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tv   Bloomberg Daybreak Europe  Bloomberg  January 15, 2021 1:00am-2:00am EST

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♪ >> good morning from london. i'm francine lacqua and this is daybreak europe. here are your top stories. >> the crisis of deep human suffering is in plain sight. and there's no time to waste. we have to act and we have to act now. francine: the stocks lower as the markets adjuster joe biden's $1.9 trillion stimulus plan.
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investors focus now turns to u.s. bank results. global virus deaths near 2 million, chancellor angela merkel holds a tougher lockdown -- mulls a tougher lockdown. shares in shall meet plunge -- xiaomi plunge. happy friday, everyone. a long week on the markets on the political front. we've been trying to figure out not only impeachment, but the stimulus package, also what happens in italy -- there is no real majority in parliament, the coalition that's pieced together by shoestrings. given all of that, and given where we are this friday, it's always a good thing to look at the impacts for the markets. treasuries definitely move on the reflationary trade. this is on the back of the joe biden stimulus package. very glad we solve vix.
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i was reminded it opens at 8:00. if you look at a two-day overview, it just shows a bit of elevated vix, and again, the focus was on impeachment and what we saw overall in the markets. the s&p futures down. euro-dollar holding steady. and a lot of focus on treasuries. remember, treasury yield goes up much higher. it could change everything for asset classes from the dollar to emerging markets to even the price of oil. we'll have plenty more markets throughout the hour. president-elect joe biden will as congress for $1.9 trillion to provide immediately -- immediate relief for the country. >> i know what i ask isn't cheap. i want to make sure everyone pays their fair share, not punishing anybody. francine: the package met with
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swift republican opposition. joining is now is a reporter to talk about the implications of all this. thank you for joining us. blockbuster price tag. what chances does biden actually have of getting this through congress? michelle: that's right. good morning. it is a ton of money by any measure. it might seem like ages ago now, but just before christmas, the package that congress pushed through was less than half of what biden is now proposing. the initial cares act that was passed was only slightly bigger. so, we do know biden will have majorities in both the house and senate, but they are razor thin majorities, so they hope from no defections from his own party in an effort to peel off a few republicans to get support. that will be exceedingly difficult given the package. even with their party in the white house, a number of
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republicans were uncomfortable with mass spending packages after the cares act. one of their big issues is state and local funding, which they argue wouldn't be disturbed it efficiently enough -- distributed efficiently enough. senate majority leader mitch mcconnell and soon to be minority leader is another one to watch. he has long opposed bigger spending to deals -- spending deals. biden is coming into office having had a long history of being a more moderate democrat than some of his party, working with republicans. this will be the first real test of how much he's able to come together with the other side on a very intense negotiation. we should also watch the political tactics. there are certain tools democrats could use to push items through, for instance with the simple majority. in order to do that, it's going to be politically unpalatable for the other side.
