francine: president-elect biden unveils his long-awaited fiscal stimulus plan. the aipac's $2 trillion. we will have more on that. global debts near 2 million. france tightens restrictions. germany may follow. good morning, everyone. welcome to "bloomberg surveillance." i am francine lacqua here in london. there's a lot of news going

on on the policy front, having implications on the market. the inflationary trade the big story we have been focusing on the last couple of months. the stimulus case is really outstanding, difference between reflation and inflation that we can see. if you look at europe, they are also a little bit down. the dollar yield higher, opening low with only defensive technologies stocks in the green. optimism about the aid package in the -- in the u.s. has turned to a bit of concern and also concerned that we could see some taxes rising in the u.s. now let's get to the bloomberg first word news. here is leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, francine. the u.s. is talking about a premature reduction in its bond buying program, chair powell

adding that a taper tantrum is a good reminder for policymakers to choose carefully. chair powell: that is another lesson of the global financial crisis is because not to exit too early. we will let the world know. we will communicate very clearly with the public, and we will do so, by the way, well in advance of active consideration of beginning to taper asset purchases. leigh-ann: after leaving the white house, president donald trump plans to live at mar-a-lago in florida and continue employee think some of his current aides. one snag for the president, some of his future neighbors are trying to stop him taking up a permanent residence. and another successful test mission for blue origin. the rocket took off from texas,

this time carrying a life-size domain called mannequin skywalker to the edge of space p he will one day be replaced by space tourists at the cost of $200,000 a seat. global news, 24 hours a day, on air and at bloomberg @quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine? francine: leigh-ann, thank you so much. now let's get our top story. president-elect joe biden will ask congress for one point $9 trillion to fund immediate relief for the pandemic. >> this stimulus does not feel very well targeted. there are some channels, some parts of the stimulus that might if it is being spent effectively. >> it may not be this big at the end of the day, but i think it will still be a sizable number, because people feel like this is kind of the last big kind of

cares act kind of issue. >> we will see where this goes, but this is an opening bid. there has to be a discussion about their vision for public health and economy and how they play out for the next six months and how they play out for this package. francine: joining us for more on this is our senior writer, stephanie baker. stephanie, how many surprises were in the relief package? stephanie: i do not think there were a lot of surprises, actually rated the headline, 1.9 trillion dollars, is huge, and almost as big as the c.a.r.e.s. act package passed in march the cares act check that had been hinted at, something that biden wanted to do, you know, i think he also wanted to provide more funding for state and local governments, and that was in that package, 350 billion dollars, and a lot more money

for this national vaccination program, which i think is really key to getting the economy moving again, making sure there is enough money, you know, because in the u.s., the problem is not lack a vaccine supply, like you have in the u.k., it is really about infrastructure, people, and organizational, you know, skills to get it out to -- in as many arms as possible. so, you know, the real question now is -- how many republicans will support it? it is likely to be passed in the house at this number. it may be revised downward in the senate, you know, as you know, biden only -- the democrats only have a simple majority in the senate, and the question is -- how many republicans would back it? and do they go and try to pass something really big, something called budget reconciliation, to get around a senate filibuster, which requires 60 votes to pass anything.

that seems possible that they would go that route to split a simple majority for budget reconciliation. francine: so, stephanie, given where we are, you know, if he does not appeal to moderate republicans, then do we have an idea of what will be voted on without going the route you were mentioning? how much smaller with the packet have to be? stephanie: you know, they have always balked at this larger one-off checked individuals, and they have also, you know, opposed additional funding for state and local governments. i think that is where you would see a downward movement, to try to negotiate some sort of compromised deal. you know, i think they will -- republicans will argue that this is, you know, reckless spending, even though some of the moves that they had made earlier, you know, in trump's term, expanded the debt

significantly. whether they will push for a promise, you know, to raise taxes in other areas, you know, is unclear. i do not think biden is planning to go ahead with anything in the immediate future, planning to play for this -- pay for this through additional borrowing. it remains to be seen what kinds of things are treated during negotiations. francine: thank you so much, stephanie baker, our senior writer, following the white house very closely. coming up, we get more on the market reaction to biden's nearly $2 trillion stimulus plan. as stephanie was saying, it could be water down. there could be agreement on other things. we will have more on dollar dynamics, given what we heard from joe biden. this is bloomberg. this i- [announcer] imagine ♪ having fuller, thicker,

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francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in london. let's get straight to the bloomberg business flash, here's leigh-ann gerrans. hi, leigh-ann. leigh-ann: hi, francine. bitcoin has recovered from most of the eye watering losses from the start of the week, bracing to top $40,000 again yesterday, toppled more than 25% and 24 hours on sunday and monday. the rebound that naysayers were too quick to forecast and end bitcoin's surge. the pandemic is likely to weigh on 2021 revenue. sales declining as much as 4%. the tech company had spent years trying to move away from legacy software and pivot to the cloud. it has seen uneven results.

