francine: a new administration begins in america. joe biden becomes president on wednesday. the national mall will stand the except for troops. the u.k. shuts its borders this week for anyone who has not tested covid negative. the country will step up the mass vaccination program. good morning. welcome to "bloomberg surveillance." i'm francine lacqua in london. happy martin luther king day. we look at markets and politics, but first let's get straight to the bloomberg first word news. leigh-ann: joe biden is signaling his administration will be tougher on tax. the former head of the commodity futures trading commission will head the sec, and a sec member

is being named to run the consumer protection group. there is that screening of the 25,000 national guard troops coming to washington for the inauguration, and according to the washington post they are concerned about extremism among the soldiers. a number of writers who stormed the capital turned out to have links to the military. in china the economy exceeded its pre-pandemic growth rate in the fourth quarter, gdb row -- rose 6.5% in the final quarter. for all of 2020, the chinese economy grew at a time when major peers such as the u.s. in japan contracted. the u.s. and the european union have condemn the russian decision to detain the opposition leader, as russian police took him when he arrived

in moscow after being treated in germany or poisoning. i 30 say he is accused of violating his terms of a suspended sentence. he is a russian credit of the russian -- critic of the russian president. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine: thank you so much. remember it is martin luther king day which means a lot of u.s. markets are closed including treasuries. i am looking at what we are seeing in europe with the concerns about markets having not enough access to chipmakers. i'm not sure whether that is the correct percentage change. that seems pretty steep. other assets are down

significantly pick this is more topical because of the views it was squandered. investors are weighing strong economic data from china, and surging corona virus trends. president-elect biden taking the oath in a ceremony reshaped by the pandemic amid looming threats of violence. >> downtown d.c. looks like a city preparing for war as official scrabble to fortify the city ahead of the presidential inauguration. law enforcement officials are bracing for the worst case scenario. huge parts of the city have been locked off and 25,000 national guardsmen have been deployed to d.c.. behind me several guardsmen from

pennsylvania are manning a checkpoint on massachusetts avenue. the city is on edge. for residents, journalists, shop owners and lawmakers, this is not just the nation's capital but also where they live and work. it is becoming harder to navigate all of the road closures. the metro is closed. parking garages are closed and even capital by c-shares have been pause temporarily in this area. this is the perimeter that has been set up around the capital mall, there are concrete barriers everywhere and armed national guardsmen patrolling the streets. sirens all hours of the day and the neighborhood has become a war zone. the inauguration was designated a national special security event, so preparation was under

way week earlier than planned. the national mall is where crowds usually gather to watch. this year it will be close to the public. the d.c. mayor has asked people to tune in to the inauguration from the comfort of their homes and asking businesses to download signs that say firearms are not welcome. many downtown stores are shuttering windows. these streets are completely empty here, and this city has been shaken -- [sirens] francine: that was the militarization of washington, d.c. ahead of the inauguration.

our guest will make us smarter about thinking and looking at this. the change of the policies, what kind of tone will we hear from biden on wednesday? >> i think what biden has signaled to the trump campaign and into the transition is that he will probably talk about unity and about bringing americans together and about rediscovering a national sense of purpose. i think that is difficult with the reality, and if he wants to get anything done he will have to move quickly and have to push his caucus in congress which controls a razor thin majority of both the house and senate to do some pretty ambitious things without of lot of difficulty. the disadvantage that biden has relative to the last time he and

barack obama was president was that the majority of the democratic party and the congress was much smaller. there is more of a ideological coherence to the democratic party, more centered around a shared set of policy ideas than the party of 2008 and 2009 was. the fact that you have these crises, whereas in 2009 it was largely just the economic crisis, i think that has inspired an amount of interest to get things done quickly to pass something like the stimulus package that biden has proposed and really get moving on addressing these crises. i think there will be a lot of talk of policy, but against this background of political violence

