusted -1.0059.d is a that is a huge deal, to see the real yield drive ever lower and the two-year to a negative 2.7782. francine: what has the attention of markets, it is about the ecb and what christine lagarde will do today, whether it is more tro's to support the bank, whether it is something to do twelve-month, and but i think they are trying to reassess the outlook for these american tech giants after the

news on facebook. so keep an eye on that. the pound still sliding after boris johnson's dinner with ursula von der leyen ended with no breakthrough on a brexit deal. needhen something that we to keep an eye on is that we could see a recovery fund. leaders are meeting. maria tadeo is waiting for a lot of them to arrive as we speak. the recovery fund could go ahead because poland and hungary have agreed to a longer-term concern , if peoplehis block are allowed to veto. tom: on the data front, we thank stuart for emailing in. turbine -- with turbine. our executive producer is a fish man. he says they disturb it.

. -- centralready to bankers have relied on qe for firepower expectation around new symbols measures running high. journey is now is isabelle mateos y lago. isabel, thank you for joining us. what are you looking for in the ecb today? there seems to be so much consensus that they will do something, and the main question is whether six months or 12 months. morning, francine and tom. i think that's right. thathave been very -- in telegraphing. they would recalibrate their policy support package in a supportive way. theyis important is how evolve their narrative from a focus on the size and the support to a focus on the duration.

that is really what is important. if you want governments to feel that they can keep providing fiscal stimulus without being worried that interest rates are going to rise again, they need the ecb to say we are going to be in the market for a longer time than previously signaled. they can do that by saying we are going to extend the pepp by six month or 12 months. it doesn't make that big of difference because if they do six at they always have the option to do another six later. but importantly, when are they going to stop reinvesting? because that is really key. the size of the balance sheet, they commit for very long, then that is very supportive for governments. same thing on tltro. will they move the raise to subsidy components? that will be a bank -- a move for banks and bank lending. but will they extended in time so they know there will be

continued credit growth and support from banks to the economy. the european economy is very dependent on bank lending as opposed to more reliance on capital markets in the u.s.. cap -- and the pepp are very important. francine: i know probably -- i know tom probably wants to talk about euro strength in a second, but we also have news that hungary and poland could agree to the recovery fund. europe andhange how ecb views the economy in the next six months? ecbelle: by the time the concludes its meetings, and christine lagarde in a press conference -- we are not sure because there is agreement between poland, hungary, and the german presidency, but we still need to make sure that the other 24 get on board. we won't know that by the time

of the ecb press conference. the news that we got overnight, that we were very close to a deal, there is an element of uncertainty, giving comfort that up for will need to make potential delays, so that is a positive. i will say that the base case was always that agreement would be fast because the support package was too big to fail. tom: tom keene in new york. thrilled that you're on in the historic ecb day. i want to talk to you about something that is in blackrock's wheelhouse, which is calculating direction. how close is europe to being japan? jon ferro rattles off the numbers about how much debt is going to be sucked up ecb to keep price up, yield down? a broad e.u. and a now or frankfurt to being the debt market of japan? that is a topic that is talked about quite a lot, and

there are parallels in the demographics, parallels in ever larger amounts of sovereign debt being sucked up by the central banks, but i think there are also differences. the ecb still has a chance to really reverse the tide of these falling inflation expectations, which the bank of japan failed to do back when, and really struggled to get them back up again. i think this is a real danger for the ecb, and frankly will be very interesting to hear how much emphasis they put on this. unfortunately, it is unlikely that they will anticipate that the concluding of their strategy review, because that would have been one way to say we are concerned about this continued decline in inflation expectations, and we want to get ahead of this and announce quickly that from now on we are going to take a more symmetric approach or whatever else they will announce at the conclusion

of their policy review. but i think the other big difference between -- with the ationof japanifict is the recovery fund, to put investment to work, to boost growth in a sustainable long-term way. we will have to see. n is a risk, but there are policy elements to suggest that we could avoid it. francine: thank you so much. she is staying with us. this is bloomberg. ♪

tom: "bloomberg surveillance," good morning, everyone. and driving forward the ecb story, what it means for that. isabelle mateos y lago's is with us from blackrock. wonderful to have her with us today. the fact of the matter is price up, yield down. francine alluded to this earlier. how does the commercial banking , aboutin europe survive ready to go through zero. portugal with the 10-year yesterday. importantly, there is a crew demanding a greater magnitude of negative yields. is the structural solution. what does that do to commercial banking? is toughert commercial banks. the yield curve in europe is quite flat compared to the u.s.,

so that doesn't help. but that is why the program of the ecb is really indefensible, to keep banks profitable as long as they lend to the economy. so that was really a very clever , in a way,inguishing insulating banks from the negative rate policy on the trade both with the tltro subsidies that allows banks to preserve their profitability. but of course he does remain a challenge, that is very clear. however, as the economy reopens, we do expect that sector to benefit like other cyclicals, and it has benefited quite a lot already in the last month. tom: let's migrate to the games here, and we do that from the e.u. meetings. it is very simple.