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they'll either sacrifice some bipartisan spirit or have a hard time getting republicans on board. huge challenge for biden to get everything he wants in this package, but perhaps he's trying to shoot for the moon to land among the stars. francine: there seems to be very few surprises when you look at the package he put forward, compared to what -- to some of the leaves in the media. -- leaps in the media. francine: that is certainly a big question, in order to pay for it, what to do to offset the spending. one of the arguments the biden team has been making to push back on the debt and the tax issues that would be traditional republican talking points would be that they think if you don't do it now -- and we heard this in the clip you opened with -- more damage will be to come. we already saw a bad number this week, unemployment benefits, the
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worst jobless claims figures since march. the biden team is trying to push this line that this is a must do. you shouldn't worry about the price tag now because if you worry about the price tag now, you'll have more debt problems later because necessary spending won't get to programs that needed. there's a lot in this package that tries to show there's a lot of necessity to this right now. francine: some of the things he's put in place is more spending, more direct payments to households, wrapping up some of the testing, but also expansion of jobless benefits. is it comprehensive? is it targeted to the right places? michelle: well, whether it's targeted to the right places will depend on how it's distributed and how it's spent. those are questions economists will be attuned to for the months to come. certainly a kitchen sink approach in terms of trying to hit on all these topics. among that $1.9 trillion, you
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can think of it in three broad buckets, direct relief spending -- a little more than $1 trillion, $400 billion for covid-19 management. you see where there is some direct spending, about $160 billion for vaccinations, but also so much in this package trying to get for the real economy. biden is speaking directly to households. he wants to make that personal appeal. to that end, he's talking about getting direct support, stimulus checks of $1400 on top of last month's package of $600 each. he's trying to tackle this jobless claims issue by proposing $400 per week in unemployment benefits, increase in the minimum wage to $15 an hour. all these things, plus funding to get schools reopened, childcare providers assistance, child tax credits, expanding
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medical family leave. there's a lot to chew on and not much talk on how to pay for it, specifically through taxes. i think that would be unpopular and counter to this message of getting support out to households and small businesses, especially. francine: thank you for this update. michelle joining us this morning. also joining us to talk about this market and the indication of this spending trend -- spending plan. great to speak to you, as always. not much new in the plan then what we were expecting, but certainly different than what the markets were expecting two days ago. what does this mean for treasuries and for dollar? >> hi, francine. it is slightly bigger than what the market is expecting. the market priced in something significant. what it does do is it emphasizes that we are likely, very likely
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to see the economic growth recovery taking off once the vaccine is fully distributed. we'll continue to put upward pressure on bond yields. from our perspective, this all makes sense. but of course, if it rises too far too fast, it starts to put a question mark on the valuations. a lot of the asset classes, which turns out to be some of the favorites -- francine: is there a level of treasuries problematic for the rest of the market, or is it how fast it gets there? seema: it may be how fast it gets there. if we saw a 10-year treasury yield, that 10 years that the fed -- the market is expecting the fed to unwind this to me this messieurs earlier -- measures earlier than expected,
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what is the various fed speakers going to be telling us? we've already seen the last few weeks, they've been out in force. some may need to emphasize the fed is going to stay resolute in keeping rates low, the balance sheet large. that can become increasingly important as the months go by. francine: how important is it a lot of fed officials stay on the same page? and what is the one thing that could reprice u.s. assets? is it tax hikes or is it something else? seema: i think tax hikes would be certainly important. i do think what the market is assuming is tax hikes will come eventually, but certainly not this year. we have a lot of problems brewing for 2022. but 2021 is considered a sweet spot. the biden administration would be brave to bring in tax hikes when the economic recovery is getting going.
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the biggest risk for markets is a continuation of this many -- many taper tantrum. it puts question marks on what we've been learning from the fed the past three or four months, and may be premature tightening is the key thing investors should be most worried about. francine: look at that, with the graphic, looking at treasury curves. when you look at asset classes, and you talk about valuation equity markets, how hot are they running? is it specific companies? his industries such as technology? -- is it industries such as technologies? or are we due for correction? seema: valuations are stretched across the board. i do think there's any argument there from anyone. -- i don't think there's any argument there from anyone. so much government stimulus, etc. coming through, some of that does make sense.
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valuations doesn't mean you'll see things topple over. but when you look at positioning, it does suggest there is complacency coming in. to us, it means we shouldn't expect a smooth move higher. we expect an upper trend, but markets could be taking profit. these kinds of moments, we do have yield, are likely to be those prompts. the fundamental story for 2021 is one of economic recovery, helped along by stimulus package and continued vaccine distribution. that's what investors have to keep an eye on, this, medium-term forecast -- the somewhat medium-term forecast. francine: we've had grim news the past few days. the daily deaths. germany says because of the virus, deaths risen yesterday by 1,589. that's the most since the pandemic began. it's similar to the numbers we saw in the u.k., at a record high.