and from the right in america generally who continue to believe against all evidence that donald trump won the election. francine: is there anything biden can do to convince people otherwise? >> not really. i think the problem is the person who did in fact when the election but is the subject of these theories cannot do really do much to convince people that the whole thing was fake or that it wasn't. i think he has to bring about policies that are popular to try to fix the issues facing the country and speed up the vaccination process and get more stimulus spending into the hands of individuals and small businesses to get things rolling again and try to undercut the

rationale for the anger, rather than take it on directly. frankly it does not matter what he says. some people are convinced that trump won the election, and they will not listen to anything biden says. francine: how does he try to mend that divide? whatever he does, will it not make a difference to his popularity with trump space? >> they are two questions, there is that trump space question and the biden popularity. about 30% of the country, still as of today, things that donald trump is doing a good job, there is not very much biden can do to to reach those people. but the percentage of in between people that do not have strongly negative views against biden, i think the additional stimulus

spending, and an extension of things like low loans to small businesses, i think the kinds of things like the vaccination programs, taking it possible for the u.s. to return to something like normalcy, i think those will build in goodwill. again, against this act drop of extreme difficulty about the basic fundamental facts about democracy right now. francine: what do you expect donald trump to do in the next couple of days? >> there's a lot of talk that he will issue another round of pardons in the next day or two. that is the major think we are waiting for, and he may also issue executive orders, but biden could undo them, especially given that we are within the last 60 days, there

is a law that allows congress to review any changes and overrule them. some of the changes that have been happening will be overturned quickly. i would expect trump will go back to florida pit that seems to be the plan -- florida. without a twitter account, he will be somewhat limited in how he communicates. [indiscernible] i would expect to see him trying to get out public communications and continued to churn out this anger towards biden and the believe that the election was fraudulent. i would expect that kind of thing. the big question is what kind of legal consequences, which of

been delayed by the fact that he has been the sitting president, will accumulate now that as of wednesday he will not be president. i think he and his lawyers have got to be thinking about that. francine: are you expecting him to pardon himself, or is it actually legal for him to pardon himself? >> no one knows because it has never been tried. the latest reporting is that his lawyers have been dissuading him from that because purse of all it would essentially invite some kind of indictment that the doj would view it as necessary to indict him in order to try to knock down the president of self pardon -- precedent of self pardon. i think it would be challenged. my belief is that it would be knocked down by the courts, but i don't know that for sure. it has never been tried in

court. there is no precedence. i would suspect he does not go through it because first of all a lot of the legal danger does not come from the federal government. it comes from new york and we have learned [indiscernible] there is the financial danger of damage to his brand. a self pardon does not really help with that. it gets rid of his ability to plead the fifth and avoid self-incrimination. there are legal reasons why he might not try even if he believes that concept would go through. francine: thank you so much. coming up, we speak with a chief economist talking about the e.u., the u.k., and of course

the u.s. and china.

>> we have very fast nominal gdp growth and we have not had that during past recoveries. the way you deal with that from a central perspective has to be different. clearly the fed is taking all of these in points and from our standpoint, if we have all of these companies around the world globally and what we see is an economy poised to grow quite strongly coming into the second half of 2021. francine: that was henry mcveigh discussing the outlook for the

economy. joining us to talk about the economy is gordhan assignment -- simon. i don't know whether we should start with china and the fact that we had some pretty good figures from china and whether that makes a difference to the rest of the world. >> it is one economy in the world that has grown in 2022 and we must not lose sight of that. i think also we must be cautious. this has been a demand from consumers world over from services which they have not been able to consume towards goods. china has been the big and a fishery -- big beneficiary. also the way that china has grown, it has reverted to the old drivers of growth rather than the areas it is trying to

kior ties pre-pandemic, so some structural regression -- trying to -- managed to squeeze out growth in the last few months. francine: where do you see the biggest danger? is it too much inflation that maybe could pop up, or is it more of a double-dip recession road wide? simon: if we take the conversations i have had at times, inflation is where it starts and ends. i think i could be fairly confident that you can see some inflation the second half of the year that is significant as a result of the base effects, and you will see some big year on year changes. the question shifts to how

