tom: this morning, things changed at the --after the elections. a heated debate has come a near $2 trillion in stimulus, more coming as joe biden gives to congress information on the state of the union come february. financial markets are quite3 new debt yields are lower. a moonshot revolves from 90. lincoln is missing, can trump exit the white house? they say there is a bust of lincoln. would someone please count the silverware? shades of the lincoln 20 years ago -- of the clinton's 20 years ago. this happens every time there is

a changing of the guard. it happened with the clintons. does this happen on down the street -- on downing street. francine: this is uniquely american but i have become smarter about controversies in the u.k. they publish a list of every gift the prime minister has given and if it is a value above 140 pounds, they decide if they want to keep it but they have to pay for it at face value. theresa may was gifted a lot of shoes. her predecessor was given a lot of ipads. it is interesting. the most incredible things

forgotten on the tube. there was a full submarine guard left on the tube. tom: this is some of the most fun. i looked at the bill for overtime for the movers and i believe it clocks in at $55,000. that is about how much ritika gupta paid less time she moved. ritika: joe biden will go big in his first piece of legislation, he will ask for one point $90 trillion -- $1.9 trillion. it has direct relief spending and more than $40 billion in relief for businesses. it is expected to attract republican opposition.

trump plans to this at mar-a-lago in florida after he leaves the white house. the plan calls for him to fly there the morning of the inauguration. several members of his staff are expected to work for him. the world is about to hit a terrifying edge mark. the death toll from the coronavirus is about to pass 2 million and there are few expectations for the numbers to start dropping soon. the u.s. leads the way. even with vaccination, the odds are slim the outbreak will be controlled before the summer. the economy in china is beating the world year after its first lockdowns. on monday, china is expected to report that gdp rose in 2020 making it the only major economy to avoid a contraction. its success and controlling the virus has led it to boost global trade and investment.

global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: for the first time in ages, the vix is 23.71 going nowhere. futures in 15. i will call it correlated with yields. the tenure is struggling. i will leave bitcoin to francine because she believes in that coin and i don't. francine: i don't know if i believe in it but don't steal my thunder, it is the only thing moving. it is fluctuating around $38,000 after recovering from earlier this week. stocks are fluctuating. they are a little bit lower. the narrower -- the narrative has shifted from wow we have a relief package from joe biden to what happens next? are they going to walk it down

because that will be pushback from republicans? i'll be going to see taxes rising to find it? it is interesting. tom: a state of the union address in february and the first one for a president is always interesting, always eventful. here is the state of the crisis address by the president-elect. mr. biden: a crisis of human suffering is in plain sight and we have to act now. i know what i described -- a failure to do so will cost us. we need to make sure everyone pays their fair share. i'm not punishing anybody. tom: joining us now is our executive editor. it is a bit quieter today. it is nice to have a quiet

friday. >> yeah but in our business saying something like that is dangerous. tom: i want to give our international audience a window here and to get away from the zaniness of the week. the bidens will go into blair house. please explain the symbolism of blair house. >> it is the staging area just a few hundred yards from the white house. it is steeped in tradition. it is where vice presidents often reside before they take office. it is normal. tom: well said. >> it is what has happened for almost 200 years in this country and it is the staging area for

the ascension to the presidency. tom: run the video again of joe biden behind us. little things matter and the placement of the flax behind the president elect. it is different than the current president. please discuss. marty: it is quite a different backdrop than what trump uses. it speaks to the issue that joe biden thinks his biggest challenge is to bring this country back to some semblance of normalcy and bipartisanship. he will be tested on this economic plan. tom: the stimulus. francine: we know what is in the plan but how many republicans will be moderates and vote for it. how watered down will it be? marty: i don't know. this plan and entirety is not

going to pass congress -- in entirety is not going to pass congress. there are pieces of it that will gain support of moderate republicans. the stimulus check is probably the easiest thing to get through congress. there will be a push to split this into pieces so they can act quickly on stimulus checks and move on to other things later. it will test joe biden's experience in the senate and his ability to work across the aisle. francine: do we need to talk about taxes or is it too soon? marty: no i think we need to talk about taxes. raising taxes is not something that happens quickly or easily in congress. it will take committee hearings, weeks or months of debate. then the real challenge is getting it passed. they will need republicans for that.