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remember, these are real people with family members, so our thoughts, firstly, go to them. but looking at the markets, why do they not see this as problematic? there doesn't seem to be a disconnect between what the world economy is going through, the lockdowns that we're seeing, and equity valuations seema: -- valuations. seema: that is true. markets view this as a short-term weakness. now that we have successful vaccines, there's an assumption that at some point within q2, a number of these economies will be able to move forward. when we look at the economic data, we mentioned the payrolls numbers, jobless claims in the u.s. although they are weaker than expected, or what we've seen in previous months, that weakness is concentrated in areas which are specific to covid restrictions, the hospitality, leisure. that's telling us once vaccine
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distribution is strongly underway and governments are able to lift some of the restrictions, we should see a bounceback in that momentum. this is a transitory weakness, and that's what the market is trading on. this is a short-term weakness and we need to bounce back with a stronger medium-term. francine: thank you so much, seema shah stays with us. let's get straight to bloomberg first word news with laura wright. laura: the federal reserve is dancing down talk of premature -- chair jerome powell says the economy is far from the central bank's goal, adding the taper tantrum is a good reminder that policymakers should choose their words carefully. >> now is not the time to be talking about it. that is another lesson of a global financial crisis is be careful not to exit too early. we'll let the world know.
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we will communicate very clearly to the public, and we will do so well in advance of active consideration of beginning a gradual massive purchases. laura: the world is edging closer to a said benchmark, 2 million coronavirus deaths. and with vaccine rollouts taking time, there are few expectations the daily numbers will start dropping anytime soon. in the past year, covid-19 has killed more people than malaria and tuberculosis combined. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much. coming up, the global death tolls are at 2 million, german daily totals rising the most since the pandemic began. we look at vaccine distributions and we look at scarring in the economy.
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francine: this is bloomberg daybreak: europe. i'm francine lacqua in london. turning to europe as the virus rages on across the continent, france is expanding its curfew nationwide. it will now cover the whole country this saturday. the prime minister says it will last at least 15 days. over in germany, chancellor angela merkel is considering a tougher lockdown, this as data shows nation's daily deaths rose the most since the pandemic began. let's get back to seema shah, who is still with us. we have more lockdowns. it's difficult to see. in certain parts of your, number of an europe, the number -- of
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europe, number of infected is going down. does that play on euro? seema: i think it plays on both, to be honest. as we come into 2021, there's been so many hopes for europe, the idea we'll see inflation trade. certainly, we've seen the euro strengthened a bit. with the covid deaths, the macro perspective, again, is lagging. the vaccine distribution numbers, they're going slower than other countries. we're looking at some of the european countries taking longer to open than the u.s. or the u.k., for example. that's going to put pressure on the euro. and as i said, it will put question marks on european credit. francine: overall, what is the
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biggest challenge for europe? sticking together? dealing with the virus? or just try to figure out where they fit with the u.s. and china? seema: that's a great question. i think from a long-term perspective, it's more of a question of where did they fit in with this geopolitical atmosphere? are they going to side with china? are they going to side with the u.s.? and where is it -- where they are going to keep the emphasis going forward. it's going to a point where they can get back on their feet. if they can, the amount of value in europe means europe could do very, very well. but as long as it gets reopening as quickly as possible. francine: again with the win with a wonderful chart. if we have that chart up for you -- you can always look at them, by the way. go on bloomberg terminal if you are a bloomberg customer. that's the number i have for
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this one. we're all glued to euro, whether euro-dollar or the euro index or even eurosterling. is there a worry with euro the ecb struggles to put a cap on euro level? seema: yeah, traditionally we've seen whenever it starts to get stronger, the ecb makes interventions, a few uncomfortable noises, enough to prompt investors to turn away. this year, there's so much expectation for dollar weakness that maybe if that doesn't pan out, it puts additional pressure and the ecb will struggle. you're already getting to the point where it's building up and maybe the ecb won't do anything. francine: are you invested in italy and the political chaos, and will hurt the recovery plan