sustained this is in terms of 2022 and beyond, whether it will fuel a wage price spiral. you have much more of a growth question. our view is inflation is more ugly to be transitory risk foreign esters -- four investors. -- for investors. francine: are we out of the woods when we get to this level or we -- or we need -- or do we need to make up for the year lost? simon: if you are tried to understand the federal reserve policy response function, you are under as -- understanding how much of that foreground inflation they are prepared to allow for it i think they will be quite tolerant given where spare capacity is in that united states economy and how much they

want the recovery to be entrenched, not just among the educated, the high income families, but also write down the threshold, really squeezing out the low levels of employment, low skilled workers. i think the fed will be prepared to play catch up over a number of years in terms of inflation. the changes will take a long time if we will see shorter supply change, if we will see a greater unionization of the workforce. francine: are you expecting supply chains to change even more than we have had in the last few years? simon: i think we will see a series of public inquiries, and they will all include things such as a nation states to

manufacture and source strategically important parts of the economy, be it in the area of health care, chemicals, we all have seen those chains being shortened. from a macro perspective, i think that is much less likely and that is the reason why we are still quite skeptical that you will see a sustained pickup and -- in global inflation. francine: thank you so much. that was simon french. he stays with us and we'll have plenty more to talk about. coming up, a senior fixed income strategist. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving,

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leigh-ann: this is bloomberg surveillance. a french water co.'s turn to get some help as it tries to fight a takeover attempt. two firms are ready to offer $13.7 billion for sewers. the company supports the proposal. bloomberg has learned that citrix systems is in talks to

buy work management platform company reich, the price more than $2 billion. it is owned by vista equity partners. a deal could be reached this week. that is you bloomberg business flash. francine: the focus firmly on maybe some of the risks out there including what we saw from china. let's get straight to the markets. some markets are closed because it is martin luther king day. equity futures, mildly risk off today, at the same time they are looking at the stimulus plan and surging coronavirus plans. we will have more on that throughout the day. this is bloomberg. ♪

>> we hope to have stable

interlocutors, because italy would be crucial for the success of this european next-generation plan, and we need stable interlocutors. several european countries will not probably be back in 2022 at the level of growth they expected. but even at the level of growth they already had at the end of 2019, if this will be the case, there will also be the case for further extraordinary measures. francine: that was the european commissioner for the economy. we are back with gordon simon. are you expecting a double dip

recession? >> the more difficult responses will be because there are three excesses of play here, the rollout of the vaccine which we know has gotten off to a poor start, and most policy already close to -- and fiscal policy, yes there are problems with the european bailout package but it remains the area, there is a greater clamor for that to be more ambitious, not exactly what the commission wants. francine: where you see the biggest concern in europe? once again there is political possibly -- possible political instability.

>> those comments, if you take the data points talked about, not being back at pre-covid outputs by the end of 2022, not achieving the growth rates, unfortunately if you look at the economy in the last 20 years, i am not sure it changes your baseline, but of course, and i think this is key for a lot of these policy questions for investors, the relative pace of recovery versus what you already have as your structural 03 is probably the differentiating feature. the worry in italy is the contagion that we have always spoken about, this permeation into the corporate sector your. that would be where i have worries if you're going to see

not just the kind of aggregate fiscal policy but more targeted sector interventions. francine: are we going to see mass-market friendly reform because they lost the u.k. driving force? >> we have spoken about this for the last four and a half years, on the u.k.'s questions, but there is a key question for the more pro-market, whether they have -- they have lost a friend in terms of the u.k., but generally over the last four years have supported those. but there have been for a number of years a question over whether -- europe pursues fiscal policy on its political system or takes a more divergent view.

i think the question is whether it chooses to aggregate together or split it apart rather than regulatory model or the regulatory model. francine: where you see the u.k. heading from here? >> the big question i am being asked is are these teething problems with brexit near term just an adjustment function? will those frictions melt away, and also when you have more pragmatism in terms of the engagement between au partners and the united kingdom.

