francine: a new dawn in america. joe biden becomes the 46th president today. trump issues pardons, but none for himself. and shares surge. good morning, everyone. welcome to "bloomberg

surveillance." i am francine lacqua here in london. quite a lot going on, of course, with the inauguration of jill biden. what biden policies mean for the future of the economy, we will have a look at what it means also for the biden administration to get a handle on covid-19 after a pretty touching memorial we saw yesterday with the vice president and the president-elect, both flanked by their spouses. the markets are focused on the dollar declining, a lot of the focus is on earnings and the hope for more stimulus. we have a bit of a mixed picture when it comes to the send out, alibaba jumping after the billionaire jack ma. now let's get to the bloomberg first word news here in london with me, here is leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning,

francine. the u.s. has given 30 5 million vaccines with president-elect joe biden saying he wants to deliver 100 million in his first 100 days. one positive signs, however, the number of hospitalizations in california is now starting to drop. in europe, germany is tightening its log down. non-essential -- lockdown. non-essential stores will stay closed until february 14. chancellor angela merkel is saying they may need new border controls to guard against new variants of the virus. italy's prime minister has devised a crucial confidence vote that fall short of an outright majority. he campaigns to get centrist and independent lawmakers on his side but fails to fully plug the gap left by matteo renzi and his party. he will need more if he wants to

stay in power longer-term. global news, 24 hours a day, on air and at bloomberg @quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine? francine: leigh-ann, thank you so much. now, and duration like no other. joe biden will be sworn in as president at the capitol today. that is about all the day will have in common with past inaugurations. the parades down pennsylvania avenue have been replaced by military lockdowns. the outgoing president will break tradition and not be at his successor's swearing-in. meanwhile, in the final hours of his term, president trump has pardoned several, including steve blandin. banno -- steve bannon. bbannon is accused of diverting $1 million in funds, and the president parted dozens of others, including a rapper who pleaded guilty to a federal gun

charge last year. joining us is a senior partner at sigma global advisors. he was also the deputy chief of mission at the u.s. embassy in london at the -- in 2008. ambassador, thank you for joining us on such an important day. how do the american people, you know, feel when looking at the inauguration? how many people still believe this is not a legitimate election? guest: good morning, francine. unfortunately, a legitimate number of americans do not believe joe biden was elected in a legitimate election, you know, because donald trump continues to sow doubt on the elections. i think many americans will be breathing a sigh of relief today and looking forward to a calmer, quiet, more effective government in the coming years.

there is a portion of the population that is -- that is angry and upset and does not see biden as the legitimate winner. biden will have the challenges to deal with these multiple crises he has on his plate right now. francine: how does he deal with the divide, lew: ? is it through economic growth, and does that have to come through quicker and better vaccinations? mr. lukens: all of the above. his speech today will be a heartfelt call of unity and to come together and address the economic crisis. a lot of whether that is successful or not or he is successful and not will deal with -- will have to do with the republican leadership. will they help with legislative goals, or will they block and

obstruct his agenda of the way they did when president obama was president? that will be key for the country to move forward and address these crises. the other factor is -- what will donald trump do next? if donald trump continues to, you know, go on air and hold rallies and talk about fraud, that will continue to keep his core base angry and divided. francine:lew, is he still in charge of the republican party, after what we heard from mitch mcconnell yesterday? or is it a faction of the republican party or something else? mr. lukens: it is a faction but an important and large faction. there was a poll last week. nbc had a poll, they asked republicans -- should donald trump remain the leader or be considered still the leader of the party? and they were evenly split. 48% said yes, 48% said no. that tells me that, you know,

half of the republican party still considers donald trump their leader. he also has an 85% approval rating from republicans, and this was after the attack on the capitol january 6. francine: lew, have we ever seen in the inauguration that looks anything like today? this is, of course, partly due to the inauguration of the president-elect, the riots on january 6, but also covid. mr. lukens: right. that makes this a very different and unique and hopefully one-off type of inauguration. the other thing that is different about it, and you touched on this in your intro, if donald trump starts breaking protocol, that not having the president-elect and the outgoing president drive together to the inauguration, not having the outgoing president there, not having the sort of traditional

walking out of the capitol, getting in a helicopter, and having the incoming waving at them, it is interesting, and i suspect a lot of people there today who are just happy that donald trump is not there, but it sends a message from donald trump, that he will continue to fight for this election and continue to try to speak out for his base. francine: lew, there's a long history of may be controversial part is, but your take on donald trump's. mr. lukens: i have not had a chance to go through all of them, but what strikes me is the way they have worked this year is they are vetted, and there's criteria to make sure that people either are, you know, that they have rehabilitated themselves or they feel badly about what they did or there is some level of regret for the crimes that they committed. in this case, what happened, they did not go through the

department of justice. most people would use lobbyists of the president and his friends and family to get him directly, and he made the decision based on what his inner circle was telling him. so i suspect that there are people in that list of the pardons who, you know, that the pardons were warranted, but there are probably others that did not meet the traditional criteria for last-minute pardons. francine: what are the three priorities the biden administration should focus on in his last days in office? mr. lukens: the three big buckets i think are the health crisis, and he is going to try to do that 100 million vaccines in the first 100 days, there's a lotta money in his $1.9 trillion spending proposal to get money out to communities, to get better testing and better vaccination procedures. the economic crisis is another thing he will be focused on, trying to create jobs and build back america, and the third area i think we'll be trying to

