>> good morning, i am matt miller. welcome to "bloomberg markets." i look at the financial war, of course the indexes will be closed in that united states of america and we still have movement in other markets where u.s. assets at trade around the world, the dollar i think is the most interesting, getting the most attention. you can see the dollar spot index up a little bit. we have the euro losing some ground, and this pound losing ground as well. futures, seeing little edge but -- little change, but edging

higher. had european index is down across the board for most of the morning. it is 1:00 in berlin, noon in london. you can see the broader european benchmark, little change as the dax turned positive in germany. the cac and the ftse still down, bitcoin turning around a little bit, trading right now for over $6,000, but traders say the charts do not look good after it hit 40,000 and almost made its way back and then came down again to this level. one of our top stories this morning is the gap between the american have and have nots. the fed mentality continues to drive markets higher,

ill-equipped to address the wealth gap and policies lining only the wealthiest pockets while millions, tens of millions struggled to put food on their plates. listen to jay powell. >> we have been talking more about various kinds of inequality that a been sustained and have grown in the economy over the years. they connect directly to a maximum employment. if you take the statutory goal seriously, it is not achieved if there are lots of people not working around the edges of the labor market. we will talk about those longer running features of the economy and take them into consideration when you look at maximum employment. matt: joining me now is a senior investment manager, and i have to ask you, in humanistic terms,

this is a huge problem and we see the reverberation socially, but they seem to be getting worse after witnessing an armed riot in washington, d.c. a week and half ago. what about market terms, why isn't the market more concerned about this growing income inequality? james: for the reasons you have already intimated, this comes back to central bank policy. i am going to strongly disagree with the chairman powell because the notion that having a full employment goal justifies such extreme policy measures aimed directly at financial markets with little or no transmission to the real economy under the guise of lifting the poorest out

of some difficult situations that they find themselves in, i think that stretches credibility to the extreme right the reality -- extreme. the reality is the financial markets are the domain of the upper echelons of society and this is a form of really trickle-down economics, just much more extreme and with less effective transmission to the lower heart of the population. a healthy economy is how you raise prosperity for all, to me, and a financial eyes world -- a financial iced world where -- financial markets regardless of the prevailing state of the economy is about is far from a healthy economy as you can get. i think financial markets become further disconnected from the economy because that is where central banks push them.

matt: clearly a lot of people agree with you. if you look at the federal reserve balance sheet, it is pretty spectacular to see how much debt they have taken on. if you look at fiscal government spending, it is spectacular to see not just tarp size packages, but double packages being spent, but none the less, as an investor a guess you have to grasp the reality. how long can this go on? james: that is where it becomes difficult because you have to recognize prevailing reality, but as a long-term investor looking at the fundamentals, i am not a traitor are trying to -- trader, i have to understand the diversions between market prices and underlying reality

and trying to manage risk around those situation can be painful in the search warrant -- short term. investors tend to spend a lot of time in the middle of the pack if you can show average results year after year, you will find the compounding effect is that puts you in the upper echelon. it is not about trying to win in every market environment, aggressively in every market environment. there are times you have to accept your view disagrees with that of the market and maybe there is some short-term pain. recently that has been one of those times for us, for myself, where we can see this disconnect and see it tilting and therefore there is more potential energy and financial markets as they raise without fundamentals to justify that. at times you have to accept that there is too much momentum behind those market murders and get back to the sidelines and

manage risk. it is one of those times where we are just looking to build some positions around that view. we still believe there are huge challenges for economies ahead and we believe market pricing is complacent in places and that cannot continue infinitely. when that reality dawns is difficult to say, but i would describe the early weeks of this year as somewhat hopeful for that investment strategy because some of the more self-serving assumptions about the market paradigm have started to collapse, which is to say rising equities and the following dollar do not go together. if treasury years -- yields keep rising, that tends to be bad for emerging markets and the pro-risk environment does not look as supportive for those

cyclical strategies. maybe adding a bit of duration and selling some emerging-market effects is how we have been playing it. when the equity market wakes up to the challenges ahead for the u.s. is a bit more difficult. matt: in terms of the bond market, a lot has been made of the 1.9 trillion package, and the fact that he does not have to worry as bill clinton did about the bond market. we see yields rising a bit and i wonder how far do you think that can go. bloomberg has a great story about european and japanese investors just getting ready to seed that market with money. james: some interesting

analogies with respect to what is going on at the moment. bond vigilantes have been crushed really but won over by the wall of liquidity that central banks have been providing for years. this is not a recent phenomenon. you do have less discipline in the financial market, and then central blanks -- banks, some of these somewhat risky strategies will continue, but there will come a point where you pushed the market too far. what we are seeing at the moment is that we have large pools of wealth out there in the world, not necessarily in the domestic united states, which devalues treasuries already and we will continue to see that rise higher. that is similar for the fed was tightening policy, but china was accumulating this huge current

account surplus and it was plowing a lot of the savings back into the treasury market. i see a lot of economies which are deemed to have performed very well as a result of the virus, and they are all accumulating large accounts, and even if they are diversifies think some of that accumulation, a lot of it will be in the u.s. and most of it will find its way back to the treasury markets. they are plenty of forces, where that level is i am not sure, but after hearing from jerome powell this last week, i think it will be more difficult for treasury yields to push on significantly in the short term. matt: the interesting thing will be to see if we get inflation that nullifies the policy ability -- possibility of a federal reserve but if indexes

indeed turned down. thank you so much for joining us. let's check in on the first word news with leigh-ann gerrans. leigh-ann: good morning. thank you. joe biden signals his administration will be toughing on banks -- tougher on banks. he has picked regulators to lead two watch on -- what -- watchdogs. gary gensler will had the cec, and rohit chopra named to have the consumer financial protection bureau. authorities are conducting insider threat screening on the 25,000 national guard troops coming to washington for the inauguration. according to the washington post, they are concerned about extremism. 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. for all of 2020, the chinese economy grew 2.3% at a time when its major peers such as the u.s. and japan contracted. the u.s. and the european union have condemned the russian decision to detain alexey navalny. the police took him into custody when he arrived in moscow after being treated in germany for poisoning. authorities say he is accused of violating the terms of a suspended sentence. he is a 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.

matt: coming up, we will speak with stephanie kelly could we just spoke with james athey on the market. we will talk to stephanie about the biden administration plan to deal with china. this is bloomberg. ♪

matt: from berlin, this is "bloomberg markets."

with the trump administration watching china for the past four years, many wonder whether the incoming biden administration will be as tough. joining us now to discuss this and also the rowing income inequality -- growing income inequality is stephanie kelly, from aberdeen standard investments. i guess it is not just important because of martin luther king day but we see the results of the wealth gap in the civil -- and the civil disruptions around the world. you think that is part of the problem and do think it is getting worse because of the pandemic? stephanie: there's no question that the pandemic has worsened it. we know people in lower skilled jobs and people from minorities have been much worse hit by the unemployment elements in the u.s. and elsewhere and we know it will continue to be an issue

even as the economy recovers. you have these kinds of impacts, and the people who do well at the beginning of the end of a recession or recovery, tend to be the wealthier people. that is where sometimes the gap in a way opens up because people feel they have not seen the benefits of the recovery that others have. i think we should bear in mind the assumption is now maybe covid is in the rearview mirror, and i worry the recovery will mean the gaps are widening again, and then again in 2024 we will have uncertainty around this transition. matt: the stereotype traditionally is republicans are not good for healing those kinds of inequalities, and you had the

trade war against china, which worsened things for people in lower income rockets and minorities in the u.s. is this something joe biden will try to stop or turn around, or does he have to politically continue waging this trump trade war? stephanie: there's no question the biden agenda is focused on the areas of america that have not done as well under a globalized world. it is similar to the trump approach but different, because it will be much more focused on spending, jobs creation, to really boost all boats. on china i think the biden approach is likely to be much more toned it down in the sense that we will not get the tweets on monday morning saying tariffs

are going up, but underlying that is this deep skepticism in the united states of china and that relationship. i think that will continue to drive a wedge in the relations. i am interested to see how human rights becomes more so on the agenda because we know democrats are likely to be much more exposed on those issues on a way trump just was not. that might be the harder thing to solve because that is really stuff china does not like to be criticized for it they see their own. that might be a source of a different kind of stress coming through. matt: what are the concrete steps you see a select -- the president-elect dealing with in the days he comes into office? stephanie: just reversing a lot of the reg literary changes that have taken place but in terms of

environmental regulation and some of the chinese kind of nontariff actions. i don't think china will be the focus. i think it will be about focusing on boosting the regulatory environment and then working on the covid support bill. biden says he wants a covid support bill that is bipartisan. i cannot see him getting that 2 trillion, but the question becomes how quickly he starts to work the other side and how quickly he says this is not working and then switches to the reconciliation. it just takes time. he pledges to get this done really quickly. i think we will see a lot of action in the first hundred days. matt: we've seen about 3 trillion spent out of the u.s. and more around the world. it has to be paid back at some point, and many, especially

people are concerned governments will try to bring it in -- in texas. i had a chance to ask tony blair about this. listen to what he said. >> i came to the conclusion at every work, these taxes just do not work in the way you think they might. matt: what do you think is the prevailing wisdom on wealth taxes, especially among western governments? stephanie: i think you have to look at this at the country level. the reality is the politics moves in cycles, and what is popular right now may not be popular in another two years. if you look at the united states, there is a sense that the follow-up fiscal support,

infrastructure, jobs, is likely to be offset by hikes in the corporate tax rate just popular among democratic voters. potentially kind of the high income, you get to that it becomes the redistribute -- to be honest, i think we have seen this support is crucial because it is limiting the long-term damage to the economies which we saw the damage from in the financial crisis. we really see physical support as central to this part of the crisis and starting to build recovery and those questions about what kind of taxes you raise have to be questions for later. that will depend on the government in question and the historical relationship they have with taxes and those kinds of things. matt: thank you so much for joining us today. a lot to talk about. i hope we can get you back on the program as soon as possible.

tune in for our special coverage of the inauguration on wednesday. it starts at 5:00 p.m. in berlin , which is 4:00 p.m. in london and 11:00 a.m. in washington, d.c. new york is in the same time zone as the u.s. capital. coming up, we speak to scott rissmiller about how the private sector is helping with vaccine distribution in north carolina. this is bloomberg. ♪

matt: from berlin, this is "bloomberg markets." let's take a look at that markets on this martin luther king jr. holiday. some markets are closed today, but you can see snp futures slightly in the red. we are not really moving very much, the index indicates that. the dollar is where the action is, a lot of talk about which way it will go. right now the dollar spot index trading at 90.91, and bitcoin is interesting to follow especially amongst the volatility of the last couple of months or i guess you could say years.