finding republicans who support a tax increase will be interesting. tom: i want to be careful because this bust has not been identified as the acclaimed bust of the white house, but the marine holding the door and outcomes -- out comes something. it always happens with the changing of the guard, it is an american tradition. marty: it is an american tradition. i keep remembering the pieces of art trump admired in the french ambassador's residence and whether or not those will stay in the white house. it is not so much what trump is going to take it is what he is going to give. the pardons being among them. tom: you and i were at the christmas party once at the

white house and you saw me put a cocktail napkin --. marty: i still have that. [laughter] tom: finally we can laugh deep into 2021. coming up, henry makes a -- that will be important. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

tom: good friday to you from london and new york. francine and i with some stability in the markets. a little worn out, aren't we

all? we are getting you ready for the weekend with smart conversation on different themes. we can do that with michael shaoul. i have been dying to talk to you about the commodity play. on this show, there is disagreement about is it a commodity turn, is it the beginning of a commodity boom or not. we have finally -- have we finally broken the resistance on commodity pricing? michael: i think we have. i think this is a rebound in the goods economy. i've had that position since the summer. if you look on the production side, most commodities have had significant cutbacks. one caveat would be china's demand for crude oil which i think is independent.

some signs show they cut back buying at the end of the year. i think generally this is the most favorable combination of events in commodities we have seen since 2003 or 2004. tom: does it cut into the rest of the world's cost side or is it beneficial signaling a greater global gdp, a greater role trade? -- rural trade? michael: if you went back to 2004 when crude was knocking at $40, the general view was the sooner it goes through $40 we have a recession which did not make sense. what happened when it broke out was there is a transfer of income and expense away from consumers toward producers.

that is what commodity booms do, they redistribute income and profitability. certainly in the early and middle faces, they correlate with better global activity global economic activity. -- global economic activity. francine: when will we see it? there are people questioning the vaccines given the new strain. as a market participant, do you have to hedge the possibility of what we will see over the next months? michael: i think you need to realize that the covid affect has accelerated the global goods economy. when i am talking about commodities, i am sensitive -- i'm not sensitive to vaccination, i'm not sensitive to governor cuomo's proclamation about how many people can eat in a restaurant. i am sensitive to the global

goods which have started to accelerate. i think there is a big difference between the service economy and the durable goods economy. they are different drivers. one has been really depressed. u.s. durable goods spending -- the cost of housing more than anything else -- collapsed. lester you had a 15% increase through november -- last year you had a 15% increase through november. that is something you don't see in a normal year. tom: -- francine: will inflation take hold in 2021? inflation we have been expecting? michael: i think we will get a headline rebound. the weakness from last year will fall out. i think the flexible part of the

cpi will be strong next year. whether or not the service crisis comes back, i think their vaccination does matter. things like air travel, education -- there is a lot of service sector cpi which is being dragged to lower. one part of cpi i never understand is shelter. you have this strange combination of very weak shelter cpi which i would imagine is being driven down urban toll values and strong house price appreciation. we saw a mild aversion of this divergence in the early 2000s. in the end, shelter turned around. if shelter can stay where it is or turn around in the middle and the more commodity-driven portions of cpi can get going -- i think the mid to late 2021 cpi

in the low twos and high threes -- in the high to said low threes. tom: how does the fed response to a cpi? michael mckee will be on tv and go the fish .1%. -- go 3.1%. francine: -- michael: there will be a battle over the benchmark. i think they will remain calm, particularly if they feel it is commodity-driven inflation which they are inclined to view as transitive. i think that is simplistic. jerome powell iterated do not want to make another mistake of hiking early. they are very much focused on

the labor market, they're not even focused on the headline number like unemployment. there focused on minority employment. they want to be part of a social engineering project to make this country better for the majority of people. it is a laudable aim. it is an aim which is more likely to be inflationary. francine: what part of the market right now is running hot? michael: i think the degree of issuance and the enthusiasm which we see -- which is mostly technology. that is worrying. i would not worry about the moves in commodities. you may have the pullback you

saw in mood -- in mid-2004. the cap globally is breaking out. the emerging market complex, for instance, managed to pass its 2007 highs. a 13 year old market turned into -- bull market turned into a secular market. is there trouble on the horizon? yeah, i think if we get rising rates. if you start to see pressures on price-earnings in 2021. there is danger on the horizon. i still think we are in the inflating phase of the cycle. francine: thank you so much. michael shaoul there. coming up, mama del ray --

mohamed will talk inflation and treasuries. this bloomberg. ♪ (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it. give the aerotrainer a shot. pain and stress is the only thing you have to lose.