reestablish relationships with allies and partners around the world, starting to rebuild some of those important partnerships that have been, you know, in rough shape in the last four years under president trump. francine: the final question may be on the process of the election. how does the u.s. make sure that no one questions or very few people question the election next time around? does it need to change balloting? is this something very american? mr. lukens: look, at the end of the day, the balloting in this election was very secure. every state audits. there's very little evidence of fraud. the issue this year was not so much the security of the election, because the process was secure, the election was secure, it was more the reluctance or the inability of a lot of the republican leadership to accept the results. and i think that is not a technical fix, it is more philosophical fix, and does the

republican party want to be the party that cries wolf and claims fraud every time a democrat wins, or will they become more of a traditional party and except result if they lose? francine: lew, thank you so much, lew lukens, senior partner at signum global advisors and of course former vassar to the united states. we will have plenty more on netflix. they have some pretty incredible subscription figures, blowing past 200 million. coming up, markets and a pretty historic day in america. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance."

i am francine lacqua here in london. now, well below's attention is on d.c. today, the market's attention was on d.c. yesterday. janet yellen appear before the senate finance committee yesterday, where she covered a number of topics. ms. yellen: we are going to need more aid with interest rates at historic lows, the smartest thing we can do is benefits that far outweigh the costs, the united states does not seek a weaker currency to gain competitive advantage. china is undercutting american companies. these practices including china's low environmental standards are practices that we are prepared to use a full array of tools to address. we have to rebuild our economy so that it creates more

prosperity for more people and ensures that american workers can compete in an increasingly competitive global economy. francine: now, joining us to talk of course about the inauguration, about bidens priorities, and what the treasury secretary will do. joining us is a guest from algebris. the economy goes one way, the markets go another, and there's a huge correction, because equities are running hot? guest: well, francine, certainly the key drivers here are zero interest rates globally, and basically we are looking at the quantitative easing that on a month by month basis is now running between 0 of gdp for the central banks around the world, so when you have basically the

death of yield globally, if you look at the $53 trillion fixed income market globally, basically insurance, whoever needs to pay bills is forced into the equity market, and that is why it is now more than 20 times earnings, it is basically, you know, there is no other choice. now, clearly all of this, i think, is going to end the day you see the resurgence of inflation and a bit of steepening of the yield curves, and i think this will happen over the next 12 to 24 months, simple because, you know, look at the evaluations. we are not talking about -- we are now talking about 100 million per months. eventually the markets will lose jobs. francine: davide, how are you expecting interest rates to be normalized? is it a reflation that you are expecting this year, or is it, you know, above target or may be

above average, let's say, inflation, because of the stimulus package in the u.s.? davide: i think it is a combination. i think, on the one side, covid has created bottlenecks in the real supply chain, and as a result has increased cost. as a result, what i think will happen as a massive issuance of government bonds around the world that is eventually going to force yields higher, simply because right now, if you look at inflation expectations minas bond yields, you know, you are in negative territory pretty much around the world, and that is not going to be sustainable. francine: what does slightly higher yields actually mean for banks? davide: i think it is very positive, because, in a way, you know, the factor, if you look at the pandemic, it has been an anchor of financial stability

and has allowed the treasury and central banks around the world to deploy their tools this time, has actually been the financial sector. and this is thanks to central banks and regulators over the last 10 years that cleaned up the sector, so they have made the banks stronger, simpler, clearer, more accountability, and i think this is kudos basically to the financial stability board and the actions taken by the fed and the central banks and having fewer banks, stronger banks, cleaner banks. and i think, you know, this anomaly of having zero rates is not even negative around the world, and all ds quantitative easing -- who pays the bills? it has actually been the financial sector. and i think a normal steepening in rates that will eventually move back to 0 is not slightly positive is how life is supposed to be, simply because, you know, time has value, and when you

have negative rates, you destroy the concept of time value. you had better not use it than postpone consumption. that is not how life is, because, as you know, time goes by, and every day, you miss an opportunity, and there is a cost to it. so negative rates come in a way, transformed the way we run economic activities. it will not be sustainable forever. i think monetization in the next 2, 3 years. francine: davide, when you look at the strength of the financial system so far, was the pandemic the ultimate threat, or because we had so much fiscal support, we have another stress, and how do you strengthen that system from here? davide: well, right now, around the world, basically, gdp is higher than 1%, so that means

productivity longer-term will be slightly lower. secondly, rates cannot go that high. that is not mean they, you know, , you know, should be negative, but you can forget the interest rates of the u.s. treasury of, you know, 3% to 4%, sibley because nobody will be able to pay that bill. so there's two different ways to default. basically defaulting principal or you stop paying interest, and when you have zero interest, it is pretty much an active yield there. and i think when the world tries to rebalance an equilibrium that is slightly positive, they are not that high. now, having said so, what i think will happen, the reason why this is positive in a wacom is basically this theory of granted financial repression, financials, i think, has come to an end, because capital can withstand a 100-year scenario -- that is covid. secondly, they are profitable, and third, the margins are slightly higher rather than lower, simple because, i think,