global gaps in access to covid-19 vaccines are raising concerns with variant strains of the disease multiplying. in north carolina businesses are getting together to help distribute the vaccine. joining me now is the chief exception executive scott rissmiller. it is great to have you. we get a lot of stories today about how we really need to do this quickly and do it in a uniform way, otherwise these mutations could threaten those who are already vaccinated. how are you going about it at atrium? dr. rissmiller: thank you for having me. we are really fortunate to have tremendous artan or's in the community such as honeywell and that charlotte motor speedway, as well as great support from the state and local governments. this has enabled us to announce

this initiative that we are excited about, this public-private partnership with the stated goal of delivering or administrating one million vaccine doses to the community by independence day. we did not choose that by accident. we believe this will be a model for others to follow to get a step closer to independence from the grip of this vaccine. matt: there are a lot of creative ideas, and i know in the u.k. local pharmacies are distributing the vaccination. i can imagine, although it is south carolina, not north carolina, if you have a big plant bmw does, you could try to vaccinate a lot of people at the plant. what are you doing? dr. rissmiller: it is a combination. we are caring for patients through multiple sites where we

are delivering thousands of vaccines a day. this partnership where we can go to these landmarks and do several thousand a day with the help of the city, we believe that is a key component. the other component we are focused on, is this disparity in care and the underserved communities. we have been leaders in ways to deliver to those communities such as we are having roving units go out into these underserved communities to bring the vaccine to them to overcome some of the barriers around transportation. that is an area we are focused on and frankly a bit concerned. matt: you talk about private and public partnerships. you have the private side

covered with big corporations like honeywell. how about the public part? what is your communication like with the government, with the governor, how is that partnership working? dr. rissmiller: really outstanding. we are in continuous, for the past week, several weeks, with our state and local government, the public health department as well as dr. cohen at the department in the governor, and they have been great partners. we feed them information continuously about how many vaccines we need and how many we have administered. they have been great at supplying the amount that we need. we need that to continue as we ramp up the processes especially as we go to the massive doses that we need, but we are talking about more.

i worry about that supply chain but the state has been great partners with us. matt: what is your outlook right now for the supply chain? dr. rissmiller: so far so good, and i am a positive person. i believe that will continue because we all have the same goal and that is to get as many vaccines into the arms of the community so we can get to that herd immunity and hopefully get back to some semblance of a normal life and back to doing the things we love. great stories are coming out of the vaccine events. last friday we opened up to the public 65 and older. we had a grandmother who received their vaccine and broke down in tears because she realized this was a significant step closer to her being able to hug her grandchildren. that is what we want to get back to. i am optimistic. obviously there are challenges. these partnerships will help,

and the government has the role, and we know our patients best. we are experts at delivering and caring for our communities. matt: i am optimistic as well, talking to you about north carolina. there is a concern about underserved communities outside of north carolina, outside of the u.s., even if we get that herd immunity. if we do not vaccinate africa, for exact -- example, we could see mutations coming back. do you hear of any solutions that you think are applicable? dr. rissmiller: what i am really excited about are the trials ongoing right now with new therapies to us to be able to treat our patients who have the virus in addition to the vaccine. we have to ramp up production of

the vaccine and get them out broadly across the entire world. i am excited about the nine trials we have going on at atrium health with new cutting edge treatments to treat people with coronavirus. i think it will be a double pronged approach, the -- triple, actually, the safety, and then these therapeutic things that are coming out, showing promising results. matt: the precautions, vaccinations, and treatments. thank you so much for joining us. sticking with the vaccine, i spoke earlier with the former u.k. prime minister tony blair about the relationship between the current prime minister and the president-elect joe biden as

well as the possibility of a vaccine passport. >> one of the things the american administration continues to show his they will be working with the european countries in order to show that american leadership is back at the multilateral level. matt: i want to ask you what you would do, and perhaps the british need a little bit of this as well, but we have an extremely divisive society in america especially at a time when we are making this transition to power. president trump is the first living president and over 100 years who has refused to go to the inauguration of his successor. what would you do if you were joe biden, in order to try to bring the country back together? >> the first thing is he is

clearly using language of reconciliation and reaching out. i have known him for a long time and he is someone who has got a good heart and good values for he can see the divisions and he has made it his job as president, to try to bring the country together. the second thing, because this is not an american specific problem, the focus is on the livery. the best way -- is delivery. the best week to show that you -- matt: the best way for the economy is to say look if you have had the vaccine, we will find a way to noting that and then you can go to a restaurant or fly on a plane, but that might not be the best way for society. >> i am sure that you are going to get to some form of health

status passport. it is inevitable. i think you have to realize that the problem is that the policymakers face and that is the result of the events in the last few weeks when these new strains that have arisen. the problem is the first policymakers around the world, they could see three phases to this pandemic paid the first is you locked down and you get the disease under control and the second is that you got the disease under control and you have instructions, but you are waiting for the vaccine. and the third phase is the vaccination, and people think of this as something you can do over a period of time at a moderate speed. what has happened is the second phase has collapsed under the

pressure of recent spikes in infection. you are faced with now mass lockdown or mass vaccination and that puts in norma's pressure on the supply chains around the world -- enormous pressure on the supply chains. i think what you are going to find is a desperate scramble for the vaccine and for governments to realize that until you get a substantial part of the population vaccinated, ending lockdown can be perilous. matt: that was the former u.k. prime minister tony blair this morning on the european market open. let's check in on the first word news. lien. leigh-ann.

leigh-ann: the former head of the commodity futures trading commission gary gensler will head the sec. sec member wrote chopra is being name to run the consumer protection bureau. joe biden's inauguration speech will have several themes. he is expected to outline how he will tackle the health and economic crisis. at the same time biden will call on the u.s. to abandon the divisiveness stuck by president trump. a former hong kong lawmaker is stepping up his criticism of h sec. he said the bank has explained to -- has failed to explain the legal reason for freezing his account after he fled the city for exile.

one official said the bank had no choice but freezing his account. hsbc has been criticized for its security laws for the white house is planning a farewell for president trump on wednesday when he leaves washington for the last time as president. bloomberg news has seen a copy of the invitation. the event takes place at joint base andrews. it is scheduled for four hours before joe biden is sworn in. 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. matt: thank you very much. coming up, the president of the national urban league discusses martin luther king's legacy and that wednesday eggnog ration of joe biden.

-- inauguration of joe biden. this is bloomberg. ♪

matt: cumberland this is , "bloomberg markets."

today is martin luther king day in the u.s. and with the country divided, racial tensions continue to heat up. joining us now is the national urban league president, marc morial. it is a day on which many of us will help we can find solutions to this division. certainly 2020 looked like things were getting worse. how do you see it? marc: 2020 was a year of pandemics, covid, racial justice, the economy, and i think a pandemic of the american soul. martin luther king would be 92 today, and his words and his work are as relevant today as they have ever been. he would urge us to fight against the hate movement and the insurrection and bring

people together around common values and purpose, the values of rather an sisterhood, equity and justice, -- and sisterhood, equity and justice, and he would counsel us to not simply be people who engage in meaningful conversation, but also in meaningful action. i believe the artan luther king quote that works best for now is that we got to be not there monitors but must tatts. we have to set the tone and the temperatures -- thermostats. we have to set the tone and the temperatures to forge ahead in a constructive way. martin luther king, what makes him so special is that he is a man for all ages. as we celebrate his work today,

i hope people will celebrate his words and his actions. matt: what do you hope to hear from president-elect biden when he addresses the country on wednesday? marc: i expect to hear a move to change the tone of discourse coming from the presidency paid we have had four years -- presidency. we have had four years of course language and finger-pointing, endless personal attacks coming from donald trump. people want to turn the page, and i think we will also hear from joe biden a seriousness about confronting covid and the economy and racial justice, the issues affecting the way we live. we have seen a reality show about watching the show for four

years. i think the biden administration will be about working to better life for people, about the american people, not about the presidency and the president's feelings or whims. i think also an understanding of the times we are in and the need for us to act. job biden is experienced -- joe biden is experienced. i think you will see a presidency determined to get off to a fast start with a strong speech and definitive executive actions in the first 100 days that could change the direction of the nation. matt: not only did the covid pandemic in health terms hit

black communities and people of color harder than it did other communities, but in economic terms, we are seeing that it hurt them more as well in terms of the economic shutdown and lower pay. what do you want to see to turn that around on the others when we start to see america recover? marc: i always say the economic pain has been shared by all, all americans of all backgrounds and races. buck the economic pain that americans and brown americans has been more severe, the and employment rate now back in the double digits, small businesses which have closed at twice the rate. the pain is broad but much deeper in black communities and brown communities. we need economic intentionality, to make capital access a high

priority in the new administration for black businesses to ensure that extended an appointment benefits and workforce investment dollars are targeted to communities where the end of limit rates are highest, the urban communities, suburban and rural communities. the most important work is targeted policies heavily focused on the areas for the pain is deepest. we have shared ideas with the incoming economic transition team, and it is my hope they will embrace some of the ideas. this is about creating a tide that will lift all boats and also unstick those stuck at the bottom of the sea.

we have work to do. i think a targeted invested plan and infrastructure plan is what the nature need -- nation needs cam and we will be working closely with the biden administration and congress to ensure that it has the kind of relief that will impact black communities and brown communities that have been disproportionately left behind. matt: you've seen the kind of -- are you seeing the kind of inclusion on market street that you want to see? there's been a lot of talk about boosting diversity numbers. are those words translating into action? marc: it is fair to see -- say there has a renewed energy from a number of financial services, but it is also fair to say that the work ahead is so substantial

because the diversity numbers have been week. -- weak. we will have to judge by results. why -- while i am encouraged by the conversations with jamie dimon and david solomon, brian moynihan, to name a few, big business financial services who are committed, but we will push them on hiring and creating is this opportunities and homeownership, closing the economic divide is the issue. if we can close the economic divide, the benefits for all will be substantial. wall street has to lead and demonstrate that it's words of 2020 will translate into significant actions.

we will be pushing ideas, but also working to hold all accountable. matt: thank you so much. marc morial there, president of the national urban league. ♪

matt: from berlin, i'm matt miller. welcome to "bloomberg markets." checking on what is going on in the financial world. it is martin luther king date. a holiday in the u.s.. s&p futures up.1%. less action in the -- markets.

it is not moving much at all. investors waiting for more cues on the vaccine rollout and joe biden's stimulus plan. a lot of talk about what the fed is going to do with inflation if it comes back, which way we are going to see quantitative easing or the bond buying program go if it hold steady right now, the dollar index at .94. bitcoin always fun to talk about, especially with volatility. i've been talking about bitcoin for eight years now. at 1.i remember you could buy bitcoin -- at 1.i remember you could buy it: -- at one point come i remember you could buy it for $.25. here in europe, speaking

volatility, and others -- another flareup in italy. giuseppe conte faces a vote today and tomorrow. joining us out of brussels, the european capital, is bloomberg's maria tadeo. there are people who are dedicated simply to covering the italian volatility. this is a country that has had more political regimes than any other in the western world since world war ii. maria: there is a lot of volatility. i personally love it. this is a very delicate and serious situation for the italian government and for prime minister giuseppe conte who is speaking before lawmakers today in the lower house. we know he will get a majority on the vote but what matters will be the senate. this is a delicate situation because he is trying to hunt

votes from everywhere. he wants to cling to the majority the speech he is making is we need to remember we are in the midst of a pandemic but we need national unity and hinting that he would be willing to dedicate more if he wins the vote in the senate. a lot of the criticism toward giuseppe conte is that he has amassed a lot of power. he has a recovery fund and emergency powers and also popular and you look at politicians, he is still pulling number one. -- polling. he is not leaving a lot for others to emerge. the big question will be the vote tomorrow in the senate. if you look at the press, they say he will get the votes and he

can still cling onto the votes. looking at the map, it is not as clear. the timeline is further complicated by the fact that the u.s. and italian republic will also be reelected. if there was to be an election it needs to happen and the next few weeks and this is in the midst of a pandemic and the roadmap is moving further logistically for an election in these conditions. matt: maria tadeo talking about the italian government. 61 separate italian prime minister's since 1946. let's get more on italy. at strategist at goldman sachs are warning bondholders that seeing central bank shielding them from a flare up of political turbulence in rome starting to wane. and italian bonds, the tenure up

three and a half basis points. the biggest gainers as investors sell. the global head of fx strategy joins me now. how do you see the situation? because the markets have seemed sanguine since today. what should be -- what should we be concerned about? >> there is definitely an element of uncertainty as far as the political instability. there are other sorts of things going out in the currency market especially in europe. we are in the midst of the pandemic. we are in the midst of global growth recovery. all of these things are really going to blend in. it induces an element of uncertainty and downside risk in europe.