and london has already seen stock trading upended by brexit. some managers worry they could be next. there is a risk that asset management could see them out of london. 1.3 billion pounds of funds in luxembourg, nearly half of all funds money managed here in britain. and that is your bloomberg business flash. francine? francine: leigh-ann, thank you so much. now let's get back to the markets. joining us this morning is peter garnry, head of equity at saxo bank. peter, joe biden announced yesterday the details we are going through. peter, there seems to be -- i don't want to say disappointment in the market, but certainly nothing they want to write home about. is this because we heard yesterday about the extent of the money, or is there a concern they will not be able to get it through? peter: i think most of the size

was already discounted in the market, and now we have the details of what they will put into that plan. i think some of it, you might call it, too socialistic for some congress members, and that could be an issue getting the entire stimulus plan through in its current form. but having said that, we really get a stimulus plan and the eventual size will be in all the details, we will have to see, but as we move forward this year , we are getting some stimulus to the degree that we get policy, and that could trigger inflation, and that is why we have coined reflation as the dominant theme to watch and to guide markets this year. we thank governments around the world, especially in major economies, has moved to a gold-based policy, where they will continue to put themselves

in the fiscal and monetary side onto corporate levels, back to where they were before early last year, and if you are right about that, then in the reflation trade scenario, have high inflation rules, have a higher yield curve, i'm sorry -- numbers will go up. that will have an impact on technology stocks, and mostly on the top of the market, and you want to belong financials and stocks with exposure to the commodities sector. francine: peter, is there confusion in the market between reflation and inflation? peter: you could say that reflation is basically when prices began to rise. i would say when people talk about reflation, that is negative, so in my book, reflation is what we have first, and inflation is sustained gains

in the price levels, maybe 3.5%, then we can talk about having real inflation in the economy. and that is where they began to be more shaky come about that 3.5 percentage point threshold, because that is where that reflation begins to be more, coined a sort of attack on capital, and it really raises the bar for the return on capital, which would be difficult for a lot of companies, because most companies, unlike the technology companies, have the set prices. so we will have to see. but we will stick with the reflation, and we will keep prices higher. but arguably together with enterprises obviously moving higher, so we think it is coming this time. francine: peter, is there a worry that actually, you know, before reflation, there is actually a repricing of treasury yields, and if the level is not that big, if they get there too quickly, that also warrants a

repricing for a lot of other asset classes? peter: yeah, so, i think, keeping in mind here when interest rates move higher, they can move higher for a lot of different reasons, and i think the tug-of-war in the coming months will be how much of the be driven by expectations and how much lifting growth expectations. if you look at the technology segment in the global equity market, the way that they have responded, i would say that the market, the two forces are quite equal to each other, so the increased growth expectations are offsetting the negatives from high inflation. but as we move higher, we think the force from inflation will be the dominant one, and that will be negative, especially for technology stocks. we are not so much worried about the very large stocks in the nasdaq 100, but we have an

increasing speculative what we call bubble stocks, and those are the ones that would be the indicator of the correction when we get to that inflation point with high interest rates and we get to see the technology stocks. francine: peter, where do you see the most value? i know a lot of the narratives over the last few weeks has been the russell 200 and what that will do, for example, to the dow and the s&p. peter: the problem with the russell 2000 is it is already very expensive. if you look at the market and how they are placing their bets relative to the stimulus that are coming through, i think the majority of the stimulus will flow from the u.s. into demand for china, because it is a well factory. so we think that emerging markets will do much better than the u.s. small caps. there are still a lot of constraints in the u.s. economy that will not necessarily be lifted.

if you invest in small caps at a very high valuation points. emerging markets are very interesting. a commodity sector is extremely cheap and has underperformed compared to the rest of the equity market from was a decade, we think it is primed to see a repricing. the continuous supply chain bottlenecks will drive high prices for commodities across the supply chain because of the u.s.-china tension, but also because we have under invested in the physical world because of the online world. a lot of capital flow has flown to the digital world. we have seen now some of the impacts on the underinvestment in the physical world. if you couple that was stronger demand going forward over the next two years, you take the stimulus and we have a successful vaccine rollout, then you will have a perfect combination for why the commodity sector will see a boom. francine: peter, yeah, i am just