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ritika: this is "bloomberg surveillance." the trump administration taking a push to pressure china. -- that was because of drilling

in the south china sea. strict u.s. investments in the companies and restrict them from getting access to technology. bitcoin has come back from losses this week. they say it is too quick to forecast the end of the search. bitcoin process more than 7% to go over $40,000 again yesterday before falling back again. bloomberg has learned that apple is planning to upgrade macbook pro laptops this year. that will have fitted -- they will have updated this place and the return of the magnetic charger. they will be the first macbook pros without intel components. tom: on the data, i went to point back that the vix is back to where we were on monday. futures at -19 and they have

deteriorated in the last hour. yield in two basis points. francine: look at basis points -- treasuries and inflationary trade and what happens from here. a lot to talk about when it comes to inflation expectations but also about what joe biden said he would put in his stimulus plan and what would be passed through. we continue checking covid-19. johns hopkins school of public health professor joins us shortly. this is bloomberg. ♪

francine: this is "bloomberg surveillance."

as we continue to track the virus, bloomberg has developed a partnership with the authority on covid-19. johns hopkins has been at the forefront of the response. everyday we will bring you experts on the disease and preparedness. we bring you and your past costs -- andrew pekosz. it is unclear whether some of these vaccines are efficient against new strains. what do we know? andrew: we know there are now multiple lineages of coronavirus that we are calling variance. there is the u.k. variant which is what must people have heard about. we here have a variant from africa -- from south africa, japan, and other places. most of the time he's come to our attention because they have changes in the surface protein

that will make that protein more efficient at infecting cells or there are parts of the protein that have antibodies that protect us that can bind to that. what we are focusing on is understanding how frequently these viruses are occurring in the population and how much of an effect do these one or two changes in the protein have on the responses -- the vaccine responses. the vaccine seems to recognize all these variants but this is an ongoing question that many research laboratories are keeping track of. francine: when you look at some of the logistical concerns around distributing the vaccine, how much progress has the u.s. done over the past two weeks? andrew: the how to editions in the u.s., the elderly living in

resident facilities as well as health-care workers, those are difficult populations to immunize. i got the second shot of my vaccine yesterday. there was a staff of 12 to 20 health-care workers running the vaccination. that is a lot of people to pull away from a hospital that is pushing its limits in terms of caring for covid-19 patients. the rollout initially was slow. i'm hopeful that now vaccine production seems to be increasing that as we move to the general population they will be more efficient in getting this vaccine into people's arms. i think it needs to get into people's arms at the schedule approved by the fda for maximum benefit. francine: when you look at the

overall concerns, how important is it that we have a new vaccine such as j and j that would come on the market? does that help or is there just too much logistics? andrew: any vaccine will help with the doses because although we are increasing the amount of vaccinations each week, we need to increase that level by a great degree in order to obtain a good number of people who are vaccinated by the end of the summer. a goal i have thought of is the end of the summer because what we would like to have is a large population immunized before we enter the fall. we saw how horrific the fall season was and now into the winter in terms of covid-19 cases as people moved into places where there is more

contact between them. what we want to do is make sure by the end of the summer we have a high percentage of people who are vaccinated. new vaccines will allow us to move into different populations, different storage locations, different numbers of doses. all of those can be managed by our health care systems. those vaccines will help us broaden the scope and get to all segments of the population so they can be comprehensive and terms of who is getting immunized -- in terms of who is getting immunized. francine: when you look at the challenges coming forward and what we heard from joe biden and terms of relief, we don't know if it will pass through congress, but is it enough to try to and this pandemic -- emd -- end this pandemic? andrew: it will help in the

medium to long-term solutions. we have to understand that the short term solution is what we have been talking about for many months. mask wearing, social distancing, avoiding crowds, those things will help us turn the corner and get case numbers and hospitalization numbers down. the joe biden plan is a good medium to long-term plan. but for our immediate things we have to do to reduce the number of cases we are seeing in the u.s. in other countries. then there is the medium to long-term plan -- problem of getting the vaccine into people, making sure it is effective, and monitoring these variants to make sure they are still responsive to the immune response. francine: thank you very much. you can tune in every day to our

conversation with johns hopkins experts. ritika: president-elect biden has revealed a $1.9 trillion relief plan, the question is where the price tag be too high for republicans? it has direct relief for families, businesses and communities. the president elect campaigned as a dealmaker and hopes to get public in support. joe biden because the vaccination effort a failure and as outlined in support a immunization program. it is offering more money for testing and contact tracing. the incoming administration wants to distribute 100 million shots in its first 100 days. nancy pelosi and mitch mcconnell are silent about what is next in the impeachment process. nancy pelosi has not said when she was sent to the senate.