the fundamentals for an aggregate on a euro angle are definitely positive for your. matt: does that mean you seek continued dollar weakening? this is what to ask in question about. vasileios: i want to clarify where i stand in that we do see further dollar weakness, mostly concentrated in the first half of this year. we do not see a collapse in the dollar or something similar over the past seven or eight months for the dollar dropped by approximately 15%. the dollar relative to real yield, less of a value than it

was before. there is already a lot of optimism embedded in the price. so we still have room further to go as follows -- as far as dollar weakness is concerned but it will not follow a cliff -- it will not fall off a cliff. matt: the cable rate at 135.5. there's so much talking about it rising to 145 once a post brexit trade deal is achieved. that never happened and now it looks like it is on a downward trajectory. vasileios: first of all, the downward trajectory is broad-based, modest dollar strength which is largely from technical reasoning. our view has been that 130 or

thereabouts didn't reflect the brexit deal. 130 521 27, 138 -- 135 to 137, 138 with structural headwinds emanating from departure from the european union. i think selling is going to remain supported because of dollar downside that i don't think it's going to make any significant headwind, because there is a lot of structural headwind that the u.k. economy is going to be facing. matt: let me finally ask you, do you see investors seeking safe haven or are they concerned over the longer run about the amount of debt that is piling up in other western economies. vasileios: the amount of debt is

an element although i would suspect that the concern is definitely alleviated by the fact that we are running on low levels of yield. that being said, what we have been seeing in switzerland is an inability to be able to change euro-dollar higher because there is a big divergence and the second thing, which is very interesting, over the past two three quarters, we started seeing portfolio outflows from switzerland to the rest of the world and predominantly in the euro zone. that would suggest the suisse should weaken. it seems like it has not been strong enough to recycle a chart of surplus switzerland is running. modest upside in the suisse. it will be a slow and stubborn

grind higher but very slow. matt: i almost forgot for a moment, bitcoin. i have always thought of it as a currency because i use bitcoin to buy food and beer and video games. do you think of it as more of an asset or commodity? doesn't even enter your universe? vasileios: no. well, obviously we have to monitor what has been happening because we have to inform our clients, but i don't see it as an asset or a currency. it doesn't resonate with me in the view that i have that currencies need to be backed by a credible institution. and this is by no means the case for bitcoin or any other cryptocurrency, at least so far. in the future that may be the case, but not at the moment. matt: i just had to throw it -- i always like to ask the bitcoin

question of fx strategists and they typically say this is not a currency, and that is what we hear from central bankers as well. vasileios gkionakis of bank lumbar odeon -- bank lumbard. let's check in with leigh-ann gerrans. leigh-ann: joe biden saying he is going to be tougher on banks. the former head of the commodities head, gary gansler will head the sec. ,s.e.c. member rohit chopra has been named to head the consumer financial protection bureau. federal authorities are reportedly conducting insider threat training on the national guard troops coming to washington for the inauguration. according to the washington post, they are concerned about extremism among soldiers. a number of pro-trump rioters

who stormed the capitol turned out to have links to the military. now in china, the economy exceeded pre-pandemic growth rate in the fourth quarter. gdp rose 6.5% from a year earlier. for all of china's economy grew 2020, 2.3% for the year. that is at a time when other peers such as the united states and japan did contract the u.s. . and the european union have condemned russia's decision to detain opposition leader alexei navalny. russian police took navalny into police when he arrived in moscow after being treated in germany for poisoning. authorities say he is accused of violating terms of a suspended sentence. navalny is an outspoken critic of russian president vladimir putin. now 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 a copy of the

invitation. the event will take place at andrews where the president will make his departure on air force one. it is scheduled for hours before joe biden is sworn in. 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. matt: next very much. coming up, the party of german chancellor angela merkel selected a new leader for the years to come. whether or not that leader runs in the september elections is an open question. we will look into how he will lead the cdu, next. 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.

matt: from berlin, this is "bloomberg markets."

i'm matt miller. germany's party voted for continuity, opting for the candidate most resembles chancellor angela merkel in terms of policy and political style. >> there are many people who think angela merkel is good first and the cdu second. the repetition among people here and internationally can be summed up in one word --trust. we need this trust as a party but this is not a gift or an inheritance. matt: joining us now is bloomberg's agatha can trial -- agatha cantrell. this seems to be a safe choice for party that has gained credibility through this

pandemic. agatha: it is a safe choice on the basis that they picked a merkel loyalist and because a lot of the support the party has got during the pandemic is being chalked up to merkel's own strategy during the pandemic and a broader appreciation of her in comparison to other world leaders and handling of it. it makes sense to seek out someone who can continue her legacy and seen as a steady hand and stable candidate. he is not going to be the chancellor, however having the basis of him being the parking meter means they are obviously wanting to continue merkel's legacy into the next administration. matt: he did not necessarily have the greatest policy or at least not a steady policy for

his own state through the pandemic, did he? agatha: no, he didn't. he was seen as laissez-faire when it came to the coronavirus initially and that came to light when there was an outbreak in july last year. in other ways, he has really held to merkel's line on a lot of different policies and he is centrist and pro-european and pro-emmanuel macron and for that reason i think he appeals to the center of the cdu. he is going to continue merkel may create issues -- continue merkel's line on --. at the moment, with navalny coming back to russia and the nord stream 2 pipeline still

being supported by the german government, this has been thrown into question by d.c. matt: absolutely with navalny coming back to russia to be arrested, after there was an attempted assassination on the putin opponent. he was then arrested by the russian state when he returned. let's get more on the future of the christian democrats. for that we are joined by bloomberg's andreas/ it is expect -- andreas. they picked the ho-hum equipment not be his pick. >> that is correct.

the german name for the cdu has always been a club of chancellors. it is not ideological consistency but just success at the ballot. that is what is about -- what it is about. the conservative block consists of one and a large one called cdu. they nominate one candidate hope to do well. together they are called the union. but they are pulling very well, in part because of covid and they are clearly ahead of every other party. i think they will be able to prevent a coalition of the three left parties for sure, that will probably lead the next government. who will be there top candidate and with what other parties.

matt: is easier if we just call them the union people get thrown by the sea, the christian. the lions share of germans don't go to church. i think it is less than 10% go to church on a sunday. the interesting thing i've found in your piece, and i encourage people to go to bloomberg.com to check out the opinion site to read that, is that we could see the union join forces with the greens. you have the party of dad, as you can see from all of the dads giving each other elbow bumps and teaming up with the party of like hippies that just got out of their drum circles. how is that possible? andreas: it would've been unthinkable a couple decades ago. the were not just antinuclear

but also the student movement and the freelove movement. the christian union party's, the original base their color was black, the robes of the clergy. their original base was the catholic parties of the republic. nobody could have imagined this. but they have both grown up, or the greens grown -- greens have grown up and cut their hair and have moderated. they have already governed together as state levels, immediacy -- municipally. other people now in control of the conservatives, i can see this going smoothly and easily and i think it would be good for germany if these two parties got together for the first time at a federal level. matt: as we are seeing from the

moves in the dax and bund, it hasn't moved markets. i check you -- encourage you to check out his column. thanks very much, andreas kluth, for joining us. we will check on how the distribution of vaccines is going in the washington, d.c. area. the head of the largest hospital system joins us next. 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. wanna lose weight and be healthier? it's time for aerotrainer. a more effective total body fitness solution. (announcer) aerotrainer's ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time.

it allows for over 20 exercises. do the aerotrainer super crunch, push ups, aero squat. it inflates in 30 seconds. aerotrainer is tested to support over 500 pounds. lose weight, look great, and be healthy. go to aerotrainer.com. that's a-e-r-o trainer.com.

matt: from berlin, this is "bloomberg markets." i'm matt miller on this martin luther king holiday. u.s. markets not trading. s&p futures are little change as our live cash trades in europe, as are the indexes across europe. the broader benchmark stock 600 -- stoxx 600 is only up by .25% -- .06%. the dollar rising, although the consensus is for continued weakness in the greenback. bitcoin rising, only $560 to

36,819. more than 42 million doses of the vaccine have been administered around the globe and in an historic campaign despite unequal access, varying degrees of efficacy. for how it is going in the d.c. area, we welcome the ceo of nov ahealth. i am betting you hope to vaccinate a lot more than that. tell us how the role out is going for you in virginia. >> it has been something of an up-and-down experience. what was originally was that it was having a rapid vaccine developed and expectations were high. road has been bumpy, from the

early days of a lack of communication between federal leadership in state and local entities that were tasked with giving the vaccine. at this point, it is day-to-day. we feel like there is a significant discrepancy in the integration we get with what happens on the ground. matt: what are you doing to help the efficiency of this rollout, improve and to bump the speed a little bit? dr. jones: transparency and communication will be the absolute keys to success. we demonstrated the science is as high as anything on the planet. the transparency and knowing where the doses are right now is our biggest challenge. there were supposedly 40 million plus vaccines that have been

distributed, and we can't tell where they are. as we get the reports, they were half the doses as for originally distributed. we were supposed to see ramping up but we were expecting to see more vaccines come our way. so far it was the opposite. we are seeing fewer vaccines comes our way in the first couple of weeks. communication will have to be improved significantly. matt: where they need improvement? we know there is a new resident moving to the white house. how has communication been on a federal level? how has communication been on a state level? you speak with the governor, for example? dr. jones: i spoke with the governor and i am pleased to say our governor is committed to transparency in the commonwealth. i made it very clear we will let

any appropriate agency, whether the elected officials or anyone from government, walked our freezers and cut the doses. it is important that everyone that has the doses should be willing to demonstrate that transparency. as they sit there, people are dying. this matter a lot. matt: how many days do you think it is going to be until you've got the kind of cover you want in terms of this vaccine? dr. jones: i wish i could tell you that. right now we have such low visibility. for example, we have fewer than three days worth of vaccine on hand right now and vaccinating 3500 to 400 people a day here at inova. we have a shaman that should come today but in two days we will have to -- we have a shipment that should come today, but if it doesn't, in today's we

will have to stop. we were told the second dose was held back across the board and that has not turned out to be the case. if we don't get the shipments we expect, we will have to start stop -- we will have to stop those injections of the second dose of those who have been already injected. matt: the clinical trials were done with the distinct time period between the first and second dose. a lot of countries, including the u.k., are going ahead with the first dose and send the second may be delayed. are you concerned about that approach? dr. jones: as a research scientist i believe you have to follow the data. the studies were designed as they were designed. you can't know what they have worked as well with a dosing schedule. we can guess but guessing and science is not the best approach.

