francine: nancy pelosi says the house will move to impeach president trump again unless mike pence invokes the 25th amendment to remove him from office. there are nine days left in his term. big tech's trump ban. social media sites from twitter to facebook shut down the president's account. right wing alternative parler gets deplatformed. and the stock rally hits pause. u.s. indices hit records on friday but look set to slide today. is the bear steepening in the u.s. yield curve giving investors cold feet? good morning, everyone, and it is monday, the second working week of january. this is "bloomberg surveillance." we look at politics, a big move in treasuries, now talking to a lot of investors, figuring out whether it means we could see a correction elsewhere. tom: i like the way you say pause in the markets. that exactly describes it. there is no pause in washington.

clarity sunday by speaker pelosi , moving to impeachment tuesday. she has given a 24 hour reprieve of some sort to vice president pence. the news flow on this monday will be truly remarkable. francine: it certainly will. away from politics in the markets, central banks as well. there is ritika gupta with first word news. from houseultimatum speaker nancy pelosi, saying lawmakers will vote whether to impeach president trump for the second time in less than two years, unless vice president pence and the cabinet invoke the 25th amendment to remove him from office. following the riots at the capitol, pelosi says the president represents an imminent threat. luber has learned that mike pence has dismissed the idea of using the 25th amendment. president trump and his advisors plan that she is expected to travel to texas tomorrow to highlight what he believes is one of his biggest

accomplishments, the role his thenistration played in border with mexico. some of the biggest names on wall street are pausing all political donations in the wake of the riots at the capitol. citigroup, if you morgan chase joined a growing list of companies changing or reviewing donation policies. shares of twitter fell sharply, down more than 8% before repairing some of the loss. friday, twitter ban president trump's personal account for repeated rule violations. he had 88 million followers. 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'm ritika gupta. this is bloomberg. and seen that francine, tom? tom: equities, bonds,

currencies, commodities, some real ambiguity out there. we will see which way we go after the difficult friday jobs report. bitcoin -- i know francine is all over bitcoin, down 10%, 36,000 on bitcoin. fromportant article bloomberg on bitcoin today, really must-read. brent crude 55 point 13 per barrel. i don't know where to go. it is sort of a mush of the data check today. francine: i think weighing on the minds of investors that equities are running too hot and -- this is some of the thinking behind some of the questions that we were asking last week. bitcoin -- prices cratered. they were down 10% at the moment, but if you look at the mover of the last two days, they fell as much as 21% to as low as 2389. think it is a cautious move

after the buying frenzy that swept global markets last week. we will have plenty more on the markets and how they intersect with policy and politics. senior democrats now say they will move to impeach president trump for the second time in just over a year and less vice president mike pence and the cabinet remove him using the 25th amendment. joining us now is bloomberg congressional reporter jack fitzpatrick. i think it is the second time at two years that the president has been impeached. if you look beyond that, what are the possibilities of something happening? either 25th amendment or an impeachment vote this week? jack: as of now, not very likely. we are looking to see if there is going to be some sort of change in momentum in terms of critical republicans getting on board. there have been some republicans like lisa murkowski in the senate who is effectively almost an independent. she initially won as a write in

candidate, saying she wants trump to be removed from office. but there hasn't been a large group of house or senate republicans talking in favor of impeachment or the use of the 25th amendment, and mike pence has not been responsive to that. so this move by pellucid to ask for unanimous consent for a resolution recommending the use of the 25th amendment and then moving on to impeachment seems more apolitical illustration of where republicans stand than anything that is likely to remove the president from office, unless a bunch of people change their minds. atncine: jack, when you look how difficult would it be for joe biden to deal with these legal consequences of his predecessor in the first 100 days? into well, this is turning something that seems like it is going to take a long time for lawmakers to investigate, the fbi to investigate, the legal and political repercussions are not going to be quick and easy.

questions about whether republicans really want to work with biden, that is one piece of bad news for him. howother questions about this happened and why, security at the capitol -- there are a lot of things that lawmakers are going to need to work on that are tied basically to the basic operations of democracy in washington. so it is a very, very bad way to start out a new administration. tom: jack, tom keene in new york. good morning and thank you for your work in washington, and all of your team in what i'm sure will be an exhausting week. i have 47 questions and no time for it. the idea is avoiding a vote. can the senators of all political persuasions avoid a vote on this insurrection? jack: it is unlikely they can avoid a vote.