looking at the russell 2000, and i think i'm a spoke and said "200." [laughs] it has been a long week for everyone. are you expecting volatility into we get to the inauguration, and then it will trail off, or is there too much unknown between the u.s. and china? peter: i think the u.s. and china will continue to get worse. i don't think the biden administration will be really much softer than the trump administration. i think the democrats have pretty much agree to the policy line of the republican party that china is that for most -- foremost competitor. i saw trade stats with china the other day. i think that will continue to be coming out from that sector. we are not worried about the inauguration we think it will be mostly noise at this point. we had a general worry that

typically the vix index has been used as a tool, but you can clearly see in the volatility market there has been a structural shift and 2020, obviously driven by the pandemic, increased participation, specifically in the options market, and they are buying a lot of options with only one week and one month, and that is forcing -- has credited a positive feedback loop, including stuff like tesla. that has our attention and worries eyes. francine: peter, thank you so much. peter garnry there from saxo bank. this is bloomberg. ♪ so you're a small business, or a big one.

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>> we are no longer going to raise interest rates just because, for example, if unemployment were to be well below, again, well below our natural estimate of unemployment, that would not be a reason to raise interest rates, unless we see trouble in inflation or other imbalances. francine: that was fed chair jay powell speaking to push back and of course tapered talk.

answer in the spotlight in the final days of the trump administration. jp morgan will kick off the earnings season today in a move that was not expected, trump a's overseer of biggest banks imposing last-minute rule chains. -- changes. joining us is bloomberg's dani burger. this is forcing companies to land, no matter ethical decisions. they would need to land to, you know, climate denying companies, gun manufacturers, and the like. wall street is not pleased. dani: that is not her statement. as you said, gun manufacturers, oil drillers, another non-esg friendly one. a lot of these banks had previously refused to do business with these types of companies, francine, it is also concern over the type of presidents it sets. does this mean we can have more last-minute regulation where we are not really consulting the parties that have a heavy interest in these sorts of

things? this comes, of course, as the banks are preparing, just days away for of the biden administration coming in. part of the confusion and the anger coming from the lenders is that, before this, the trump administration had been pretty friendly to wall street. so it comes as a surprise in that way. we also heard that one of the heads of the trade associations of these banks just really challenged this, saying the rule lacks both logic and ignores basic facts of how banking works and will ignore the safety and soundness of the banks. he goes on to say it is unlikely to withstand scrutiny. withstanding scrutiny, there is not much they can do. they haven't threatening lawsuits, writing letters, but at the moment, that is really the extent of action they can take, francine. francine: this is like plumbing. you did not really think about it until something happens. can biden actually reverse this, or does it have to go through, you know, the process without

turning back straightaway? dani: presumably, we have someone new in the chair, the chair of the office of the down after putting through this regulation, but it is a process to try to reverse some of these things. it will be interesting on the earnings call, which kicks off today coming to see if banks mention at least the outlook from the biden administration, whether they will be more friendly. of course a biden white house has a large concentration on climate, so this could be a big concern, francine. francine: thanks so much, our dani burger. we have quite a bit of earnings coming out and we will talk about that later. the prime minister of italy, giuseppe conte, loses his majority. the government teeters on the edge. this is bloomberg. ♪ s bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in

london. let's get to. here's leader -- here is leigh-ann gerrans. leigh-ann: joe biden is planning an immediate 1.9 trillion dollars of aid for the u.s. economy and he plans to lay out the second broader recovery package at a joint session of congress that month. president elect admits the proposal is expensive says america cannot afford not to act. mr. biden: crisis of deep human suffering is in plain sight. there is no time to waste. we have to act and we have to act now. leigh-ann: the world is coming closer to a sad benchmark -- 2 million coronavirus deaths. vaccine rollouts taking time, there are thoughts that the number will drop. there is little clarity on when president trump's impeachment

trial will take place. nancy pelosi has signed the single article of impeachment but has not said anything about the schedule for sending it to the senate. both republican and democrat leaders have been silent on how the senate will handle trying a president after he does leave office. 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 leigh-ann gerrans. this is bloomberg. francine? francine: let's discuss the latest on the deepening political crisis. prime minister's contee is racing against time to forge a new majority with a day of reckoning set for tuesday in a vote in italy's senate. prime minister is facing a dramatic political impact sparked by matteo renzi's withdrawal of his party from government. the move robbed conte. joining us is the deputy cheryl

-- jeopardy chair of rothchild group. thank you so much for giving us your time. when you look at the complexity of italian politics, a lot of people outside italy don't know what will happen in the next seven days. there are a number of options. what do you think is the most likely scenario? paolo: it is complex also for italians. i believe that we will find a new majority on tuesday in the senate. the new majority made up by what we call responsible mp's, mp's which are from other parties to give mr. conte a majority. some senators are ready to vote

for mr. conte. francine: but does it weaken his hand to decide the recovery fund money that the e.u. gives italy? does that make it a bit more messy? paolo: well, yes, it doesn't simplify the situation. the whole subject we are discussing with the business community is how the government will deal with the 209 billion euros which are part of what we call next-generation fund, and for which we with the present government has yet prepared what we need to present in order to have this rally. so i hope that for mr. conte's government, it will be much more active on this front.