we are trying to make sure everyone has the second dose to had the first dose. matt: let me ask you finally about the effects of the vaccine. of course, everyone is encouraged to take it when he or she can, but there have been some negative reports about especially elderly recipients in scandinavia. that is what we are seeing now, right? how do we know how the very young are going to react to this vaccine, because i am not sure on the trial results we saw for under 18 or under 17-year-old kids. dr. jones: these vaccines have not been studied in children and we need to guess at this point. if we can get large numbers of adults vaccinated, it will protect almost every single one of those, not only from this terrible disease come over 2500

americans dying every day, but we also keep them out of the health system which is currently severely overtaxed across the world. we hope to get hurt immunity. -- herd immunity. but developing that is another opportunity. i am concerned about vaccine hesitancy. the science on this is so strong. we have vaccinated over 40,000 people at inova and the reactions have been tiny. we had one single patient out of all those who required overnight hospitalization. having said that, i walk through the vaccine center and through the area where people are waiting for the 15 minutes after their first or second vaccine, and the bottom line is, it's the

most boring part of my day because the people are sitting comfortably and looked incredibly bored for the most part. we see the occasional reactions, but we see lots and lots of real deaths from the disease. the balance in the math is too straightforward to have acceded hesitancy. matt: i am sure for every one person who is hesitant, there are 10 people clamoring to get dose. dr. jones, thank you for joining us. the inova health ceo talking to us about the vaccine rollout. i spoke with the u.k. prime minister -- former u.k. prime minister, tony blair, about the british relationship between prime minister johnson and president-elect joe biden and about the possibility of a vaccine passport. >> one of the things the american administration has shown is that multilateralism is

back and they will be working with european countries and the u.k. in order to show that american leadership is back at the multilateral level. matt: i want ask you what you would do were you in joe biden's position, and perhaps the british need a little bit of this as well. we have a divided society in america, especially at a time when we are making this transition to power. president donald trump is the first living president and i am sure over 100 years who has refused to go to the inauguration of his successor. what would you do if you were in joe biden's place in order to bring the company back together? >> the first thing he is doing which is using language of reconciliation and reaching out. it is in his nature.

i have known joe biden for a long period of time. he has good values. he can see the divisions in america and his job is to try to bring the country together. this is not an american specific problem, it is all over the world. you put the immediate focus with the pandemic and the best way to overcome some of the divisions in society is show you are delivering to the people. matt: it strikes me that the best way for the economy would be to say, look, if you've had the vaccine, we will find a way of denoting that and you can go to a restaurant or fly on a plane, that might not be the best way for society. mr. blair: i am sure you are going to get to some form of health status passport. it might be inevitable.

you won't have the economy globally going together unless you get that. but the policymakers are facing new strains and new challenges with it being highly transmissible. around the world, they can see three phases to this pandemic. the third phase is you locked down and get the disease under control. when you got the disease under control, you lower restrictions and wait for the vaccine. the third is the vaccination. the vaccination is something you can do over a period of time at moderate speed. what happened is the second phase has collapsed under the pressure of recent spikes in infections. your faced with now as a

policymaker is pretty much mass lockdown or mass vaccination. it is putting enormous pressure on supply chains around the world because those supply chains have not been geared up to accelerate the way the governments now want. what we are going to find or what we are finding is a desperate scramble for vaccines and for governments to realize that into you get a substantial part of the population vaccinated, lockdowns or imperative. matt: that was former u.k. prime minister tony blair speaking with me and my coanchor on the european warning open. now let's get over to leigh-ann gerrans with the first word news. leigh-ann: two regulators backed by progressive democrats have been named the former head of the commodities future trading commission, gary gensler will

head the sec. ftc member rihit chopra is being named to run the consumer protection bureau. joe biden's inauguration speech on wednesday will have several themes. the incoming president is expected to outline how he will tackle the health and economic crisis he does inherit. at the same time, biden will call on the u.s. to abandon the divisiveness stoped -- stoked by president trump. president giuseppe contee is expected to reach a vote. the vote is failing to win an outright majority would weaken him. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

this is bloomberg. matt: coming up, speak to the president of the united auto workers about president-elect biden. ♪

matt: from berlin, this is "bloomberg markets."

i'm matt miller. the carmaker formed from the fiat chrysler automobiles and psa group gained in the first day of trading after completing an effort to form what is now one of the world's largest vehicle manufacturers. want to get the perspective on that as well as the co-relation between labor and civil rights activists as we await a new president and the inauguration of a new president after a year of division. joining us now is the united auto workers president. it is martin luther king day. it was a very divided year, filled with strife because of the inequality in the u.s., the black lives matter movement stood up and was fought back

against. what role does labor play in the civil rights movement today? rory: labor's role in the civil rights movement march hand in hand. the founding principles of both are based on equality and equal opportunity for all. in our labor agreements, we assure that it supports the civil rights movement early on and in the early days. labor partnered with the civil rights movement with martin luther king. we provided resources and bodies for the cause. in detroit, martin luther king was given office space. during that time, it is very well documented that he wrote his "i have a dream" speech in our offices in detroit on jefferson avenue. we are very proud of that. the labor movement and civil

rights movements have advanced each other consistently and brought a lot of economic parity to many working families in this country. matt: i used to cover the auto industry very closely up until 2016, when i moved to germany. detroit was making a comeback. what is the state of the detroit auto workers right now? rory: we are doing good, in spite of the rough pandemic times, we did not take as hard of a hit as many people thought. we are building plants and building a new plant right here in detroit that will employ over 5000 people, many of those being employed will be detroiters with a mix of current uaw members. at the end of the day, all of

those jobs will be unionized jobs with a collective bargaining agreement that will ensure standards of living. so that is something that is significant, something that more people need to realize in this country that working families need to have a voice and a mechanism where they can advance standards of living, wages, benefits, job security. you do that through and organize voiced with a collective bargaining agreement. that is something i am very happy to hear that joe biden understands very well. matt: back in those times when i moved here, globalization was on the rise. in the last four years, you have really seen a breakdown of global trade in a lot of places,

certainly with donald trump's trade war against china. how has that affected the auto industry? rory: it has put us on a teeter totter, so to speak, with a lot of supply in securities and things like that -- supply insecurities and we will find that the american people were the one taxed during those efforts and they did very little to help. we want fairness and a balanced playing field. we want to make sure our products can compete on a very competitive and fair level with the rest of the world. that is all you can ask for. we are confident that our products can do that. matt: we are showing some video here of electric cars being produced. we hear they take far fewer people to build.

are you concerned about the coming wave of ev production? rory: we are we are watching it very close. we -- we are. we are watching it very close. we see a mix, so to speak, of gas, internal combustion vehicles and electric vehicles and autonomous vehicles going forward over a period of time. we see job creation with the ev market, but we are very cautious and optimistic and we are moving very protectively into that. it is coming. it behooves us to make the most of it. i am very happy to hear that president elect no biden is very conscious of that as well, and he wants to see those teacher jobs be american-made, unionized

jobs with great wages so americans can provide for and support their family with the coming new technology. matt: you mentioned sea. i am doing about getting a ram or a power wagon. rory: smart man. matt: but now i see ca -- fca is no stranger to foreign leaders. you have him coming in. what do you think of the new merger and a new boss coming to town? rory: our members are protective. we have protections in our agreements that protects the bargained wages and benefits.

we have gone through mergers. just off the top of my head this might be the third or fourth one related to chrysler. our collective bargaining agreements are protected with language that ensures what we've agreed upon with the earlier company transfers to the new one. i have been in constant questions with fca leadership about the coming merger. there are some things we like and some things we don't like. but i am confident going forward we will be able to sit down and have those very protective discussions that ensure our members and employees of the new company are going to be protected and they are going to have very fruitful

employment that will advance them in this country. matt: we can see and understand your priorities. rory gamble, thank you for your time, the president of the united auto workers union. this is bloomberg. ♪

>> 2:00 p.m. in london. from london, i am guy johnson. welcome to "bloomberg markets." happy martin luther king jr. day. superlight assets because u.s. markets are closed. the stoxx 600 near session highs here in europe. superlight volumes. s&p futures absolutely flat. a big day tomorrow. janet yellen will be giving testimony on the hill. we are waiting to hear exactly what she has to say, the incoming treasury secretary, the incoming treasury secretary come on the dollar. we are up by around 1/10 of 1% on the bloomberg dollar index. as you can see, really tight ranges today. and european politics to throw in, plus the virus -- all of these factors will play a really

big part in this week's trading. we have the yelling hearing, the inauguration, key votes in italy, the italian prime minister giuseppe conte facing two votes of confidence. one today, the more important one tomorrow. instability pushing yields higher. strategists at goldman sachs are warning gold holders saying that current central bank support is shielding them from a political flareup in rome, but it may not be enough. let's bring in laura cooper for more. we need to start pricing in risk? we have not had to do it for a while because the ecb has been there. laura: we are seeing pressure, but even so, the btb spread remains at exceptionally low

levels. it has been trading near the five year low. given the fact that the ecb backdrop is so strong, i expect that will be contained. but i would expect we will see some pressure on that. it is really markets that have really is regarding the political risks starting to brew back to the surface. guy: how vulnerable does that leave the btb bark it -- market? if there holding duration for a long time, they can trade in and out but it is a very liquid market. but some point, they will be hints. it will probably not be this year but next year that the ecb will start withdrawing stimulus. laura: that is a picture for broader markets in general, just how central banks are going to withdraw this exceptional monetary support. markets are predicated on permit easing continuing.

looking particularly at italy, the fact that italian debt to gdp is near the highest across the region, expected to touch 106 or 7% according to the -- touch hundred 67% -- touch 167%, according to the imf, this year. investors will have to shift their focus to long-term challenges in just getting the country back on a path to debt sustaining -- the ecb will eventually have to manage those market expectations. guy: so all those risks are still in the background. at the moment, the market does not believe that mr. conte's government will fall, but were that eventuality were to pass, how do you think the btb would react? laura: you are correct in saying the snap election is not the market base case at this stage.