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or the long-term sustainability of italian debt? or is this a very italian situation? seema: i think it's a very italian situation. if you look at the last 150 years or so, typically governments last 15 months. this has gone longer than i think many people were anticipating. this is particularly italian. we think the general structure around spending and the physical recovery fund, we don't have too many concerns that italy changes our outlook for the economy too much. we just need to get over -- we don't expect it to be any major impact on the fiscal outlook, certainly for italy. francine: thank you so much, seema shah. coming up, wall street fumes over a last-minute rule from trump's top bank watchdog. we discuss that next. this is bloomberg. ♪
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francine: this is a plumber daybreak erupt. i'm france -- bloomberg daybreak: europe. i'm francine lacqua in london. jp morgan will kick off earnings season today. but in a move that was not expected, trump's overseer of the biggest banks is imposing a rule change, quite a significant one. joining us to discuss is bloomberg's dani burger. wall street is in very pleased with this rule change that basically -- isn't very pleased with this rule change that basically forces them to lend to whatever, even if they are against these companies. dani: exactly. some of these companies will now be effectively forced to lend to, which are controversial, things like gun manufacturers and oil producers, especially in a time where we have so much of
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wall street, and really the world, focusing on est. this really -- esg. this really undoes a lot of the efforts from the banks. brian brooks. part of the reason there's so much anger around this is because it's coming so late in the trump presidency, with only a few days left, when wall street is usually -- used to getting its way with the trump administration. one of the top trade groups for banks spoke out against that, saying the rule lacks logic, ignores basic facts about how banking works, and will undermine the safety and soundness of the banks. he goes on to say it is unlikely to withstand scrutiny. really interesting. this is why we hear the argument for more sustainable types of investing. they're also upset with this watchdog overregulation that makes their technology easier to access, likely bringing in more complications. so, a lot of anger coming from
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wall street over these last-minute rules. francine: i imagine the biden administration could reverse it very quickly, but i'm not too sure. bank earnings kicking off today, what are we expecting? dani: part if it is the commentary from the biden administration. it will be interesting if they mention this rule. probably not likely. they will have to process it before speaking about it. but they want to know what sort of commentary they will say about biden's stimulus plan, whether that is something that will help banks. the other big thing will be trading.
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for is from the banks -- for the banks to keep all the good things like trading and lose all the bad things. francine: thank you very much with a thorough look at the banking concerns. coming up, the trump administration takes aim at xiaomi in the final attempt to ramp up pressure on beijing. it's incredible in the last five to six days until biden gets inauguration, the narrative is on what trump admitted ashe what the trump administration -- what the trump administration is doing. this is bloomberg. ♪ on is doing. this is bloomberg. ♪
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♪ francine: good morning, everyone, from london. happy friday. it's been an intense two weeks. i'm francine lacqua. this is daybreak london. >> deep human suffering is in plain sight. and there's no time to waste. we have to act and we have to act now. francine: stocks lower as markets digest joe biden's $1.9
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trillion stimulus plan. investors now focused on u.s. bank results. global coronavirus deaths near 2 million. shares in xiaomi plunge. the trump administration -- to the markets, we have seen a lot of market movement after an initial lull to the markets. a lot of the focus has been on reflation trade, how long it has left and whether the reflation trade, or having treasuries also will change the forecast for some of the equities going forward. a lot more questions now on where there -- whether some of the equities are running too hot. investors again looking at the call for m&a news, thinking that france will block it, and what that means for the future of invest ability for the country.