waiting tosked up, speak to the worthies here. they say maria, they walk away. does towhat maria tadeo world leaders in particular. but it is a realization, not the united states and europe, it is 27 nations, depending on who is counting. how united is europe in 2021? isabelle: i think it is very united, actually, certainly in its ability to provide policy support to its economy and to put money where its mouth is on implementing a climate transition that delivers carbon neutrality by 2050. there is going to be a lot of investment, a lot of spending and policy support. you do not get there in a straight line, but frankly neither do you in the u.s. or other countries. frankly, there is a part of the world where we are not worried

about policy fatigue or policy disunion in 2021. it is europe. frankly, that is another thing. as everybody agree about everything? absolutely not. inre are big differences views on lots of topics. europe has made a lot of progress this year and hopefully will continue to step by step filled up the -- build up the institution of architecture that is needed. and of course tonight we will have a compromise -- hopefully there will be a compromise at budget, of law on the and because nobody will get everything that they wanted, but what is important is the direction of travel. the direction of travel is going forward. we will have a much bigger budget with a rule of law mechanism in it. that's what's important. is 2021 the year where we realize that the qe does not

really do much for the economy? it has not done much for inflation. what is the purpose at this point of more qe? isabelle: i would disagree with the statement that qe does not do much. qe is playing an absolutely essential role in enabling the support to be implemented, to be executed without a tightening in financial condition. it would have been impossible to seen the support across the european union if it was not for a period. so that role is essential. as i was saying earlier, increasingly the impulse or the support element comes from the duration, the length of time for which the support is provided, rather than the incremental purchases. in fact, we have already seen in the second half of this year,

the ecb has needed to purchase smaller amounts of government bonds because the objective of stabilizing markets and keeping financial conditions fairly loose has been met. where the ecb is struggling is with inflation. there is no question about that. and here it needs to do more. doing more is not going to be enough, that is very clear. if you look at inflation expectations in europe, it picks up a little bit, but they are below the pre-covid level. a big contrast with the u.s. here. the ecb really does need to tell us very soon, what are they going to do to meet their inflation target? it will not take until the middle of next year to hear what their new monetary policy strategy is. tom: that is a key insight, folks. the vector of u.s. reflation, so different from europe. isabelle mateos y lago with blackrock.

coming up hussein kenji. i will tech -- i will check facebook on the break. this is bloomberg. good morning. ♪

tom: "bloomberg surveillance pickup we are going to deb -- ." there are 6, 7, eight tech stories right now and we are going to squeeze two of them in

in the next 15 minutes. airbnb, hussein kanji joins us. i am thrilled that he is with us today because i think he is a very clear and sane voice and the hype. i think we can begin with the idea that airbnb is not in graham dodd, not in graham data and cottle, is not even something that warren buffett would understand from those iconic textbooks. when we take an ipo and we extrapolate out a value of a company, is that a legitimate valuation that we are looking at this morning of airbnb? i think that is broadly the question for almost everything in the tech industry right now. interest rates are so low, and that is kind of -- tom: i don't mean to interrupt, but this is absolutely critical. is it a constructed, manufactured, or manipulated scarcity? i don't think it is

manipulated, i think it is a genuine scarcity in these companies. they are being bid up to a stream the high valuations because there is such a scarcity. what does airbnb become? we are not t is a combination. the growth of the company has been a stream the good. the pandemic was extremely challenging for everybody in the trap industry. -- and the travel industry. i was very surprised to see third-quarter numbers profitable, which is good news going in. the good news is that -- the goal is to not disrupt the entire hotel industry and to have the company become a hotel operator. to be fair, i think it's 'soking, which is airbnb biggest competition, they're both about 50/50 market winners.