what we expect to happen and we are still getting a count here is this unanimous consent measure will probably be objected to by somebody, at least that is what policy is testing. and then tuesday, if there is an objection, they go to vote on impeachment. we have seen a huge number of house democrats talk in favor of impeachment. it looks like they will probably have the majority again. the senate then has to take it up. they have to debate it. i am not sure there is a realistic way for them to sidestep this as long as the house majority puts it to a vote. tom: this is the great unspoken that you are seeing on a monday morning in this eventful week, people scrambling to try to avoid votes. mr. fitzpatrick says it appears they will if they vote on certain matters. i want you to explain to the bloomberg matters -- to the bloomberg audience, whether it is angus king of maine, maybe

susan collins, maybe others -- you know better than me -- but you mentioned murkowski of alaska. if she does not move across the aisle, if she moves to be "independent," what does that really mean? on an individual basis, it could be very interesting to see if there are republicans who side with democrats on this. obviously mitt romney cited -- cited on impeachment. willie debt will two thirds that thirds -- will two thirds vote to impeach? it doesn't look like there is enough support now to impeach the president. there is probably going to be an attempt to pick off those moderates -- maybe susan collins, murkowski, romney, maybe others.

i'm not sure who the other examples would be, but it is very difficult to get up to six to seven votes, -- 67 votes, or if there is one vacancy, 66. if you can get moderates to side with democrats, maybe that is a good sign for legislation to move forward with the biden administration. maybe it speaks to frustration with trump, but again, it is a really uphill battle in terms of impeachment, getting to that high number of a two thirds majority. francine: we know the president will remain defiant and the last nine days in office. we know he is traveling to texas. what are you expecting from him? to say he isafe likely to remain defiant. there has been all sorts of talk about his wish list for potential pardons. that is probably the top priority. it is a strange time because we

are not even getting a lot of guidance on what his daily schedule for -- his daily schedule is, but he will have many calls and many meetings, and that is all the white house is saying in the mornings. the pardon list is something to watch for, and from congress' perspective, any unknowns are what is scaring democrats. there is concern -- big concerns about hoping he does not take any military actions, anything out of left field. but again, the pardon issue and his long list of pardons that he has been considering, including possibly a self pardon come is probably the most high-profile and controversial thing on the list. francine: jack, thank you so much, our bloomberg confessional -- congressional reporter jack fitzpatrick. coming up next, lew lukens. he will look at the legal implications for possible impeachment. lew lukens, up next.

this is bloomberg. ♪

tom: good morning, everyone. bloomberg surveillance. we are looking at the markets, futures -21, but there is only one story worldwide. that is the story of washington, through the second week of january. we have been speaking with a lot of given voices. one of the great themes is, what if this happened at senegal, we would have all the answers. let's talk with someone with immense experience with banana republicans. ambassador to

senegal, lew lukens, and right now as president bush says, we are on the edge of banana republic. what would we do if this occurred in your senegal? >> if this occurred in senegal? -- if this occurred in senegal, and by the way, this happened in happen, this were to what is happening in washington now, we would work together with allies to try to impel the president to acknowledge the results and to accept the will of the people. and it puts our diplomats in a difficult position when they try to do this now around the world, and there are a couple of elections globally this week. when we have a situation at home where our president is not accepting the results. someyou have had challenges with the trump administration, but let me give you the what-if debt would be

your counsel to the secretary of state this morning? lew: a lot of senior foreign service officers have written -- have encouraged him to distance himself from the president and to condemn the violence at the capitol last week. there point is that if this happened in any other country, we would be condemning this in the strongest possible language. we should not absolve ourselves come and we should be condemning what is happening in our own country. but there had not been a response. he is one of trump's most loyal lieutenants, so i don't expect that he will suddenly criticize president trump. but it puts our diplomats in a difficult position erode the world, trying to figure out how we talk about what is happening in washington without being disloyal or seeming disloyal. ifncine: does it help -- president trump were to be impeached or removed the 25th amendment, does it help with how the u.s. is perceived worldwide,

or does it make no difference? lew: it helps because then it shows there is a process in the united states and that we have law & order, and we have a system that functions properly to remove leaders who have overstepped to the boundaries. i don't think that is going to happen. i don't think vice president pence is going to invoke the 25th amendment, and i don't think the president will be impeached for the end of his term next week, but certainly were those two happen, either one of them, it would put out diplomats in a better position overseas. francine: if the president doesn't get impeached, what happens in the first 100 days of joe biden? will the legal troubles of donald trump overshadow some of the policies that biden could be putting in place? challenge thehe biden administration will face. it is likely the president will be impeached in the house before inauguration and it will not be taken up in the senate.