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remember, we had horrific numbers of people dead in germany. that's also filtering through the narrative. if you look at euro-dollar, looking at the u.s. 10 year yield, which is probably the biggest movement in terms of market for 2021, and s&p futures down. on to china, xiaomi has been blacklisted by the trump administration, part of its final push to ramp up pressure on beijing before he leaves office next week. going after xiaomi was unexpected. stocks plunged on the announcement. i haven't spoken to him in a while, tom mackenzie. great work. i follow what you do very closely from china. i know it's been relentless. do we actually know how much this will cement the relationship that the biden administration has to have with china when they take over in six
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days? tom: well, it's certainly significant. fully new knew from our reporting, from sources out of ashe what we knew from our -- what we knew from our reporting, from sources out of d.c., they flagged it weeks ago. what we didn't know was the extent to which the u.s. would be targeting jewel in the crown companies for china. and xiaomi was certainly one a surprise -- certainly a surprise. it's one of the biggest smartphone makers. it outbid apple. it has a huge footprint in terms of sales. the fact that it's been put on the defense department list of companies u.s. says has ties to the military is significant. xiaomi has said it is not a military company. it has no ties to chinese military. but there's a debate, -- debate
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among investors about what that means. commack is china's hope to rival the likes of airbus and boeing in terms of producers of commercial airlines. that was also on this list. the commerce department targeted cnooc, the third-largest oil and gas producer in china. it is the number one offshore gas producer for the country. that's being targeted in terms of restrictions to access u.s. technology. this is a tightening of the screws at the corporate level in terms of money flows and technologies china's key companies. francine: pretty amazing, the market evaluation over -- market valuation over -- market valuation for xiaomi. tom: the longer-term implications, potentially you're
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looking at a delisting of this company if this executive order, signed by trump in november, that underpins this list, if that is not withdrawn by the bind administration, -- biden administration, then november this year is the deadline investors will need to have divested from this company. the commerce department could put in place similar restrictions around huawei, around technology, software, and hardware. and that would be a major blow. investors we've been speaking to this morning have debated the implications. some say the fundamentals of the company are secure and they are hoping the biden administration will reverse the executive order. that will be the hope of officials in china. previously, following similar actions, they accused the u.s. of bullying tactics and say they will protect the rights of their companies. but they will all be looking
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ahead to what happens after january 20, with the new biden administration in place and whether a conversation ken starr start about these issues. francine: are we expecting -- conversation can start about these issues. francine: are we expecting china to retaliate? i wonder if they are looking at capitol hill and think we can do what we want at this moment in time. tom: they certainly look at what's happening in the u.s., of course all the disruption in the political controversy and the attack on capitol hill. that, for china, for china's party and government, it's a positive because it feeds into their narrative of the breakdown of the west and the strength of their system. but the views are, from china experts we speak to, is china is unlikely to take significant retaliatory moves before the biden administration arrives. they want to open up a window to
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start conversations. but they have threatened to retaliate. they put in place new laws around restricting foreign investment in some areas, ranging from telecoms to the agricultural sector, that will come under greater scrutiny. we'll have to see what happens. we're waiting to see an official response and expecting a press conference in an hour or so. again, it's unlikely they're going to take dramatic action before the biden administration takes place. francine: tom, thank you so much, joining us with great insight. xiaomi wasn't the only country to be blacklisted. speaking exclusively to bloomberg, the u.s. commerce secretary, wilbur ross, blamed the company's drilling actions in the south china sea. >> cnooc is the largest oil company in china, and one of the largest oil companies in the world.
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they've been using mobile rigs, one in particular, to bully countries like vietnam and others on what they call the south china sea to stop their own oil development, stop their own drilling in the ocean, and try to even force them to do things in joint venture with the chinese. so, this is really a continuing abuse of china's violation of maritime principles in that part of the ocean. it's a very serious matter because all of these countries are very dependent on imported oil and imported natural gas, just as china is. so, they're trying very much to get a big control over these new fields. and that's what this is designed to deal with.