many lawmakers are positioned to lose their seats should that actually materialize. while it is unclear what the outcome could be from the senate votes tomorrow, that could weaken the governing coalition. at this point, i do not think a snap election is likely. certainly, that would pressure the ecb thursday, if we see these political risks flareup, and their capacity -- it is unlikely they will expand that program again. but certainly we could see them shift gears just in an attempt to assuage any fears. guy: thanks very much for the update. laura cooper, bloomberg news' laura cooper, joining us with

the political turbulence becoming once again a reality. we used to be so used to it. a global macro strategist is joining us now. what do you make of what is happening in rome right now? is it ok to just keep buying btb's, because thursday, we know that christine lagarde will still be there? >> first of all, i do not necessarily want to disagree too strongly with what laura just said because clearly what the ecb does is extremely important and we know what the market would look like if the ecb were not there, but there is another element that has come to the fore, at least over the last one and a half to two years, which is right to the core of this political instability, you have a government really committed to the euro. you have a fiscal program

sponsored by the e.u. who, by a large extent, support italy. these factors together would change the political fate in rome for the medium-term -- in other words, if there is european money moving in, there is less incentive for euros captive parties. this is the big question for the market. if the market does not assume that there will be a fresh election for all the reasons laura pointed out, but if you look at the polls and how they would shape up, there is a strong possibility that the further right guy would come in and take a different stance. so this is the crucial question -- can italy stay there pro-european course, take european money, spend it, and boost the economy? the main reason why the

coalition is currently on the ropes is not necessarily because of a fundamental difference but how to spend money coming in from europe. guy: is the market being overly optimistic on italy's capacity to be able to absorb those funds? in the past, bureaucracy and corruption has gotten in the way, and italy has not been able to generate a big benefit in the way that others have from things like special funds coming out of brussels. if it does not deliver, does not turn out that italy can spend this money effectively, debt levels will be potentially even higher further down the road, and that will only exacerbate the situation. is the market being too optimistic about italy's capacity? peter: first of all, i think you just said it. it is not a question whether italy can spend the money but whether it can spend it

effectively. i am pretty sure that, if you hand over the roughly 200 billion to be spent over the next four years, there are places for this to be spent, even in the here and now, so i am certain that over this period that this money is there and will be spent. in the near term, that is a positive. the question mark is, effectively, can you spend it? one of the perennial problems for italy has been extremely low gdp growth. part of that is lack of investment. so can you find these investments that change the medium-term trajectory of the italian economy? that is a much more broader question. guy: we saw the cdu election,

whether or not angela merkel's successor will become chancellor, we will wait and see, but does his succession to the head of cdu, is that good for europe? peter: currently, i think so, because at the end of the day, he is seen as a continuity candidate. he is relatively moderate, like merkel is. when you look at the polls in germany, obviously the elections are coming up in autumn. one of the strong possibilities in polls is you see a cdu plus green coalition, and if that is the outcome, you want a moderate person there. i think that is a succession candidate. and so far, merkel has been relatively good to germany. if the market sees it as a continuation, it would be good

for germany, and typically what is good for germany would be good for markets as well, at least in europe. guy: let's wrap up by focusing on the ecb. the ecb will meet thursday. we will hear from christine lagarde. a couple of days back, she talked about the current projections being realistic, and i do not think we get new ones until march 11. do you think the ecb is overly optimistic given the virus counts and lockdowns across the continent? peter: i think so. when you thing about this, in the previous projections, the assumption was that there is a gradual reopening. certainly not an intensification of lockdowns measures as is likely happening. when you look at the strain in the u.k., we are fairly certain it is -- it is almost a certainty it is already on the

continent. what he put that into the equation, it is almost a given that almost every country in the e.u. and the euro area will be in a fairly harsh form of lockdown probably until easter, and that is not in the ecb's forecast. does that change the trajectory for the year? that is different -- even if we come from w1, the recovery story we are painting is intact. the economy has worked relatively well last summer, why should it be different this time around? that story has not changed, it is just the base we come from is so much deeper. i think they will have to change them, but what she is probably referring to is the medium-term forecast. if they have to come down significantly, that is questionable. guy: stick around. we still need to talk about what is happening stateside.

we will get yellen tomorrow. peter schaffrik, rbc markets global macro strategist will stay with us. and a german steel giant is considering listing its steel division on the market. this is according to people familiar with the matter. stocks picking up a little bit. still to come, washington, d.c. in high alert. we will get to the tensions in the capital ahead of joe biden's inauguration, speaking with american little action forum 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.

guy: from london, i am guy johnson. this is "bloomberg markets." let's talk about what will be happening stateside tomorrow. bet against the dollar rising ahead of janet yellen's expected endorsement. the u.s. treasury secretary designate testifies to the senate tuesday. there is speculation that officials will not object to a softer currency pair back with us, peter schaffrik of rbc capital markets. what do you expect to hear from janet yellen tomorrow? peter: first of all, probably something about the stimulus package, maybe a little bit more detail. and certainly the question of whether or not the u.s. would continue to support a strong dollar policy or at least stand against an outspoken policy of a weaker dollar. i think that is almost a given, that she will not say outright

-- when you look at the reaction, typically speaking, when the market gets a with that -- gets a whiff that the u.s. market will get a boost, and when you also see longer data yields rising, that they tends to support the dollar, so i am not worried anything she says will lead to a significant dollar collapse. guy: but the market is certainly betting that -- looking at data that suggests hedge funds are pretty short of the dollar. why do you think they already seeing something you are not? what could undermine your idea that the dollar is reasonably stable from here? peter: first of all, you just mentioned it.

it is probably one of the most consensus trades out there, that the dollar will weaken. and we stand against that. again, when you look at the growth trajectory going forward, in analyst forecasts and consensus forecasts, the u.s. still does quite well, particularly against europe, which is obviously one of the big path to the dollar index. when you look at the interest rate differential, it has been widening lately. you look at the expectations for future inflation stateside, and that is typically also an endorsement by the market that adopted policies of re-inflating the economy to some degree is working. as long as these narratives are around, whether or not that will bear out is different, but as long as that narrative is around that the u.s. will do well, it

will reduce unemployment, it will get wages up and inflation back to target much quicker than other parts of the world can do this, as long as that is the case, it is difficult to see april -- a significantly weaker dollar. guy: you mentioned yellen will talk about what will happen with the biden relief package. how much do you think comes out? peter: it is difficult to say. obviously not all of that is pure stimulus. there are other projects in there as well. we will have to see if, in the negotiations, some of that will have to come out. when you look at this, it is the first significant initiative that the democrats want to push through. they have the majority, even a very slim one now, in both chambers, so wiggling that significantly, we find it difficult to see that at this stage. it probably will come down, but

probably not too much. guy: final question -- the rollout of the vaccine program both here in europe and in the united states is turning out to be much slower than the market has anticipated. there are exceptions. the uk's pushing ahead, israel has been highly effective, but elsewhere, large-scale programs are struggling. how do you think that will manifest itself in the data? you have already addressed that you think europe will be in lockdown until easter. do you think ultimately we may see the same thing in the u.s.? peter: the united states is different come also because the weather pattern is much more differentiated across the various states, but you have seen that those estates fairly heavily impacted have put in place tighter restrictions, so i would not go as broadbrush as the case in europe, but overall, the story is very similar.

it is likely in my mind that the new u.k. strain and some of the other strains are already out there, and it is probably going to spread fairly quickly. then, when you look at this, you have a situation where, on the one hand, you have new strains that are probably more transmissible. we know that, in some places, such as the u.k. and the u.s., some of the alternative measures have not been very effective, and therefore, the numbers have been quite high. when you look at that, what else can you do, really? production capacity for the vaccine has to catch up. i think the u.s. will probably face a similar problem. guy: great to get your take today. thank you for joining us. peter schaffrik of rbc capital markets. still ahead, former u.k. prime minister tony blair sees a return to multi-nationalism.

this is bloomberg.

guy: matt miller caught up with former u.k. prime minister tony blair a little earlier to talk about vaccine passports. tony: one of the things the american administration will be keen to show his multilateralism is back in fashion and they will work with european countries in order to show that american leadership is back at that multilateral level. matt: i want to ask what you would do, were you in joe biden's position. perhaps the british need a little bit of this as well. we have an extremely divided society in america, especially at a time when we are making this transition of power. president donald trump is the first living president who, i am

sure come in over 100 years who has refused to go to the inauguration of his successor. what would you do if you were in joe biden's place in order to bring the country back together? tony: two things. first thing he is currently doing is using language of reconciliation and reaching out. it is in his nature. i've have known joe biden for a long period of time. he is generally someone with good heart, good values. he has made it his job, as president to try and bring the country together. the second thing, because this is not an american specific problem, is to focus on delivery. you put immediate focus on the pandemic. the best way to overcome some divisions in society is to show your delivering to the people. matt: it strikes me that the best way for the economy would be to say if you have had the

vaccine, we will find a way of denoting that, and you can go to a restaurant or fly on a plane, but that may not be the best way for society. tony: i am sure you will get to some form of of health status passports. it will be inevitable. we have to realize what the problem is that policymakers are facing. it has really come about in the event of the last few weeks were these new strains have arisen that opposing new challenges and are highly transmissible. the problem is, around the world , there are three phases to this pandemic appear the first phases you lockdown and get the disease under the control. the second phase is you have the disease under control, have

restrictions, and you are waiting for the vaccine. and the third phase is vaccination. people thought of vaccination as something you can do over a period of time at a moderate speed. what happened is the second phase collapsed under the pressure of recent spikes in infections. really what you are faced with now, if you are a policymaker, is mass lockdown or mass vaccination. this is putting enormous pressure on supply chains, because those supply chains have not been geared up to accelerate in the way governments now want. i think what you will find, are finding, is a desperate scramble for vaccine and for governments to realize that, until you get a substantial part of the population vaccinated -- ♪

guy: from london, i'm guy

johnson. this is bloomberg markets. let's talk politics now. joe biden will become president of the united states on wednesday at noon. thousands of national guard troops have been deployed to washington, d.c. as we have all seen ahead of that inauguration. the city now on high alert with authorities receiving multiple reports of violent threats at the level of the incident that happened on the u.s. this month. joining us now with the latest bloomberg news, politics reporter kathleen hunter. what are we expecting wednesday? just set the scene for us in terms of how the authorities are going to manage the inauguration. >> i'm reminded of four years ago when trump straight out of the gate, one of the first issues he had with reporting of his presidency was his claim that his crowd size far surpassed president obama's that turned out to not the case.