then it goes to chuck schumer to fire -- to figure out does he schedule a vote or a hearing on a trump impeachment after he has left office, or does he focus on trying to pass joe biden's priorities, legislative packages to address the coronavirus pandemic and boost infrastructure spending in the country? if you are chuck schumer and joe biden, you want to focus on the latter and not be distracted and have your first two months of your administration consumed with donald trump. consumed witht be donald trump, but donald trump has consumed everybody, including his supporters come in the past five years? how do we de-trump? lew: i don't think we do. i think he will likely announce his 2024 campaign next week, and he will do that as a way of staying in the news, and more important, for him to continue raising money off of his supporters, money that can raise

salaries -- that can pay salaries and travel expenses. i don't think republicans will be able to dissociate themselves from him. tom: what should be the first state department initiative of the biden administration, as clearly as a thin medic? let's go to our allies theme. is it shuttle diplomacy? lew: i think joe biden will not be as consumed with diplomatic initiatives. he is focused on the domestic agenda, but i think the secretary of state, i think we will quickly see him on a world tour, a world apology tour, if you will. he will go to europe first come is my guess, and he will start talking to allies. the things they will want to focus on is bolstering democracies, obviously our own. we cannot just point the finger at other countries because we have our own issues. but with a focus on climate change, addressing clementines, everything that the --

addressing climate change, everything the department does has to be focused on how does this help average americans? how does this foreign-policy help rebuild our country and rebuild the middle class? there will be a very interesting and different approach to foreign policy under this administration. francine: how should we look at social media companies? are they now publishing companies? lew: your last correspondent talked about trump's priorities during his last week, and he has made clear he will try to do what he can to curtail the activity where the reach of social media companies now that they have abandoned him. there is very little he can do. i don't think we will see much actual concrete progress there on trump's part. but i think social media companies will be looked at very closely by the incoming congress and senate. they have been looking in the house. democrats had a large report late last fall on the impact of

social media companies and what can best be done about them, and i think we will see an enhanced enforcement activities and enhanced funding of the antitrust division is apartment of justice, taking a hard look at social media companies and whether they have too much power. tom: ambassador, thank you so much. lew lukens, we greatly appreciate the perspective on an eventful week. i am looking forward to this conversation. you know georgia is a purple state now. haley stevens is a democrat from michigan with really interesting challenges, and one of those -52-48 districts. this is bloomberg. futures of 21. excuse me, down 21. ♪

ritika: this is bloomberg surveillance. here is your bloomberg business flash. the social media side parler seems to have gone off-line, and the outage is likely to go longer than expected. amazon, google, and apple has removed support in the wake of the riots at the capitol. --ler says others with others will not do service with the company.

bitcoin's roller coaster ride has taken another risk. a two-day cup and digital currency shows that the currency boom may run out of steam. after hitting a record high of more than $42,000 last week. a group of hsbc shareholders once the bank to get a little greener. they have filed a resolution urging it to cut support to the fossil fuel industry. amongst those backing the move were the largest listed asset manager and the biggest publicly traded hedge fund firm. hsbc is strongly committed to addressing climate change and eventually aligning finance and missions to net zero. that is the latest bloomberg business flash. francine: a bit of pressure on european data, but global markets worldwide. i want to show you what it was doing premarket, twitter, down 6% after president trump was banned over the weekend. after a buying frenzy that swept

across global markets last week, investors starting monday in a cautious mood. what weighs on people's minds at the moment is where is that equities are running too hot and valuations are stretched. tom: i will go with that. i think there is some real ambiguity over which way this will cut. a number of reports over the weekend of a booming labor market to come. nobody believes that, but we will see. within that move, 21 levels is where we closed on a buoyant friday. out to 23.61 as well. readjusting and recalibrating the american economy -- kevin cirilli in the next hour -- at 7:00. ♪

francine: this is "bloomberg surveillance."