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>> so the south china sea situation has been developing for quite some time now. i saw today, as i understand, the state department introduced restrictions on individuals involved in the south china sea oil expiration industry. why now? >> dealing with these problems is a little bit like whack-a-mole. you put in the set of rules, then the very clever people on the others tried to figure out some way to evade them. so now you need to do new rules to correct the new evasion. these rules will not affect, adversely, legitimate western oil companies and others who sell products to cnooc. this is specifically designed to discourage cnooc from abusing the maritime situation and from their bullying people. >> it's been a priority of the
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trump administration, and yours personally, to affect the relationship with china and change chinese behavior. looking back the last four years, do you think you succeeded in that? >> look at wally. -- huawei. it was dominating world 5g. from a national security point of view, that would've been one of the worst things because the 5g system is very easy to put backdoors so that the calls can be intercepted, so that things can be introduced. so, by dealing with the availability of high-tech, particularly semiconductors, to huawei and his ete, we've -- cte, we've slow that down. it's one of the several reasons why so many countries now have changed their minds and are not
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adopting huawei. so, we've been encouraging countries to use what we call trusted partners, ones that are not going to put a backdoor in, ones that are not going to take advantage of frequent upgrades to infiltrate your system, ones that will not take advantage of the maintenance of your system, to infiltrate bad things. >> you and i both saw, as china tweeted out after the attack on the capitol, don't lecture us about hong kong. how much has that weakened the u.s. position in getting china to address things like human rights? >> oh, i don't think it weakens it at all. think about tenement square. that's where young college kids were in a fairly peaceful protest, and they got mowed down. they brought out tanks. i haven't seen any tanks
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patrolling in the streets of washington. so, it's a wildly different thing. i think it's very unfortunate, for all the circumstances of the last week, but that really has nothing to do with getting china an ok pass for their extreme human rights abuses. francine: that was u.s. commerce secretary wilbur ross. coming up in this week's money undercover segment, we hear from the european co-heads of a private firm. that's coming up next and this is bloomberg. ♪
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>> we're no longer going to raise interest rates just because, for example, if unemployment were to be well below again, well below our
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current investment rates of unemployment, that wouldn't be a reason to raise interest rates, unless we see trouble in inflation or other imbalances. >> a little inflation right now would be a welcome thing. we came through a 10 year expansion where we couldn't get inflation up to target. i more confident now, that with our framework -- i'm more confident now, that with our framework, we can get inflation back up to 2%. but i am not at all worried that there's this run-up in inflation around the war -- around the corner that we will preemptively need to stave off. francine: that was the san francisco fed president mary daly, and fed chair jay powell speaking there. he pushed back on taper talk. let's get to bloomberg first word news with laura wright. laura: president-elect joe biden is planning an immediate $1.9 trillion of aid to the u.s. economy.
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he also plans to lay out a second broader recovery package at the joint session of congress next month. the president-elect admits the proposal is expensive, but says america cannot afford not to act. >> the crisis of deep human suffering is in plain sight. and there's no time to wait. we have to act and we have to act now. laura: after leaving the white house, president donald trump plans to live at mar-a-lago in florida and continue employing some of his current aids. bloomberg sources tell as he plans to fly there on the morning of joe biden's inauguration. one snag for the president, some of his future neighbors are trying to stop him keeping up permanent residence. another successful test mission for blue origin. the space company of amazon founder jeff bezos. this time carrying a lifetime -- life-size dummy to the edge of space. he will one day be replaced by space tourists at a cost of
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$200,000 a seat. global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much, laura wright in london. tech valuations may be skyrocketing to new highs. the firm's european coheads spoke with bloomberg's dani burger about their outlook for private equity markets. >> a couple of things the crisis has made very clear -- for instance, we're lacking digital infrastructure in europe, and therefore we have invested in a company in the u.k., and they are building high-speed internet connectivity to households, which are kind of underprivileged. and they do that at very affordable rates. so it's a very purposeful activity. and eventually, it will be