it has been taking care of the situation but not much of the future. francine: paolo scaroni, what is the biggest concern right now? there are number of rumors flying around, saying that it would be -- that a technocratic government would be better, hoping that mario draghi would take some kind of role in italian politics. but what are the main challenges for the next six months? is it vaccination, or is it just a recovery fund to launch an economy? paolo: the big challenges are 2 -- first of all, how we deal with -- is not as dramatic in italy, is very, very painful. this is one. and second, how we deal with the future. the italian economy was performing poorly even before cobit. imagine now the italian economy

is dealing. we need these 200 plus billion euros in order to change completely the italian economy in order to make it more productive. do not see much yet from the government. i don't know what mario draghi thinks. everyone would like to play a role in this dramatic moment for our country, but i don't feel it is the time. italian politics now are concentrated on next year, and for a few months before this election, nothing will happen in politics. so i'm not expecting mr. draghi to play short-term in this. francine: drop sometimes with the internet, so hope you can still hear me.

i want to also ask you about oil and opec. it just seems like 2021 we are not short of news. where do you see demand but also agreement within opec going to keep a handle on oil? paolo: i'm fairly optimistic about the oil price because there has been a demand rebound, demand in 2021 will be at least 6 million barrels a day higher than in 2020, and saudi arabia showed clearly its intention to cut down in order to keep prices level. prices now are around $55 a barrel, and i believe this price will stay on, may be go a little higher in the next few months. there is a ceiling which is probably around $65, which is

the price at which shale oil, in america, will start again to increase production. i see oil prices between 60 and $65. francine: what do you think world businesses, global businesses, italian businesses need to focus on right now? we are in 2021, we still in the pandemic, and we will see if vaccines work. how do they react -- how do they adapt to this new reality? paolo: some businesses are adopting well already. other businesses are totally collapsed. tourism, hotel, travel, everything needs to sort out the issue of covid in the world before they start all over again to grow come as it has been growing in the past few years. i have to tell you i am fairly

optimistic about the vaccine because production should be growing rapidly. the pharmaceutical industry has shown the capabilities not only of making it but producing what we need. i'm expecting that in 2021 the covid situation will be behind us, even in the sectors that have been suffering so much from covid. francine: paolo scaroni, i need to ask you about football. there are some clubs that are facing liquidity issues because you don't have the revenue from spectators because of covid. how do you see this playing out in italian football? paolo: let me say first that milan is at the top of the league. we are enjoying this position

and nobody would have respected that. in economic terms, yes, all of us are suffering. all over europe we are suffering, and i don't see any solution if we do not solve it. we need to have people going again to the stadium for many reasons, including for economics . we are suffering, all of us. i hope 2021 will be the end of this unbelievable situation which normally is going toward football matches all over europe. francine: do you think private equity funds will take a stake in some of your rivals? paolo: they are very active, very active at the level of the clubs, but also at the level of the league. the italian league, there are two private equities -- three private equities which really are ready to take a stake.

the media company -- i'm expecting more and more intervention of private equities in the world of football. because the world of football can be cash generated, profit generative for everybody including private equities, which shows great interest toward european football. francine: enjoy the match tonight. i'm sure you will be watching like most of us. my executive producer will be watching roma. that is tonight. we will have plenty more on the market shortly. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get to the bloomberg business flash from leigh-ann gerrans. leigh-ann: bitcoin has recovered from the eye watering losses it start -- saw at the start of the week. it top 40,000 dollars yesterday. it had tumbled more than 25% in 24 hours on sunday and monday. the rebound is a sign that naysayers were too quick to forecast an end to bitcoin's surge. london has seen stock trading upended by brexit. there is a risk that some asset management could be forced out of london. firms in the u.k. handle about 1.4 trillion pounds before funds in the e.u. of the islands and luxembourg.

more than a year before wirecard imploded, executives at commerzbank did have suspicions. according to a testimony at a parliamentary hearing in berlin, the lender flags money laundering concerns to general authorities. it then told a regulator of its decision to end its relationship with the payment company. s.a.p. says the ongoing effect of the pandemic is likely to weigh on 2021 revenue. it sees revenue and software sales declining for -- declining. it has seen uneven results and has twice warned that the pandemic will stymie some clients' deals. that is your bloomberg business flash. francine? francine: thank you so much. tech valuations may skyrocketing to new highs. the firm's applico had -- the