it's going to be quite different this time around for joe biden's inaugural. there will be flags set up on the national mall. usually the national mall is covered with members of the general public who get tickets. in some cases stretching all the way from the capital down to the mall. all of that area is going to be closed off and we are going to have a number of american flag set out instead. it's going to be quite a different scene. a much more tamped down ceremony. president trump himself will not be in attendance. it's going to be a different situation from what we have seen in the past. guy: kind of detail are we expecting from the speech that he will deliver? >> we do have some preview of what biden is expected to say. it sounds like he's going to be talking about many of the themes we heard him hammer on during

his campaign and again on january 6 following that really unprecedented mob attack on the u.s. capitol. the president-elect is going to be talking about the need to unify the country, the need to move past and heal the divisions of the trump era. those divisions have been very much on display and will be serving symbolically as a backdrop to his swearing-in. it's going to be a market shift in tone -- marked shift in tone. guy: we understand that coinbase andrews that morning, there will be a ceremony to mark the departure of donald trump as president. how concerned are people about that? what is he expected to say? do you think he will be mindful of what is happening across town that day? do you think he will be mindful

of the risks that he is running if he will say anything inflammatory? >> i think if history is not -- is any guide, there is no reason to think donald trump would temper his rhetoric at this stage. i think most of why we haven't heard from him i would imagine is he's been banned for more than a week from twitter and facebook. that has taken away one of his big microphones. that is something people are watching very closely because what the president says as he gets on the plane to depart washington for the final time might have a bearing on how his supporters, even his most extreme supporters conduct himself during the days of and after the inauguration. it'll be very telling to see what he does or doesn't say. there is not necessarily a reason to expect he will speak

out in ways we haven't heard him speak out for. guy: given the concerns that were voiced only a few weeks back about the biden team's ability to transition into power effectively, if this team is going to be hitting the ground running. >> there's a lot of concern about that. biden's transition team is trying to do everything they can to ensure that happens. they started out for a number of reasons behind where we saw president obama and also president trump start out on their first day in office because president trump and his republican supporters in congress disputed for so long the results of the election. secretaries and other top-level nominees haven't gone through to the same it normally does. president trump and president obama by contrast had many of

their top nominees confirmed that day that they were inaugurated on january 20. that is likely not to be the case for biden. the country is still obviously dealing with the results of the coronavirus pandemic. there are now new security concerns across the country and in washington. i think the degree to which the incoming president is able to turn the page and move past them is going to be something everyone in washington and across the country is going to be watching very closely in the coming days. guy: thank you very much indeed. bloomberg's kathleen hunter updating us ahead of the inauguration later this week. joining us now with more insights, doug holtz-eakin. former director of the congressional budget office. thanks for your time today. let's focus on the financials. we know the new administration is asking for 1.9 trillion

dollars in terms of a new relief package. some of that obviously has gone out of the door. nevertheless we are going to hear from janet yellen tomorrow. we are going to see this process unfold over the next few days. in terms of what the new administration wants and is going to get, how big a gap are we going to see? >> i think there will be a considerable cap. the -- gap. they are going to have to get at least nine republicans. this is an opening bid to a legislative process. i expect treasury secretary yellen to make a strong case for. there are some things that i just don't think have a chance to get through. they're not going to raise the minimum wage to $15 in the middle of a recession and damage small businesses. they are going to have to think hard about the scale of this

proposal. gdp in the fourth corner of -- quarter of 2020, why do you need a $1.1 trillion solution to the size of a problem. they are going to have a real problem getting something like this through. guy: why do you think they are not using the reconciliation program and what does that tell us about what could be coming down the pipe from the biden administration in a couple's? -- in a couple of months? >> there is an agreement that we have an enormous problem the corona virus. there is disagreement on the scale of those things. when he moves forward to his health agenda, those kinds of items, he's going to need to really rely on just credit votes most likely.

guy: taxation? >> taxation can be done, reconciliation. they're going to propose some dramatic things on health and infrastructure and they will use some of the tax proposals for the campaign. notably higher rates on affluent individuals and appropriations to offset some of that cost. guy: you talked about there being a recognition on both sides of the file on the fact that the american economy needs some help. the vaccine rollout looks like it's happening more slowly than anticipated. does that increase the view on both sides of the aisle on the scale of what is needed? >> we just past $900 billion out of the congress. that's 8% annual rate. that's an enormous amount of support.

i expect both sides will be looking at the vaccine rollout. if it looks anything like 100 million vaccinations, then it's really hard to make the case for extending ui for another six months. it's really hard to make the case for raising the benefit that goes with that unemployment insurance. one would expect if the vaccine works well, you will have the economy functioning much better by july, august, september. if it doesn't, that changes the math. guy: we need to track the data, watch the vaccines, see how they are being rolled out and how effectively that program is going. thinking about where the u.s. economy is going next, it is going to need a great deal of work from congress to get it back to where it was. what do you think the model is now?

how do you think bipartisanship is going to work in a senate that is basically 50-50? what's the model? is there anything you would say works well and this administration can use? >> the economy is not as bad as many people depict it. job loss in december came with 500 jobs lost in hospitality. outside of that, we continue job growth. no one expects fourth-quarter gdp to come in with negative numbers. with the support that was just put in place, fourth quarter is going to be reasonably strong. that means you don't need these enormous packages to keep the economy growing and the model is to have things that you can get through congress. the best way to do that is for the administration to write legislation. to tell the american people that's what they want, send it

to congress and at that point congress can begin to modify it as needed to get it through the house and senate knowing that the white house ultimately will keep doing things that minority needs to have them cooperate, protect the flank of their party when they have to make unpleasant votes and in the end, the effort starts in the white house. it's the only place that can broker compromise and provide political air cover for both sides to do difficult things. how the biden administration approaches this is very important. guy: how are the republicans position 20 comes to the energy transformation? this is going to be a key and central plank of the upcoming administrations program. i'm wondering where there is movement in terms of bipartisan

agenda that can deliver some of it and how effective that is going to be. >> the house republicans have as a common part of their election plank that climate change is a real problem with substantial impact on the globe. the step they hadn't taken was to write down large-scale solutions. the gap that needs to get closed is between recognition and measurement of the problem and addressing it on large-scale. i think if the biden administration comes forward with some fairly efficient policies that have minimal economic disruption as they get ramped up, they will get cooperation. if they come in with something that looks to be a bridge too far in terms of negative impact on the economy, they will start to have some trouble. they have finally gotten to upon where we have both parties on the same problem page, now we

have to get on this same solution page. guy: on of the things resident biden would do is finally killed off the keystone pipeline. thank you for your time, doug holtz-eakin. coming up, 20 more in this program. we talk what is happening with the janet yellen hearing. we are also going to discuss the impact of the china, the outgoing trump administration's action on china. that's coming up with george magnus of oxford university. this is bloomberg. ♪

guy: from london, i'm guy johnson. this is bloomberg markets. the chinese economy roaring back to pre-pandemic growth rates in the fourth quarter as the country's industrial engines firing up once again. searching demands for exports the driver. when it comes to the consumer, less good. joining us to discuss all of this is george magnus, oxford university china center. research fellow. nice to talk to you. let's talk about what is happening here. it would be nice to me in person, but we can't do that yet. china is coming back. the data are really strong. how does this change the priorities of the administration in beijing? >> the main event from an economic policy point of view in 2021 is the release over details

of the five-year plan which will happen in march around the time of the national people's congress. i think as a lot of people already know, xi jinping has already announced that the motif in china's economy in terms of policy is going to be what he calls jewel circulation strategy. this is really an emphasis on domestic economic circulation, supply chains, production, consumption as well as international. the gdp data weren't remarkable in a number of different ways. one of them was because domestic circulation really fell off the back of the lori and actually most of the growth in china last year really was through the trade allen's and through investment by local governments into infrastructure which they are trying to weave themselves away from. the big event for 2021 will be

whether the government is capable and able to reverse that shift. to make domestic consumption, domestic production count in a way that it didn't daring the pandemic. -- during the pandemic. guy: so how do they do that? retail sales growing down from 5% in november. for the whole of 2020, down by 3.9%. it's a tale of two cities completely when it comes to these two sides. how do you shift stimulus from the industrial sector to that local more domestic sector? how does that actually happen and can it happen quickly enough for a reasonably rapid turnaround for the retail sales number for the domestic economy? >> i think that's going to be a key question. in one sense i don't think the

government has to do very much to basically see a partial reversal of that slump in retail sales during the first months of 2021. i think we are going to see a little of that anyway because even though the 2020 annual data for consumption were very poor, talk about consumption share of gdp back to where was about 10 years ago. they need to really come back from that. some of that will happen in the early part of this year for mathematical reasons. but how do you make it happen is the question. that's what we really want to see the government tell us if they do, which is really about how they're going to strengthen income. chinese consumers are really on the rack. only partly because of the pandemic and because of what was the fear of congregating and mingling in public. but mainly because income growth

has been so low and income inequality has grown even further in 2020 as it has elsewhere. because of the pandemic. the short answer is we need to see more action on privatization of resources, giving the private sector more emphasis because as we know, most of it is on the state sector at the moment. income growth and getting social security payments so chinese workers don't have to save so much. guy: china's share of the world economy is accelerating at its fastest level ever. china's growth could surpass the u.s. has the largest economy by 2028. that's not very far away. today we have seen the trump administration on its way out basically tightening the supply chain nucera round huawei.

-- around -- noose around huawei. >> certainly the appointments that biden has made recommended to key positions for asia and china are very encouraging these are experienced people. they know the region very well. i think this is sort of a two-pronged thing really. one is america can meet the china challenge must more effectively -- much more effectively if it turns inward paying attention to science and innovation and engineering and doing a lot of the things at home which it needs to make the economy and make its potential and contribution in terms of science and innovation that much more robust. the other thing of course is really how it manages its

relations with china. i don't expect the biden administration to do very much with tariffs early on. i certainly don't expect the tariff preoccupation which the trump administration has and stupidly had really because they can't really affect the trade balances by tariffs. it's just a cost that both chinese and american consumers will bear. the restraint over access to technology and inputs and core resources that china needs to basically forfeit its own technological ambition, i think that will remain and my guess is that the biden administration can play pretty tough on that. guy: always a pleasure, george magnus. this is bloomberg.

♪

guy: from london, i'm guy johnson. let's get you up to speed with what you need to know. a look at some of the biggest business stories in the news right now. let's start off on the supermarket sector after canada abandon talks for a $20 billion takeover of the french grocer. the finance minister publicly opposing the deal. government may have been concerned about the potential impact on employees and its supply chain. the boss of the messaging service parler has gone into hiding, saying he has received death threats. it has gone silent after apple and google dropped it from there app stores and amazon pulled its web hosting privileges. bloomberg has learned that

citrix systems is in talks to buy managing platform company reich. adil we understand could be reached this week. that is your bloomberg business flash. quick look at what we've got coming up for you. european close is going to follow in a couple of hours time. today, reasonably quiet. the action really kicks off later in the week. janet yellen testified tomorrow and we've got the new administration being sworn in. s&p futures flat. more details to follow. this is bloomberg.