not valuedings are as highly as they should be. tom: airbnb with hussein kanji. there is facebook and the government. we will continue on that here in a bit. futures up 5, nasdaq 100 fractionally goes the other way. the vix has basically done nothing through the week. .1.64 balance today, recovering, the senator rick scott with david westin at noon. this is bloomberg. this i- [announcer] imagine having fuller, thicker,

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partners essay this is something that was largely unexpected, especially coming from the u.s. does this mean regulators will really scrutinize some of these big tech giants, or is this just a one off? dramatick it is a change in policy for the u.s. government to go after this. i don't think it is going to be a series of these. i don't think the government is very well staffed, this is the reason they have ripped in some of the state generals into the case just to have the manpower to be able to fight it. this is going to be a long battle. the government is going for the win. it is not just a small settlement. they want to fundamentally break up the company. francine: will it be broken up, and in what timeline? >> that is a good question. typically you look at these things on a consumer harm basis. it is really hard to do the out -- to do that for the tech

companies because they really don't cause that much harm. the government is taking a line which is saying what could these companies have grown into if they had stayed independent. that is a hard thing to prove because it is almost a what if-type scenario. wrote an email to his staff and suggested this is going to be a long protracted battle for facebook. i don't think this is something the government can do like fighting facebook or google or amazon. the department of justice inherited google and apple. tom: there is a moment where those younger and even someone of my vintage look back on fondness at bell webs, bell telephone and rain and and they were way out front on this. network externalities and network effect. neververnment has

prosecuted monopoly given these massive effects of the few survivors, the few winners in technology. do they have the body of law to take on network effect, or are they going to prosecute a standard oil prosecution? think monopoly law is fundamentally changing when it comes to these kinds of actions. attorically, you always look did the consumer get hurt? there is no hurt in this case. the question is, the competition get hurt and how can you prove that competition got hurt unless you understand what -- tom: this is really important. somebody wants to go out and start a new instagram, they have every opportunity to do that, but are they defeated day one because of the mathematics of the internet? the ethernet mathematics? couldn: i don't think you do in instagram today and the question is, how instagram

stayed so low and stayed independent, could have turned into a rival to facebook? no, i think a lot of intuition says yes which is why facebook absorbed it and it is such a crucial part of the facebook empire today, but that is the line the government is going to be arguing. if a new direction and interpretation of monopolistic behavior, because there is no net arm to the customer. tom: if there is no net harm, why are we doing this? it is competition. it is the what if clause. if instagram had stayed independent, the consumer would have benefited from having two people in the market versus one person who has aggregated all the power. this is going to be hard to prove for the government and will take a lot of resources which i i don't think the government is going to be doing a lot of this in parallel. francine: who else is at risk? this is exactly the thinking of

the commission. they have thought about this for quite some time. we see monopolies with competition. overall, doesn't mean google is at risk? other companies at risk? split itthe government up legally -- evenly. the department of justice took down google and apple and have not been successful in lobbing their case. i think the sec is putting most resources as it is not a very well constructed machine. it is going to be a drawn out legal battle because we are changing law and policy in conjunction with going after these companies. francine: what about apple? just to be clear, and every time we have something from a competition commissioner in europe, he said this is un-american. is the u.s. becoming much more

like europe? hussein: to some degree, the two regimes are converging with this action. the u.s. historically has not -- has not done very much. have these commissions fighting against facebook and those are kind of the two openings. i don't think this is one where the government can go to war with all four tech giants at the same time. i think the google one may be subtle, the facebook one, the government is going for the win. i think amazon probably gets left behind and then the question of what happens on the apple side with the doj. francine: thank you. let's get straight to the bloomberg first word news. steven mnuchin and nancy pelosi are hopeful there will be a new deal on a stimulus package. lawmakers face roadblocks, one is a business liability shield and the other is aid to states.

pelosi said, one way or another, we will get it done. for the first time, daily coronavirus deaths in the u.s. have top 3000. americans are being infected with an increasing rate. the cdc protects by christmas, more than 300,000 people in the u.s. will have died. joe biden's son hunter is facing and i -- a federal investigation into his tax affairs. flashpoint a flat -- during the campaign. biden says he is confident the probe will show he acted legally and appropriately. global news 24 hours a day on air and at uber quick take powered by more than 2700 journalists and analysts. changing europe, changing brexit, may changing dinner. this is bloomberg.

futures up seven.