my expectation is you will see a dial down in those tensions which will lead to a more pregnant medic approach -- pragmatic approach this could take place. there are bigger issues on financial services were actually there are still big divergences of how markets should be regulated. they need to address those in 2021. francine: there is also talk in the media that the chancellor will raise taxes in april. if we go back to austerity to quickly, how much of a mistake or not would that be? >> this would be unwise for the chancellor to tighten that yoke. the u.k. is unlikely to use the restrictions on the weather economy, i think it is more likely the chancellor will want to set fiscal rules on how the

deficit is brought down from 20% of gdp back to something more manageable longer-term but near-term raising taxes and cutting spending would be unwise as we don't know as the furlough scheme unwinds potentially the end of april, how many people are currently furloughed will have jobs to go back to. this is not the time and i don't think the chancellor will do this in early march. there is quite a lot of speculation in the press this morning. francine: if you look at currencies, what is the most interesting, euro dollar or sterling? >> the euro dollar for me. i think the trend has not much

further to run, so that -- francine: we keep on hearing from all corners that they went to rival against the dollar longer-term, when we actually start talking about that as something that could happen sooner rather than later? >> two big problems with those areas, one if we have to -- if we have christine lagarde, who was also on the program, she would not relish the greater role of the euro, in terms of supporting growth, so i am not convinced that even though there is a geopolitical case, that most european policy would support. in china it is different in terms of the degree to which a global reserve currency needs to have. that is not something the

chinese policy makers relish. i think this remains theoretical rather than a practical debate near term. francine: thank you so much, simon french. this is leigh-ann gerrans. leigh-ann: two veteran regulators strongly backed by progressive democrats have been picked to head two watchdogs. gary gensler will head the sec. ftc member is meeting name to run the consumer financial protection bureau. joe biden's inauguration speech wednesday will have several teams, the incoming president is expected to outline how he will tackle the house and economic crisis he inherits at the same time biden will call on the same -- u.s. two abandoned divisive as -- the white house is

planning a farewell for donald trump on wednesday when he leaves washington for the last time as president. bloomberg news has seen a copy of the invitation. the event will take place at joint base andrews for the outgoing president make his departure on air force one. it is scheduled four hours before joe biden is sworn in. there are global gaps in access to coronavirus vaccines and that raises concerns that the spread of the disease will breed more dangerous versions of the passages. the u.s. and the european union has given out about 2 million doses so far. some countries have not yet started their campaigns. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine. francine: coming up, a

geopolitical strategist, coming up. this is bloomberg. ♪

>> the overall quarter really seems to have shown the economy has ended the year on a strong note for the manufacturing is doing well. >> in terms of chinese data,

very positive. >> the thing we are watching out for is whether the pboc will be maintaining a tight policy in the face of an economy which is potentially on the brink of deflation. francine: china was the only global nation to avoid a contraction this year. joining us now is the global head of em research. thank you for joining us. when you look at china, the fact that it is growing, does it help the rest of the world? >> that is a good question. i think it does. we have seen in the past the chinese cycle recovering actually helping. december has been a great month.

obviously we are still in this environment impacted by covid. china is producing the goods the world needs. over time, the growth has impacted the rest of the world and china has continued to recover. we make it into a better global environment so i think the short answer is yes, that it does help level trade in commodities, etc. francine: if you look at when china will start spending and helping the world grow that way, how far is that way? >> i think we are in an environment where china exports are performing in other parts of the economy, like retail sales and messy consumption, i think

the rest will depend obviously on the labor market which is improving in china but also disposable income growth which we expect to improve and pick up as the year advances. if that is the case, i think there will be more imports in china from the rest of the world, and i think there is also investment in manufacturing, so this is a recovery that is gaining pace clearly evident in the numbers today. i think other parts of the economy will join, especially the domestic side, and it will generate importing from the rest of the world. francine: what is your biggest concern about china? murat: we don't think policy -- the recovery is gaining pace.

we are actually looking for 8.5% growth, which is very solid, but despite that we are not looking for monetary policy easing to change course because you have inflation very low. the dpi as the less negative -- overall inflation turned positive in december, so even though the economy is gaining pace, we do not think the course will change, so that is the worry. we think the prime rate will remain the whole year. francine: you also have this emerging arc it sentiment survey, and i think respondents actually expect emerging markets to perform well and that we begin to see inflation in there. is this emerging markets as a whole or do you have to pick but countries you like what murat: that is a good question.