let's take a closer look at what we are watching for this week. u.s. politics will probably dominate everything we are seeing that his central bank heavy. today we hear from banking -- bank of england officials. we also hear from robert kaplan on went -- and on wednesday, christine lagarde speaks at an online conference on the e.u. economy post-covid and post-brexit. on friday, wall street lenders kick off her earnings season. we get results from j.p.morgan, citigroup. us is the state street global advisors emea head of investment strategy and research. thank you so much for joining us. if we kick it off with some of the main concerns in the markets to that that could last quite a long time, it is all about what treasuries are doing, and treasuries are taking their key from politics in the u.s. how does that develop in the coming weeks and months?

>> thank you and good morning. i think we have seen a pickup in interest rates, 10 year come above the 1% level. the yield curve has started to steepen, and there was an acceleration of those two trends on the back of the georgia win for the democrats. this idea of a blue wave of fiscal stimulus, more spending. i think we will keep an eye on interest rates, but at the level they are at because of the yield curve is not a cause for concern. it is maybe a cause for a bit more optimism that we could see a more profound recovery in the economy sooner if biden gets his stimulus bills underway. so for us, it is something to watch but not in the immediate cause of concern now. francine: is there a part of the market where valuations seem off or equities are running too hot? >> you cannot look at valuations easy totion, so it is

look at historical grasp of valuations and say that we are above the peak that we saw in the.com boom. what theyou look at level of rates are now and you factor that into equity valuations, we are actually at fairly reasonable levels. earnings will have to come through. we cannot have equity markets at these levels without earnings growing, but we are confident that is going to happen and we are still confident that risky assets, in particular equities, are going to have a good year this year. tom: thrilled to have you on. thank you so much for joining. if you go back to your oxford work in engineering and you have to engineer an exit from all that we wrought in 2020, what does it mean for stability, the transmission of a weak dollar? do you see a stability to how we respond and react to all these dynamics, or do you just assume

instabilities to come? altaf: it would be great to have a stable exit from all this monetary and fiscal stimulus now . in history, generally, unfortunately we have had bubbles exploding in bubbles popping, and that has been the way out. the way to engineer more stable exit would be through strong signaling, which we are seeing from central banks much more than we have seen in the past. they say what they are going to do and they stick to it. we are going to have to see earnings coming -- we are going to have to be companies stepping up and making most of these conditions and keeping their business model solid. and we will have to see more nimbleness in terms of the labor market, moving labor to certain sectors of the economy, which we don't think are going to flourish forward. a bunch of things will have to line up. forget about bitcoin and

that. stay to the institutional market, the gloom crew, why they are wrong and why we will see stability. how do we compensate with the international system for all the shocks we are seeing -- reduced gdp, reduced productivity, and the pandemic echo altaf? altaf: to go back on productivity, we will have to see a shift in terms of the way industries are financed and the way labor is supplied to those industries. we have already started to see a profound shift in the way people are behaving, with more online shopping, video streaming, and those effects are going to be long-lasting. they will last far beyond hopefully when vaccinations are rolled out fully and we have some kind of herd immunity. i think economies are going to shift profoundly, sectors are going to change in terms of

their focus. in terms of -- we do think central banks, for better or for worse, have become less independent, more tied to the economy, and are working more hand in glove with the economy so that we do have less of a chance of a bubble exploding and popping and more of a chance for stable exit. francine: is there a part of the market, or is there an interest rate where you expect people to go back to how we were pre-covid? altaf: i think it is really hard to point to any industries where that might happen. for example, travel and leisure, we think has profoundly changed forever. you see that in a report in the u.s. last week. we think there are some sectors that potentially are completely transformed and will change. energy is another sector where that might happen, financial services as well. the bellwether sectors of the economy, we think are going to