♪

guy: from london, i'm guy johnson. u.s. markets are closed today for martin luther king day. colleagues in the united states are enjoying a well-deserved day off. let me check the price action for you. the stoxx 600 in europe is a by .1%. it's being delivered on very light volume. s&p futures a little flatter than what we are seeing here in europe. it's going to kick off tomorrow because we will get janet yellen's testimony. we are going to get a little bit about what that approach is going to be. crude a little softer. but as you can judge by what you

are seeing on the board in front of you, nothing is going anywhere like today. we are going to be talking as well as a great deal about what is happening with the early season. we have seen some of the u.s. banks already reporting, but investors are very much seeking a little bit of reassurance about the optimism that is already being priced into this very strong equity rally. does that set the stage for a little bit of disappointment if companies fail to justify these earnings valleys. here to give us his take, it is a perfect day to talk about the upcoming earnings season to get a sense of where we are going. equity markets have been running aggressively over the last few weeks into the beginning of the biden administration and that certainly is affected by what we are seeing. we now need to see earnings justifying some of these

valuations. is that going to happen? >> you will get a pretty decent set of numbers coming out of this. even if we get the type of 19, 20% numbers that are being forecast by the analyst expectations, is that actually going to be enough to fill the gap between some of these very elevated earnings multiples based on those earnings forecast? i think that's where we have the doubt that is here because when you look at the gap that has opened up over the last 3, 4, five years between prices and compound earnings growth, there is almost as big a gap as there was in 2000 and it's this kind of thing that makes us say we really are looking at a bubble here and we know that bubbles whilst they can prolong for longer than people expect also tend to come down with a bit of

a bash when they do. at the same time, we have seen that you are also going to get potentially a leadership change if you do. some of these cyclical areas might be places that are more interesting now. guy: nevertheless, some of the value stocks probably have the highest headwind when it comes to the earnings story. they have suffered the most when it comes to this downturn. do you think the -- is to hide to be delivered upon? >> some of the sectors that have moved ahead, then yes, we are saying to people watch out going into this. the expectation is too high. you might want to take a little bit of profit. as we come out on the others, potentially you've got a much more interesting trade. what i would also say is just thinking about the banks again

and contrasting those with something like technology, in the last months, the u.s. banks have outperformed u.s. tech by something like 12% and over the last three months they have outperformed already by something like 30%. this is very much an environment where people are starting to say the kind of administration support you're going to get from the fight and package plus the fact that you have already got the scope of the vaccine to boost growth in the second half of the year, earnings are going to be much more plentiful in 2021 going into 2022. in that kind of environment, you don't want to own growth stocks as much as you want to own some of these value. it's going to be a tricky phase to negotiate. probably setting into some of the earnings results for some of the value stocks but then if we do get a correction downwards, to start buying back again and making that more strategic acquisition.

guy: let's talk about the relationship between growth and yields. u.s. ten-year circa 1.1 right now. how much higher do you think that will go or do you think this recent reflation run may be starting to peter out and if it is, doesn't that bode for the idea that people are going to rotate into tech? >> i think it rotates you back towards the more defensive place rather than just technology. there is the risk of a double-dip both for the united states and for some european economies that are being hit hard by covid in the short run. but that is a short run move and i think that's what we would want to emphasize. you can perhaps see 10 year treasuries drop back 1%. we'd be targeting still

something like one and a half percent and that kind of environment makes it very tough for growth stocks, for tech, for some of the bond sensitive plays to carry on performing as they have done over the last few years. our sense that this is probably the start of a bigger shift and that that's the thing that makes us feel more confident about rotating longer-term towards the more value-oriented parts market. -- parts of the market. guy: one of the facts that has driven the equity market has been coal buying. we are about to see potentially more checks going out of the door. once those calls are bought, they have to be hedged. do you think in the near term that this could be just more rocket fuel that drives broader indices higher?

>> you are absolutely right. that liquidity role factor has been a dominant factor a couple of times in the last 12 months. i don't think we should underplay it. we will see period is where you do get further gains in these markets i think what this highlights is that it's going to be a very volatile year. i think the straightforward narrative that is there about it being just everybody wanting to be bullish, 80% of respondents to our asr asset allocation survey in december or bullish. a lot of that is already in the price to our mind. there will be some liquidity driven purchases, but we have already seen the margin debt on some of these retail accounts go up by 50%. $240 billion in the last year and that is a phenomenal amount

of money. it's already provided a big boost. our sense is that that in the past has been very much a sign of peak market performance. so it could go higher, but the oxygen is getting very then out here. guy: absolutely. we still need to talk about what is happening with the vaccine rollout and the virus lockdowns we are seeing in europe. coming up, the u.k. make begin to relax restrictions as early as the first half of march. we will talk about the virus next. 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.

guy: welcome back. global virus cases continuing to search. the european union pushing on to try and vaccinate 70% of its population by the summer. it could be going slower than anticipated because of the delays. countries trying to contain the latest spike with more stringent restrictions. let's bring in sam for sally. bring it all in for me at the moment. europe is already struggling to deliver the rollout of the vaccines that everybody hoped it would. what do we know about the pfizer delays and have significant an impact do we think it's going to have in terms of the rollout? >> we saw that the u.s. was very slow to begin with and they basically started a good two or three weeks ahead of the european union. those numbers are now looking a lot better. i suspect the same will happen in the eu.

different countries will be at different paces because of their populations response to vaccinations and from what i'm hearing, the one or two week delay in two deliveries and then i catch up, i don't see that mattering in the longer-term of six months or so. guy: a scare out of the weekend suggested that elderly patients, particularly those very close to the end-of-life were dying in higher numbers than anticipated. this caused something of a scare judging by the newspapers i was reading over the weekend. what do you know about this and does it stack up? >> it's a really good question. obviously and -- any issue especially death has to be deeply studied because you don't

really want to be doing that if you look at the data that the cdc in the u.s. provides weekly data updates on all kinds of, thousands of side effects or hundreds of side effects and you look at the data up to the 15th of january. they had 44 deaths associated with, not due to, because that has to be studied, with people who were vaccinated with the pfizer biontech or moderna vaccine. about 1.3 million people in nursing homes have been vaccinated this is not something to do with old age. it is something to do with what specifically norway has been doing. what type of individuals they have been vaccinating which perhaps should not have them. guy: it is certainly causing a little bit of consternation it's interesting the norwegian

authorities seem to be starting to downplay it. thank you very much indeed. still with us to discuss the impacts of the slow rollout within the eu, ian hornet. if europe is heading for a double-dip and it looks like the data appointing us in that direction, to what extent does this undermine the case to rotate towards european stocks, particularly european value stocks? >> it just depends whether you think that's going to happen independently in the euro zone relative to the u.s. as well. our sense is there would use similar kind of pressures in the u.s., so we think it's more generalized slowdown. the other thing is the willingness of people to look through this. at one level, there's almost a very clear response from investors which says if we get a

slow down, all that's going to happen is we are going to get more of a policy response so let's not bother about that i think it's going to be a very tricky balance as to how big a hit to economic growth that will be and how long that will last. i think as long as it is viewed as just being a one quarter process, we might see some of the pressure coming off the bond yields short-term as people think there might be some more monetary stimulus rather than fiscal stimulus. straight qa or something like that. bond yields coming off, those are overboard as well at the current time so on yields having risen very rapidly. our sense is that that would just come back a bit and then we would move back on. but if it looks as though this is going to turn out to be a problem that lasts much longer into q3, then clearly that

starts to damage people's expectations. at only about economic growth but about those earnings numbers and that impacts both bonds and equities and that would dampen the expectations around the value trade about europe and the rest of the world outperforming some of the u.s. and that has been a key trade for the last three months. u.s. has underperformed the rest of the world and that has been the key thing we have been trying to point out to clients. guy: one of the things the market has really put on the back burner has been the risk of european politics blaring up again in providing problems. we are starting to see it happen in italy. we have seen the governments in the netherlands fall. we are going to get into a suspect some quite significant

political turbulence in germany. populations are really concerned at the moment that the european union is not delivering in the vaccine rollout program the way it was promised. governments are not delivering. we have been through elective political stability. is there a danger that as we start to exit from covid, does that political volatility start to come back onto the agenda, how problematic do you think that would be for this european question? >> we have a always seen that political uncertainty tends to raise equity risk premium. the narrative around more europe rather than less europe has played out to a reasonably healthy extent that we have seen things like those spreads come down aggressively.

there is a risk that some of those underlying stresses will start to reemerge. i think our concern is the degree to which policymakers respond to these, recognize some of the pressures. the biden administration is clearly working towards trying to resolve some of the distributional pressures that have arisen over the last decade and european governments will need to take heed of that message as well. i don't think -- it's not something that is unique it's there in the year us as well -- u.s. as well. as a macro strategist, i would rather focus on things like relevant economic growth, what's the currency doing and are those the bigger driver than the political notice that occupies

-- narrative that occupies a lot of media space but isn't quite as dominant in terms of the longer run economic outlook. guy: do you think the ecb is still being too optimistic in terms of its outlook. >> i think it is something that she will need to address. whether they change their views significantly, we have tended to see those occur after the event rather than ahead of the event, so i don't think they will be very proactive in this situation. we do have that commitment that they will stand by, the support for economic activity. particularly if they see the treasuries stepping in to make sure that there is fiscal

support there as well. i don't think anybody wants to see that deep recession emerge at this point and i think the objective as we have seen in the united states is much more about stabilizing inflation, getting unemployment at on a downward trajectory and stabilizing economic growth. i think we should take the ecb at its word that it's looking to persist in that kind of program. there is plenty of scope for inflation to re-accelerate. i think they will stay very much on the easier side of things and be prepared to act when necessary. guy: always a pleasure. thank you very much. up next, we are going to talk about restaurant closures having a very different year for michelin star ratings. should we be having michelin stars this year given the

guy: mitchell and recently -- michelin recently released its 2021 guide to french dining. the awards coming as restaurants across france remain closed. the nation under stricter restrictions with a 6:00 p.m. curfew. joining us now is the michelin guides international director. you have acknowledged that this has been a pretty challenging year. how easy is it to assess restaurants considering most of them are closed? >> it has been a challenging year but it was of ultimate importance to release the selection today.

-- of course be able to release -- without the selection criteria and methodology. we have to adapt to the situations. inspectors were be able to be back in the field as soon as the restaurant reopened and also we managed to involve more international inspectors from one international team to join the french inspection team to be able at the end of the day to realize as many meals this year as we did the previous year. guy: when do you think i'm going to be able to use this guide again? what is your thought on when restaurants are going to open not only in france but around the world and have changed you think they are going to be as a result of the crisis? >> unfortunately that's a

question i do not have the answer yet. one set of the stored restaurants are open. so it's not the end of the crisis. it's also why we decided to keep the link today between the food lovers and the restaurants. keeping talking about the restaurants just to create envy to go back to the restaurants as soon they will be allowed to. guy: in terms of how different the sector is going to be, i can imagine you haven't taken stars away. those that are able to survive, how do you think they will be changed as a result of this crisis? do you think anything would have changed? >> of course, it is too early to know how far the industry will be impacted. however, i can say we did not

come for dies on our methodologies and all the stars that have been awarded today in france as far as retaining the star -- the crisis already has a deep impact on the way the chefs think about the restaurants. throughout the year they have managed to be quite agile to adapt to situations. also thinking about the way to use the food, to source local products, to work with local producers to protect their local community. guy: we are going to have to leave it there. ♪

guy: welcome back. live from london, i'm guy

johnson. investors doubling down on a weaker dollar. janet yellen's testimony for senate -- before senate tomorrow. expected to endorse a market-driven exchange rate, singling they may not object to weakening dollar. joining us is our chief economist. what are you expecting from yellen tomorrow? mike: you have heated up appropriately. you will see a bit more of a benign neglect from the biden and ministration then you have seen from other previous democratic administrations with regard currency. the reason is related to the global inflationary environment and global excess supply environment in the federal reserve's shift towards targeting average inflation,

which allows inflation to run hot to make up for shortfalls i think the yellen fed will be very -- the yellen treasury is going to be very comfortable with that approach because it was stakes made by the yellen fed that artist into the situation we are in today where the fed has to be more proactive in supporting fiscal policies than they would've been had mistakes not been made prior. guy: where do you think u.s. economy is going this year? we are seeing a lot of the stimulus pouring out of washington and we will see how the biden plan divides washington. people upping their expectations for the u.s. economy. strong growth numbers, 5%, 6%,