after the inauguration, democrats will be in charge of the senate which means they will be handling the trial of trump after he leaves office. boris johnson faces a threat to his leadership from levels -- from rebels in his party. this after the damaging lockdown. it could be ages after it pandemic restrictions last until spring. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: up next, we talk with kenneth leon, csra -- cf ra global director of research. this is bloomberg. ♪

ritika: later today --

tom: good morning everyone. in all of the distractions that come every 90 days, that is bank earnings. we are pleased to start with initial instruction from washington with those bank numbers. kenneth leon joins us. what is this first quarter distinction? what will you be looking for and what is different? kenneth: the fourth quarter is closing the book on a difficult year. covid-19 is further in the rear mirror and that means the billions of reserves is behind us. now, the fourth quarter will

validate the strong upward movement playing into a stronger economy in 2021. i think banks are going to begin to gain their confidence to talk more positively about the outlook. with joe biden's stimulus plan, the w shape becomes stronger on the top which means those suffering will be getting some form of support. that should give a healthy backdrop for consumer lending in 2021 past the first quarter. i think the fourth quarter is over, let's go through the numbers. especially the fed stress test results. there will be a return of capital from the banks. they are over capitalized. there is a chance for return of

dividends and buybacks. tom: you and charles were pounding the table. i have a 5 -- jp morgan growth. 15% dividend growth on a yield of 2.5%. i think going to sustain that growth? -- are they going to sustain that growth? kenneth: we think yes and a lot of that is driven by capital on the balance sheet to put also businesses will begin to improve. with covid in the rear mirror, perhaps these banks are switching investments from business travel and other related expenses to investing in technology. that gets back to one of your favorites about reducing from bricks and mortar, how much of the branches do you need because

goldman sachs and others getting into this business -- it is a changing landscape. banks get that added power from cost control in 2021. francine: when do these banks wrap up lending? kenneth: the ship for 21, the most concern was about credit losses and a low rate environment. at a second level, we have a steepening yield curve which improves spread. if we have a healthy economy, which i think we will, we will have increased volume that would increase spreads. we are moving to that inflection point where improving rate environment -- we are going to see a pretty good picture for loans.

the rear mirror category with the distressed industries. two tom's question -- to tom's question, hospitality and restaurants and small businesses. going forward, i think the market will be looking to that stronger economy. that means you don't have to wait until the second half of 2021 to get validation in the second quarter. francine: does the stronger economy mean household finances are okay? kenneth: we think they are. this is a story i want to pursue in 2021. the large banks in the last two or three years are consumer lending and small business have had a high bar in terms of pico scores or credit quality. -- fica scores or credit

quality. jp morgan is taking the best of the letter and then there is the second level of other banks. then you have shadow banks. 80% of mortgage is coming from shadow banks. when we get the narrative on behalf of the consumer, which is a strong. if you look at fed data in terms of household debt, it is really good and there is a savings component that will be spent. when you look at large banks, they risked on lower credit quality households. is that fair? no but this is what the large banks did. tom: we will have jp morgan any moment here. i will go to alison williams and come back to kenneth leon as he looks at the report. the citigroup executive transfer, how is that going?

kenneth: when we had that first conversation, it was positive about a jane fraser. then we find out part of the reason michael corbin had to leave was he declined to invest in platforms which created a 900 million loss. jane fraser will being energy to restructure. citigroup has disparate businesses around the world, she has been involved in many of those. she had a small tail in the water with announcing the -- with private banks. she's going to come in as a vibrant, new ceo that will change the culture that also know where all the issues and opportunities are. tom: waiting for the earnings here. jamie dimon, what is his

strategy for 2021? kenneth: i think it is mostly toward getting a higher wallet share. tom: i am going to use that phrase this weekend with the kids -- "wallet share." francine: what are your thoughts on buyback? kenneth: the fed still has a restriction in terms of the first quarter on dividends and buybacks. they can do it but i would think the fed would come back this quarter to say you are free to follow the stress test guidelines. then we have the june stress test. i think they want to clear the path of the restrictions they