i truly hope that an agreement can be found because even with agreements, it is going to be very painful and difficult, but with a hard brexit, it is going to be really painful especially for people losing jobs as a last thing we need right now. i truly hope and agreement is still possible, but of course, not at any price. there are limits to what the european union can do. that was the eu commission vice president

speaking to maria tadeo sounding helpful at brexit deal can be reached. negotiations resuming in an attempt to reach a deal by the new sunday deadline. i don't know whether this is trolling or why we are only finding out about contingency plans two weeks before the real deadline, which is december 31. let's get straight to maria who joins us from brussels. i know you are waiting for a lot of these heads of state to come in. if we can't have an agreement, if we didn't have one yesterday, what makes people hopeful we will get something on sunday? are two things here, one is that they were not actually hoping for a deal yesterday. the europeans were briefing very hard on this. it was about political momentum and injecting renewed energy into the talks. to some extent, that is happening. we are now waiting to see what can happen between now and

sunday. it is very much about the briefing ursula will give to european leaders when they meet here. i just spoke to the prime minister of luxembourg. he also had a warning which he said, for me, it is best to go for a no deal rather than a bad deal. that is almost the theme we hear repeatedly. there are still sticking points that need to be resolved before they can give the green light to any deal that may come between now and sunday. tom: i tried to read on this as an outsider. 1291 days into this soiree. for the life of me, i don't understand where the pressure is for the eu to do anything. like julyo me exactly of 2016. is it every advantage of the eu to just wait out? --? -- britain? maria: that is very much what they are doing is to wait

because they feel like for most areas except for fish, which i should be clear, the brits do have the upper hand, but every other area, the europeans do believe they have the upper hand and they just need to wait until they blink first. that is very much with emmanuel macron. voices that do say that no one knows what happens after a no deal brexit. there could be big disruptions from everyone here to go for a compromise. that is very much the angela merkel line. wait, but the question is, how much? the storyalso broke that today, the eu commission would publish these contingency plans. is it a little too late, if we have a no deal brexit and a lot of companies are not ready for this ugly transition, what happens january 1? maria: what they say is that they are ready for a no deal. the reality is that many

businesses don't know what a no deal would look like in january if we do get to that point. the commission also says they are putting this today and tapping in the game for weeks. my readout is that this is mostly political. they are doing this today ahead of a crucial summit, ahead of a crucial briefing to pylon the political pressure to say that if we don't get a breakthrough, we are ready to go to no deal. francine: thank you so much. sticking with brexit, big gaps remain after a dinner meeting between boris johnson and the eu commissioner present -- president. as always, thank you for joining us. is it 50-50 if we get a deal or a smaller chance than that? anand: i'm starting to think it is a smaller chance because what we have arrived at now is a point where there is a fundamental difference of philosophy and principle between the two sides. if the talks don't succeed, this

will simply be a reflection of the fact that the two sides are approaching this question of what rules the u.k. should and could be bound by post-brexit from fundamentally different angles. francine: what has changed in the last four years of negotiation? anand: we have not been negotiating this for the last four years, only the future agreement since the end of last year. i think two things have happened, i think the eu have dug in a little bit on their demands the u.k. sign-up to certain minimal standards. i think boris johnson has doubled down on this maximalist isinition of brexit, which not just leaving the european union a no longer being a member now means taking back absolute control over all our laws so it is sibley unacceptable that they expect to

be bound by any legal commitments going forward. tom: i find this to be the oddest of negotiations. explain the incentive for brussels to come to an agreement. i can't see where they have an incentive to come to an agreement other than to export the marginal bmw into london. anand: i think the eu does have several incentives. there is the economy of the republic of ireland to think about. the europeane of union will face consequences economically although not quite on the level of those the united kingdom will face. republic of ireland agriculture is in for a rude shock in the event of a no deal brexit. more broadly for the eu, i think they recognize there are economic gains to be had from having a deal that won't be there in the events of a no deal. secondly, i think they think that if they get a deal, at least it is the basis we can

build a relationship with the united kingdom going forward. perhaps most important of all, there is a recognition that if these talks break up, the ultimate outcome may be significant acrimony which will get on the way of efforts to collaborate across the piece. that does not just mean on trade or the bmw, it might be harder in nato or molly. summitenvironmental being held in the united kingdom at the end of next year. i think politically, there is an incentive to try to get something out of these talks that is the basis for a constructive future relationship. i look again at where we are, and i guess to francine's wonderful question of simply what is next, what will you be watching for moving to the end of the year? who blinks i guess is the large question? comes to thet