-- next three months. we are doing this quarterly survey across a wide range of investors. the previous one in september was around half of the investors have clearly -- but at the same time, investors are harboring a large amount of cash, one quarter actually expect the cash that was to go down, so put more cash to work which means the optimism may translate into action. in terms of country choices, and this one was conducted in the second half of november, pretty much in all three surveys, asia and china needs the pack, but for the first time we had actually seen some rotation, some investors preferring some other countries.

clearly some optimism regarding that perhaps on the back of rising commodity prices. francine: thank you so much. coming up in the next hour, we talk about vaccines and what we have learned in the last two or three weeks. this is bloomberg. ♪

>> this is bloomberg surveillance. i am leigh-ann gerrans. in south korea, samsung has been sent back to prison for 13 months in a bribery case, a dramatic setback for the largest electronics company paid samsung has been trying to move beyond the scandal. he was first jailed in 2017 after being convicted for his role in a corruption case. goldman sachs has raised growth forecast for the u.s. this year and beyond the upgrade is fueled

by the expectation that a biden administration will deliver large amounts of state fiscal aid and education and health spending. they protect the economy will expand 6.6% this year. the trop administration has reportedly lashed out again against china that the u.s. has told several of the huawei technology suppliers it is revoking licenses for the u.s. has been arguing that huawei is a threat to national security. that is your bloomberg business flash. francine. francine: thank you so much. we are talking about emerging orchids and we were talking about china and also that em sent me -- sentiment survey. we were talking about where you find the best value in em. if you look at currencies, how much will investor appetite --

fixed income or equities? murat: investors appear to be more -- the optimism has increased from the september survey. those investors expecting appreciation has almost doubled compared to the september servants he -- survey. latin america is an interesting region as we have discussed before. there is some optimism with regards to that effect this year as well. francine: when you look at dollar dynamics, what are you expecting dollars to do from here until the end of the year and are most of these emerging

markets the dollar play? murat: excellent point at a fair point. it is a very important tactic. we are looking for generally soft markets like the -- not a structural weakness. this is sort of become a benchmark. they think the opportunities are more in the em space, and obviously there is sort of a consensus at the last week, but i think the expectation -- this is going to be a relatively benign. based on our studies, what is more important for that is growth so that is the first factor that it drives at. we talked about china, and it is

impacting the rest of em and should do so going forward. based on our previous analysis, mobile growth and em growth are important tactics for emfx to perform. obviously the dollar is important as well, but i look at both. francine: what about the impact of the u.s. elections? how will that impact emerging markets depending on what joe biden does with foreign policy? murat: it is interesting because we asked this question in the survey as well, and the answers were pretty fresh obviously. what is interesting, when we did the survey, the georgia runoff's results were not there. investors actually thought job widen -- the joe biden presidency and the congress controlled by democrats --

could actually be negative. i think this is because of the mixed signals that this outcome is sending. as you mentioned, there is this policy potentially stimulus coming out and we should be grateful because em could export a lot to the u.s. if commodities -- but on the other hand a stronger recovery in the u.s. is lifting up rates, and if that tightens global financial positions, that could be bad for em. we do not expect u.s. rates to -- as the year advances. francine: thank you so much. tune in to our special coverage of the inauguration at 11:00 a.m. new york time on wednesday. ♪

francine: a new administration begins in america. joe biden becomes president wednesday. the national mall will stand empty except for 25,000 troops. growth in china hits pre-pandemic levels. can it sustain them? do you kate will step up its mass vaccination program. welcome to "bloomberg surveillance." i am francine lacqua. it is martin luther king day. tom keene is off today. let's get straight to bloomberg first word news. >> joe biden is signaling his administration will be tougher on banks. gary gensler will head the sec. ftc member is being named