put in december 18. it is all good. i think banks will be aggressive on buyback. it is also a way to support where the share prices are and look to the improving operating business. francine: how do they navigate politics? we have seen chief executives say that they want to take donations or want donate to the republican already. -- to the republican party. how much will that be in the discussion on wall street on how to deal with president trump? francine: the shares are -- kenneth: the shares are changing and what they see is nothing from the fed or treasury. -- when you go through each of

the players. the congress is more interesting. everyone knows chuck schumer so there are not surprises there. but who sits in the house and senate finance committees might become more important. we are not going to see the crazies, the elizabeth warren's going to resurrect the consumer agenda she had before. i think they will take a low-key profile. i think where the biden administration will be strong will be on protecting the consumer which is something the banking industry will be fine to do. tom: still waiting on jp morgan. kenneth leon with us, now alison williams joints. which ratio matters this time around?

allison: we are always looking for the underlying drivers to see where strength comes from and if that is sustainable. i think we are looking for capital markets momentum, net interest income trough think, -- troughing, and moving past the provisions. we have a strong 2020, we are ending on a healthy note. we think there is momentum into the first quarter. we think there is a turn to normalization in the latter part of the year. net interest income may have troughed in the third quarter. the yield curve has been positive but you get the strength in net interest income. we think that accelerates as we go out throughout the year.

on credit, we saw the provisions in the second half. we saw last quarter with no reserve -- we will see some slight reserve release at the banks but we think the -- we think they stay conservative even though the environment has improved. we have seen some pickup in charge-off. tom: i know you have your 10,000 shares of a firm. is james dimon concerned about innovation providers like a firm -- affirm? allison: technology companies are something the banks are watching and jamie dimon has been -- vocal about syntax but also the payment type companies

versus a certain -- versus a firm -- versus affirm. they had a successful debut. they have been growing strong. jp morgan does have a competing product on their card but it is not as visible, it is not as promoted. these by now, pay later companies that had a strong corker, how is that impacting their business? it is more of a service. if you look at jp morgan, and a lot of people have concerns about that. jamie dimon says we can give that away for free. they have done that in their trading account.

while we have seen strong growth in retail and robinhood be active, we see jp morgan adding that for their core customers and growing database. francine: when you look at the package of government aid joe biden unveiled, what does that mean for these banks? allison: that will be another question for the call. i have not read through the full package and i'm not sure the executives have either. i think more stimulus is good. there is the question of is it as much as the market was hoping for -- we will see. the bottom line is that it will factor into some of the assumptions we discussed earlier. loan demand is something we want to pick up on a consumer site. that involves people having jobs as well as support we get to the

corporate and broader side of the economy. my guess is that the banks won't have factored this into their reserve assumptions. the reserve assumptions are done at the end of the quarter. i think if anything the stimulus will give an potential upside to where we close the quarter. francine: let's get back to kenneth. in the past they have not been this late, we are still waiting. shares are down some 0.6%. how will jp morgan compare to the other once in terms of share price fluctuation -- other ones in terms of share price filtration? kenneth: it is really the ability to support the rise of

share prices and then look at the market and say bank stocks are still relatively undervalued and have a much bigger opportunity in 21 than they did last year. investors are going to be confident this should be part of a cyclical portfolio. we have seen a change of leadership to financials and materials since november. i think the lower tax is a great core holding for investors and we are going to get validation for that. i don't see these stocks going up 5% or 10% today. tom: we will go to break here and a moment and come back with kenneth leon and alison williams. we will get this carol ross -- this chaos set up. the first headline i see, i know this is what miss williams is

looking at, return on common equities. they did not make 20%, 19%. return on common equity, 24%. i am not sure i have ever seen that number. and book value up 8%. that looks like a good indication. a night -- a nice step out for the leader of american banking. francine: this is the fourth quarter, they're coming in fast, these headlines. credit losses report 1.8 billion. we have a whole another two hours to go through these numbers. tom: we will dive into this. stay with us on radio and television, this is bloomberg. ♪

♪ >> is not bad news and good news anymore, it is bad news reflecting a really painful couple of months ahead for the economy. >> you have all of the telltale signs of a bull market at play here. >> the recessionary trade has lagged in the near-term because i think darkest before the dawn. >> volatility kills people's confidence. >> but volatility is when you can make a buck. >> if we just have a recovery in 2021, that is a failure. we need to have a boom. >> this is "bloomberg surveillance," with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, everyone. jonathan ferro, lisa abramowicz and tom keene. jamie dimon and the same angle as the president-elect, both looking at near-term economic uncertainty. that from jamie