7%. steven: i think they are getting ahead of themselves. people are looking for transfer payment and assuming all transfer payment will be spent. the reality of the situation is you go back and you look at the history of refund checks and look at the history of transfer payments, even the federal reserve's own study suggests that only about one third of that actually get spent. so if you dial back where these very bullish forecasts are coming from by assuming 100%, you take 66.6% off of it, you get back to more reality that is what we think we will experience. we think we will experience a healthy economy could would be close to 4%? yes. are we going to be in the 5% numbers are the 6% numbers, it's

unlikely given the reality that people will probably use some of this transfer payment to either pay down debt or boost their savings to spend when and if they need it in the future. and that is very critical for the u.s. economy. the savings rate has been low and households have been paying down debt throughout the entire past 10 years and through the crisis. i see that trend continuing. the household has to continue to reduce debt service burdens. they are back to 1980's levels while the corporate is in the 1970's levels. these are drops in debt burdens and driven by the fact of uncertainty. when you are uncertain about what is going to happen in the future and competitive pressures and things like the virus and the vaccine and what will happen and what won't happen, people

tend to use extra money they are given as savings and a cushion against array today and that is -- against a rainy day and that is what is happening here. guy: how big a drag on the debt levels we currently have will be in the medium-term? you addressed what is happening with the consumer but you talked about corporate debt, which is superhigh. i am wondering how big a factor that is in terms of not this year's growth but 22 -- 2022 and beyond. steven: when you think about it, the level of debt that's being experienced globally, and this is a global phenomenon, it is not just the united states. you look at every country around the world, whether you are looking at europe or the u.k. or china or the united states, everyone is running at the level

of debt that japan was running at the point in time when it did its wall and deflation. japan has not enabled to get above trend economic growth since then, 30 years ago. i believe no other country is going to get above trend on a sustainable basis either, whether it be europe or the united states. this is what we were experiencing prior to the covid related recession. we had an economy which was growing just high enough above trend in order to pull down the unemployment rate, but not high enough to use of the excess capacity created in the economy and keep deflationary pressures at bay. this is a very important problem and suggests that as we didn't to 2022 and 2023 area, this economy will drop down toward trend. if you believe the trend in the united states, and somewhere between the one and three quarters into into quarters is

probably where the economy is going to head to on average over the next three to five years of expansion. guy: break even is at 2%. does that seem right given the numbers you have given me? there is expectation among some that we will see inflation start to push higher. we are starting to see it with materials and pushing up strongly. do you think that inflation we are seeing in the material space translate into court inflation in the united states giving the gross -- given the gross figures you're outlining? steven: over time it should. the question is will it be given the time it needs? there is a counter process that the fed would be more quick to react, that the fed would be looking to taper its quantitative easing. all those factors are negative to the idea we will get to a

sustainable 2% with hitting 2.5% inflation to make up for the shortfall in inflation. therefore the market vigilante is him is still there -- vigilantism is still there. they only give up after the december minutes were released a few weeks ago and quickly jumped on to the taper bandwagon. there is this concept that the fed hasn't changed its operating procedure and i think that goes counter to the getting us to the substantial inflation rate and that is a critical problem for the fed. the fed has to find some way that markets understand they are going to let inflation run hot. the reality is, the breakeven should be higher than 2%, not to percent, because the fed has to convince people they are going to let inflation run hundred and 2% in order to make up for eight

-- run hot at 2% in order to make up for the 10 years. guy: we will talk about the inauguration. we will see joe biden take the oath of office, wednesday. the inauguration ceremony will be dramatically reshaped i the virus. there have been reports that the inauguration practice or money has been evacuated. we will have more on that. this is bloomberg. ♪

guy: this is "bloomberg markets." you are looking at the principal room. coming up, a chief fx strategist. this is bloomberg. from the -- the united states

preparing for the inauguration. racing for looming threats of violence. we have this report from d.c. >> it looks like a city preparing for war to fortify the city at of brightens -- fortify the city ahead of buying's inauguration. officials racing for the worst case scenario. huge swaths of the city blocked off and 25,000 national guardsmen authorized to deployed -- to be deployed to d.c. behind me they are manning a checkpoint. the city is on edge. for d.c. residents, journalists, shop owners and journalists, this isn't just the nations capital but where they live and work. >> is becoming harder and harder

to navigate the road closures. parking garages downtown are closed. what you are looking at here is the perimeter being set up around capitol hill. all of a sudden there are fences and concrete barriers everywhere and armed national guardsmen patrolling the streets. there are sirens wailing at all hours of the day. the neighborhood has become a war zone. the inauguration was designated a national security event. preparations underway a week earlier than planned. the national mall is where crowds usually gather but this year it will be shut to the public. the d.c. mayor has asked that people tune in to the duration from the comfort -- people tune into the inauguration from the comfort of their homes.

many downtown stores putting up plywood and covering windows. the streets are completely empty. this is a city that has been shaken by coronavirus lockdowns. guy: we were mentioning a moment ago a rehearsal evacuated. we are starting to get details from d.c. as to what caused that evacuation. the fire department said there was a fire a few blocks away there were no injuries and the situation now appears to be under control. they do not believe it to be a threat, but it does seem out of an abundance of caution that that rehearsal was evacuated.

sitting here in europe watching what is happening in the united states right now, i think a lot of people are concerned about this means long-term in terms of america's political trajectory. if this had happened in another country, there would be an economic discount applied. do you think there should be an economic discount applied for what is happening stateside at the moment? steven: not particularly. democracy is a very difficult thing to keep and to earn. you will go through periods of fits and starts, where people feel their voices haven't heard or feel their voices have been inappropriately --, and you will have responses as a result. it is up to policymakers to stand the test of time and make sure those concerns are addressed and addressed properly.

there is enough concern to go around on both sides of this equation. the plane -- the blame goes to both sides for handling it poorly. it is a learning curve and that is the beauty of the way the system works. it learns from its mistakes and moves forward and out expect will have a significant readjustment of the way things are going to take place in two years from now when we have our next lectionary -- election phase go through. there will be a lot less consternation and concern about the way the voting process takes place because this is the way america works its way through its problems. guy: i hope you're right. the political pendulum in congress, particularly the senate, is finally balanced for we have not seen the biden admitted --by

administration using -- it is not using it now but may need to use the reconciliation for the green deal or taxes. what are you expecting? steven: i do think they will use reconciliation with taxes. green new deal has largely already done in the latest stimulus program. there was a huge energy component of the bill which didn't get much press whatsoever that deserves to be looked at. there are a lot of issues that have already been dealt with. reconciliation cannot be used in some of these rings. -- some of these things. reconciliation is a very specific process. if you try to use reconciliation for something it is not designed to do, it could get hung up in

the rules committee forever. that is why nostrum is bill has been used in a reconciliation process -- why no stimulus bill has been used in a reconciliation process. there are some very defined limits that keep reconciliation from being used in this process. that is why it has to be is stimulus bill. this opens up the stimulus bill to concerns, especially considering the fact the senate will be going down this impeachment process, which is just probably going to galvanize the republicans to stand firm against the new democratic doherty. -- democratic majority. they are just creating a bigger problem for themselves in the way they come cater their legislative agenda, means we will get less out of the biden -- problem for themselves in the

way they complicated their legislative agenda. there is a lot going on. they really need to at this other process on top of it all as they are trying to get a stimulus program done. this comes back to my concerns as janet yellen -- of janet yellen. she trying to coalesce 12 collegiate people to come to a conclusion and the right conclusion about monetary policy. they were tapering and tightening at the same time and that blew up on her watch. i believe that janet yellen may not necessarily, although very qualified for the job, may not be the right person to deal with the egos involved on capitol hill and she will have to deal with them. she hasn't shown the ability to master the art of negotiation properly. this is where steve mnuchin was a unique character. he orchestrated a good deal of

the funding many movies. when you are dealing with the movies you are dealing with egos of producers, actors, egos of studio companies. he was capable of dealing with the large egos out there. it remains to be seen whether janet yellen can. when she was at the fed, she certainly was not able to do that. it will be interesting to see if she can do it now. guy: it will be fascinating to see who she puts around her. negotiation skills will definitely be required and managing big acceptation of egos is always part of the program. they cute for your time. -- thank you for your time. coming up, a supply squeeze in corn sending prices soaring. more on food inflation, coming up. this is bloomberg. ♪

guy: in the agricultural sector, a lot of people getting excited about whether this will be an inflationary course and will drive core inflation higher. supplies push week prices in paris. in china, record highs. joining us is megan dash, who covers this. suggesting this -- megan --who covers this. megan: agriculture marchers -- markets are getting a lot of attention. when you look at it, global food prices at a six year high during a lot of has to do with grain

and vegetable oils. we are seeing 12 supply and demand adding to this rally. there have been on the corn sign -- corn side, ukraine and u.s. smaller than expected. argentine is next crop has been hampered by drought. there has been a being need for oils. these have pushed up markets. there are political factors beginning to play a role. we have seen protectionist measures creeping in on the corn site in argentina and russia on the wheat side recently announced export taxes. that is leading to the rise in prices in these markets. guy: what is the relationship between what is happening in ag prices and food inflation, both

in the developed world and the developing world? eggen: -- megan: prices take a little time for this to trickle down to grocery store shelves. ultimately, higher raw material prices can lead to higher prices at the shoe store over time. food inflation is quite low versus what we saw back in 2008 or 2011. but one challenge this year is this is going to be particularly difficult during the covid-19 crisis for countries and consumers who have seen declining incomes or deteriorating economies. countries that were already vulnerable could see purchasing power declined for countries that are particularly reliant on imports, this can push up the import woes which is a

challenge. we have seen food inflations in place like brazil, ghana, argentina, and we have seen inflation picking up recently. guy: how much is this dude what is happening in china. their pork industry was devastated -- how much of this is due to what is happening in china? there pork industry was devastated. how much is driven by that? megan: china has become now a huge global force on the grain import side over the past year. their hog herds were decimated by african swine fever and now they are working to restock and rebuild that sector. they have buying corn and wheat and barley. they remain a big player on the

soybean side. i believe they may be the top import of the season, which is unusual. a lot of this demand has been drawn from the u.s., also south america. on the wheat side, france has played a big role. we have seen that helping to prop up rena prices around the world. guy: great insight. thank you for joining us. bloomberg's megan albery on what is happening in the agricultural space. coming up, all eyes on the u.s. dollar. incoming treasury secretary janet yellen heading to washington tomorrow. we will talk more about that. this is bloomberg. ♪

guy: live from london, i'm guy johnson. martin luther king day. u.s. markets close, like volumes in europe. european equities up near session highs. at least in positive territory, up by .2%. as i say, superlight volume the u.s. out. s&p futures flat. fair value calculation pointing to a very flat open tomorrow in the united states. in terms of the dollar, flat as well. you are getting a picture. the markets are just watching and waiting to see what happens tomorrow with janet yellen and then the inauguration. but today with the u.s. closed, everybody sitting on their hands. tomorrow,