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profitable. dani: i know you guys are exposed a lot to financial services. are you concerned that the transition period ended and we didn't get any equivalent? >> it's a good question. i think a lot of markets are creating, or at least standing by the, agreements at least to march, april. we just made an investment over the crisis, an asset wealth management business. we also have a broker business in mcgill. and both of these have other ways to make these markets work, just focused on the u.k., so that's ok. but for now, we're waiting and watching. dani: are you concerned at all? what are the things that keep you up at night now that we -- now that the transition period has ended? >> i think a long-term effects remain to be seen. for the just ask and supply chains, how they open up, at the
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moment, the traffic volume are fairly low between borders. when that goes back to the normal levels, then we'll see how the new system will work and whether both sides are prepared for it. so, that's an area we keep closely watching. you know, overall, it's very hard to say, but i think we look at the microlevel rather than the macrolevel. we look at tech companies and we do not focus too much on the big picture. we'll find a lot of attractive opportunities, both in the u.k. and continental europe. dani: let's get into some of those sectors. tech is always top of mind. how do tech valuations look to you right now? are they too frothy? >> the public or private valuations, while quite high, if you look back at 2019, you'd say the same thing. so, i think it's really a function of the actor level, the
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s -- the microlevel, the asset collection. dani: in that scope, valuations have a different meaning to you. i know you've had them in the past, being a large one. are you interested in those types of deals? >> yeah, we are, and partly because in some of these companies, the change that needs to happen is hard to do in a public setting. so, one is valuation, but really what it comes down to, some of the other ones in the market now, we look at them and say what is the change -- what is the transformation that these countries need to do? and are the current public market investors patient to be long-term investors? sometimes earnings have to come down. you have to invest in r&d. you have to do organic roadmaps. that takes the margin of these companies down. you have to change the perpetual
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license model and long-term subscription revenues come down. we are able to do that in a private setting. it's those companies we're interested in in a private context. francine: those are the your coheads speaking to dani burger. now coming up, merkel's cdu poised to vote for a new leader. we will get key candidates next. this is bloomberg. ♪
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francine: this is bloomberg daybreak: europe. i'm francine lacqua in london. let's look at the things that we're watching out for today. germany's ruling party, angela merkel cdu, begins a convention
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to choose a new leader. germans are due to go to the polls for national elections, so this is significant. for the first time in 16 years, angela merkel will not be on the ballot. we'll get an update on u.s. retail sales. forecasts appear they may decline an americans face a surge in covid-19 cases. bank earnings also getting underway, with fourth quarter numbers from j.p. morgan, citigroup, and wells fargo. let's get more on these top stories and angela merkel's cdu poised for a vote. this kicks off a big political year in germany as the country prepares for national elections in september. on the phone with us is bloomberg's reporter, aggie control. great to have this update. a lot of people think this is more significant than the september election. can you run us through the candidates? >> yeah, so the race is pretty tight at the moment.
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the one that is slightly ahead is -- however, the party may see him as a bit too conservative to appeal to the broader public. and he might actually lose out in the second round. then you have the continuity candidate for merkel. he's the only one with significant governing experience, one of germany's largest states. but that was also -- that could also play against him. and then you have a compromise between the two. he's seen as liberal and a modernizer, but he's also opposed some policies of merkel's government, such as the nord stream 2 pipeline. francine: what does this mean for the party's election campaign? >> it's important to note this new leader does not immediately become the party's candidate. that will be a decision taken
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sometime in the spring. however, it will be a significant thing for looking at where the party is intended to go in a post-merkel era. merkel has continued to be a sort of unifying person who has been able to boost the cdu during the pandemic's polling. at the start of the pandemic, the cdu did exceptionally well in the polls. a lot of that has been chopped up to merkel's handling of it -- chalked up to merkel's handling of it. but you see the greens, in the winter of 2019, have almost caught up with the cdu. and it may take a little while longer before the broader public noticed that the cdu will no longer have merkel at the helm for us to really see what will be happening in september. francine: thank you so much for what we can expect on saturday, our reporter in berlin. we'll have full team coverage on
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monday. that's it for bloomberg daybreak europe. the open is up next. a look at joe biden's relief package, bigger than what we were expecting. we'll look at the outlook for treasuries. this is bloomberg. ♪
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matt: good morning. this is the european open. the cash trade is just an hour away. here are your top headlines. joe biden unveils his $1.9 trillion stemless plan. -- stimulus plan. jp morgan pushes back. stocks

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