be changed forever. it is hard to point to any sector, especially with the rise of esg, which is transforming businesses across sectors, which is not going to be profoundly different to where it was a year or a year and a half ago. francine: thank you so much for the insight, all tough because .om let's get straight to bloomberg first word news. ritika: nancy pelosi is moving forward with impeachment plans this week, taking up a resolution to impeach president trump unless vice president pence and the cabinet use the 25th amendment to remove him from office. bloomberg has learned that privately pence has decided that is not feasible. the outgoing capitol police chief says the house and senate security officials have made strong efforts to call in the national guard last week. they took more than an hour to

approve the request, even as his forces were violently overrun. media calledte run for retaliation after the trump administration removed restrictions on interactions with taiwanese officials. it is one of the biggest moves yet to reshape u.s. links with taiwan. the u.s. imposed the limits after officially recognizing china in 1979. the u.k. is ramping up control after the coronavirus vaccine. seven regional centers will open up at sports and conference centers. matt hancock says the u.k. is on course to meet its vaccine target. the goal is to hundred thousand people to receive doses every day. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am ritikantries, gupta. this is bloomberg. tom? francine? francine: coming up, we speak with james bevan's, you shall

investment -- we talk with his social media companies -- twitter, facebook, google. this is bloomberg. ♪

francine: this is "bloomberg surveillance." to talk about the markets, we will talk treasuries, equities, and whether they are too hot at the moment with james bevan. before we get onto maybe some of the evaluations out there, i want to ask you about social media companies. if this is a day of reckoning after what happened at the how willill last week, facebook, how will twitter, and

how will google change? google ishink that relatively well-placed as i diverse global business, underpinned by strong cash flows. it is easy to see how they monetize their worth. on it -- i much more concerned about the outlook for twitter and facebook because i reasonably anticipate that there will be additional regulation. they will become increasingly accountable for the content that they carry on their services. as a result, they will find it much more difficult to operate and much more difficult to monetize as more people say do we really want -- francine: will they be broken up? james: i don't necessarily think that they will be broken up because if you want to break a company up, it is usually done on the basis that there is customer disadvantage. in contrast, i would suggest that none of those companies represent as they stand an

impairment of customer choice, but i do think they will have far more regulation with state media companies. james, when a motion runs high, there is a basic theory, a basic system of you buy it and you hold it. discuss the confidence you have in a holding of equity securities this morning. james: as of today, i look at valuations. 500 -- ihe u.s. s&p think that is exceptionally rich, but it is less rich than peak in 1999. i know there are a lot of people that talk about tech companies, the most overpriced on the market. under a current multiple of 27 on times earnings. times earnings in 1999.

interestingly, this time around we have a very low bond yield. know itond yield -- we is just over 1%. it is deeply important, the bond it is upsing from -- about 15 basis points, from the beginning of the year. overcoming concerns about valuations and the trajectory of behavior of governments generally. i am therefore optimistic about equities, but i recognize central banks and covid-19. even with the long view that you have -- let's call it old conservative money -- there is buy the rumor, sell the news. there are a lot of rumors right now. how does james bevan buy the rumor right now? the collective rumor? looking am interestingly at free cash flow, and the markets have been

remarkably un-discriminating between companies that are well structured and those that are structured to take advantage -- take advantage. , it hasnd alphabet delivered superior share price performance. alphabet has not. i look at the wrong term growth potential of that relative -- i alphabety back the story over the domino story. termed.that it is well --the one thing tom: this is a surveillance break exclusive. i never thought we would be talking to james bevan about a medium pepperoni and coca-cola to go. francine: please don't get me started on domino's pizza.

remember, i am italian, but this is another conversation for another time. when you look at limited treasury yields come how much higher can they go, and how much impact will it have on your portfolio? james: interestingly, i try and work out what i think is a fair yield on u.s. treasuries should be, and i look at the ratio of copper price to gold price, and a long-term relationship suggests the u.s. 10 year treasury yield should be 2% rather than just over 1%. 2% is not an issue for me in terms of selecting equities. where we need to see the bond coursefse balance sheets are more stretched. so 3%, 4%, bad news. 2%, absolutely fine. francine: what needs to happen to get to percent or 5%?