negotiations themselves, i won't watch that carefully because i don't think anyone knows what happens in the room apart from the people in the room. i don't know what is in boris johnson's mind. lots ofe outcome there things to look for. what do they include, how much trade mitigation is there. there are the preparations made by businesses because on this side of the divide, it is pretty apparent that businesses have not started preparing themselves well enough. it is the degree to which each side insists on implementing the in their entirety or the degree to which there is a bit of flex that tries to minimize the chaos that we might see otherwise in january. and of course, in the events of no deal, it is a sign for either side is willing to go back to the negotiating table because ultimately, the impact of a no deal is too severe and they would like to start thinking again about some sort of deal. whatine: when you look at

exactly it means for industries and companies, if we were to not get a deal, we find out about contingency plans, but have they been briefed before? how much chaos will there be at the border if there is no deal? anand: i think the british government is thinking in terms of between 3000 and 7000 lorries piled up somewhere near the border because the drivers haven't correct paperwork, have not filled in the forms, have done so wrongly, it is very hard to predict what will happen in january. we don't know how many on the eu side have already taken measures to say there is no point trying to source those products from the u.k. anymore, we should go to slovakia or spain or somewhere else instead. the effect won't be immediate because new year's day falls on a friday which means we have the bank holiday and then the weekend. even with a deal and more so with no deal, we will see some disruption because remember what

brexit is about. it is about making trade with your nearest and closest trading partner more expensive and more cumbersome. it would be remarkable if that were to happen without some sort of disruption. francine: is it in boris johnson's interest to have a no deal just when the economy is already reeling because of covid? if the two sides won't give up, who is most likely to blink first? notd: at the moment, i'm convinced either will. the things we have learned from the brexit process is that the primacy of the aggregate economy has passed. brexit is about political principle. it is that that will come first. a no deal brexit will have a greater negative impact on the

brexit economy than a brexit with a deal. bear in mind, i think this is utterly crucial to the argument. that withg it shows or without a deal, brexit will have a greater negative impact on the u.k. economy over the next decade then covid will have had. tom: very informative. thank you so much on this endless debate. bloomberg, david is rising tide ofhe wales, football. this is bloomberg.

is looking atusk the bright side. altitudefirst high flight of its next generation aircraft ended in a massive fireball but musk sees the mission as a success. wassure in the fuel tank

too low causing the landing speed to be too high. it is one of the sec's largest settlements of her tied to accounting disclosures. general motors has been fined $200 million about allegedly misleading investors. -- gm did not admit or deny the findings. doordash shares closed up 86% from their ipo price. that gave the food delivery company a market valuation of more than $71 billion. tony: one half of our goal is building the largest commerce marketplace in which we are bringing everything in your city to you. the other part of our goal is to make sure we can take the products we have built for our marketplace and give them to merchants in the form of ordering as a service, logistics as a service, so they can build an end to end technology

solution. karina: it is a renter market in manhattan. apartments here have not been this cheap to rent in 10 years. 22% toian price plunged a little more than $2700 a month. landlords are offering concessions to fill vacancies. francine: thank you so much. this is what the markets are looking at. it is clear they are expecting talksing to do with continuing with brexit. it is moving a little bit on euro strain. yesterday, i was telling about cable. a noown managing more than deal brexit anxiety at the moment. we will see what happens in the next couple of hours. a lot of the focus is also on facebook with the possible

breakup because of antitrust regulators. tom: i look at the euro breaking down. as i mentioned earlier, the two year yield in germany has my attention. a substantial and growing negative yield as well. coming up, i am really looking forward to this. can america recover? gideon rose has done it again. essayeptionally important by shannon o'neill on the new american industrial policy. must watch, must listen. this is bloomberg. ♪ businesses today are looking to tomorrow.

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tom: this morning, guess who's to dinner. there is panic in pound sterling and euro.

you're outs not, if waits britain. nothing has changed. little has changed for lagarde. the german two-year, the portuguese 10-year, now the spanish 10-year -- they signal disinflation. this morning, a critical ecb meeting. it is not antietam of 1862, it is not the great galveston hurricane of 1900. it is the one-day pandemic death in america of 3000. good morning, everyone. this is "bloomberg surveillance ." tom keene in new york, francine lacqua in london. the news flow is extraordinary. we didn't mention one word in the last hour on this horrific pandemic. extraordinary in america. what do you see from london on the pandemic in europe?