james: you need to see a significant shift in policy by the federal reserve. it clearly has to worry about inflation, as it indicates inflation running above for a period. it promotes the strength of the wheneconomy, and that -- dollars become materially weaker, one might expect that banks will not stand by and will because it leads to higher import prices. in addition, francis published in his petition of an interest in -- i reasonably believe that a meeting of minds between mr. biden and mr. powell of the federal reserve could lead to the fed shifting policy earlier than a specter, driving up

prices generally in the equity market, but most certainly underpinning this expectation that bond yields will rise. tom: james bevan, thank you so much. really looking forward to that further conversation. we will touch there on what to toward with technology mid and small caps. later today, on esg, it is the vote. mania --super futures at -18. this is bloomberg. ♪

ritika: this is "bloomberg surveillance." i'm ritika gupta of with the bloomberg business flash. shares of samsung rose. some of its most sophisticated chips -- they are being asked to make them. raised three point $9 billion for is first

asia-pacific infrastructure fund, the largest of its kind. three dozen investors put in money to be used for everything from waste management and renewable energy to communication towers. the newly crowned richest person in the world is debating how to give away his fortune. elon musk went on twitter to to surpass jeff bezos to take the number one spot in the world's richest index. that is the bloomberg business flash. tom: thank you so much. james bevan is still with us. you mentioned free cash flow earlier. i had my heart skipped because i just wrote a banner for bloomberg surveillance on 2031. i have never looked at 2031. frame investment now by

utilizing an studying free cash flow in its various ratios out a decade. james: i would say that the key change for free cash flow is going to be the extent to which companies are prepared to invest in order to secure additional productivity. a square circle on the valuation of u.s. equities and the maintenance of low inflation, investing in order to secure superior growth. in the last decade, where 2% real economic growth in the states in prior periods has been described as the new normal, i am optimistic that the u.s. can go to -- can go back to three percentage points, meaning free cash flow growth continues to drive forward over the next several days. i'm optimistic that as long as we maintain growth, investors

will be fine. tom: what is so important is test one of the great wrong calls of the last 10 years is single digit equity growth. do we revert back to the meme and go through that assumption, or do we revert back to the mean and level out with single digit growth? thes: where i think about source of single digit growth has been violated is the challenge of consistent re-evaluations. it is not that the corporate earnings has driven the number into double digits, it is the ever-increasing valuation that investors participate, in the earnings and free cash flows that are available in the markets. that story has essentially completed. it is inappropriate to anticipate we will get ever richer valuations. i think we should be expecting single digit equity returns in the medium-term, but in the near

term i think there is scope as the markets move higher. i think that the optimism that pervades -- we can see 4300 points of the s&p 500 this year. my concern is that if it comes too early, it will so the seeds of destruction and be followed by a meltdown. francine: james, what do you do with -- that: i am of the view that you referred to just moments ago is very well-placed for valuations to come out after the covid-19 crisis. i would be quite nervous on emerging europe and also latin america. francine: is there anything -- you talk about a possible

meltdown. if you saw something it easy in the market to warrant -- where would you see it first? what is the first indication of that? james: the two risks worry about our a shift in policy by central banks, particularly the u.s. federal reserve, leading to a shift in cash rates and bond yields across the curve. it might make a statement saying that they are minded to change policy. where we see bond yields begin -- the up, i think second issue this dependency now on getting justified valuations, were we to get a further acceleration in covid-19 cases, any risk to those growth numbers pulls the rug from underneath the valuation cases.

tom: james, thank you so much. and wonderful briefing to get this monday started. ccla chief investment officer. -1.73, just to give back some of that challenging jobs report, maybe some of the central bank uncertainty as well. the vix turns around two big figures. 22.46 on the vix yield. 1.11% on the 10 year yield. that is an interesting number. please stay with us. we do another hour of bloomberg surveillance. congressman stevens from detroit next. this is bloomberg. ♪

tom: this morning, if it is

tuesday, it must be impeachment. speaker pelosi coding with urgency, if it is tuesday, president trump will go to the alamo -- not the alamo, the on the border alamo, 78516. the dollar finds a bid, the 30 year bond in the vicinity of 2%. nationwide, the arrests begin. the pga will not golf at a trump golf course. nazi guiltspeaks of and kristallnacht, 1938. it is bloomberg surveillance, francine lacqua in london, tom keene in new york. i want to begin with our washington news bureau, craig morton, kevin cirilli, and all. they worked right through the weekend. it is an historic moment for the nation. francine: it certainly is, and i think