the market is attached to a lower bound of rates. francine: davide, thank you so much. we will be right back with david and sarah -- davide serra of algebris. coming up, we will of course bring you live coverage of biden's swearing in. that is at 4:00 p.m. london time, and this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua here in london. now let's get straight to the bloomberg business flash, here's leigh-ann gerrans. hi, leigh-ann. leigh-ann: hi, francine. netflix has ended is bigger than ever year with a bang, adding more subscribers, saying it no longer needed money to expand. it added 8.5 million subscribers. it helped by adding new shows, including "bridgerton" and "the queen's gambit." $21 million. hard-hit by the covid-19 pandemic, being forced to close theme parks and postpone movie releases. due to those losses, some bonuses were scrapped and executive pay was reined in. asml has surpassed expectations

for the quarter. the dutch campaign makes semiconductors. it is mostly protected from the pandemic, as it is working to make the latest computers faster, cheaper, and more efficient. and that is your bloomberg business flash. francine? francine: leigh-ann, thank you so much. now, coming up, italy's premier battles on. conte lives to see another day in power. we look at the details. he has a minority, so it is difficult for him to do reforms. we will look at that. european stocks for the moment higher on wednesday, buoyed by hopes for more stimulus. this is bloomberg. ♪

mr. biden: is deeply personal.

that our next journal -- journey to washington starts here. the place that defines the very best of who we are as americans. i know these are dark times, but there is always light. francine: that was joe biden speaking yesterday as he departed his state of delaware for the nation's capital. to see if there is any impact from the stimulus. a lot of talk was on janet yellen and her hearing and testimony yesterday. the focus is not only on stimulus but exactly what joe biden will do in his first day in office and the next 100 days. let's get to first word news with leigh-ann gerrans. it is inauguration day in the united states. president trump will skip the ceremony, been in a rare side of goodwill is wishing the next administration luck.

washington is on high alert after the cap -- after the attack on the capitol two weeks ago. top republicans and the senate push the blame on -- at trump's door. >> the last time, the senate convened, it was stopped from doing its duty. the mob was fed lies. they were provoked by the president and other powerful people. president trump has pardoned 73 people, including his former strategist, steve bannon. bennett was being prosecuted for allegedly defrauding donors over building a wall on the border with mexico, and other pardon was for lil wayne. trump did not pardon himself or any members of his family. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i'm

leigh-ann gerrans. this is bloomberg. francine? francine: the italian prime minister, giuseppe conte, has survived a crucial vote in the u.s. senate but failed to get an outright majority. he campaign to get senate and lawmakers on the side but failed. he will need an outright majority if he stays in power. joining us is a long-standing advisor in italian politics, probably like very few people in the market. what happened to how much the prime minister can actually get done? how crucial is it that he gains more support to try to do the reforms needed to access fully the recovery fund money? davide: i think the crisis was

-- out of the g20, the worst gdp, but most importantly the worst death rate. so clearly you have on both axes the economy and the covid crisis is subpar response. but basically in my view it requires a change in pace and do something better on both fronts. and the status quo is not attainable. i think as a result for a couple of months there asked a change in pace, and that has led eventually to going to the opposition. saying we are not happy and we need to change pace. right now the government has a

minority government is facing 100 year challenge, and as a result you want the -- the opposition has already called for the need of having government of national unity. it means you are bringing in a competent person, and in nearly there are quite a few. i can think of mario draghi or similar. to properly spend the 200 billion euro that the european union has between grants and loans so that italy can do the reform. you cannot just pick up a lawyer and say invest in europe. it makes no sense. francine: so do you think it will be in the next three months , five month, six months, that there will be a new prime minister in italy? davide: i think so, and most

important either will be no election. the reason is there has been a change with 20%, people in parliament will eventually lose their jobs, and what's going to happen is as a result in the next election, the majority of the people in the lower house will not be there. hence they will do anything they can to -- no election. but at the same time you need actions to be taken. that's why think eventually this will lead to a government of national unity. francine: i want to ask you about european banks shortly. there is also unicredit looking for a new chief executive. who is the right person for that job? davide: listen, i think unicredit is one of those banks in europe that is quite unique. it has 50% of its balance sheet in germany and austria, and 50%

in italy. on a profit basis, italy probably counts -- accounts for two thirds. one, it can handle this. secondly, it needs to be both italian and international at the same time. third, 80% of unicredit is actually global funds. so there needs to be someone who has the full support of the creme de la creme of the institutional -- lastly, and not in my view afford to fail, for the simple reason that unicredit is one of the cheapest companies in europe, and hence whoever can needs to turn it around quickly. there is lots of upside that needs to be managed properly, and without making mistakes. francine: are you a shareholder,

davide, and will you be a shareholder, depending on who becomes chief executive? what are you holding right now in terms of italian and european banking? davide: so in unicredit, we do have a lot invested in the capital securities between -- one of our largest positions. we also do have equity, because we do believe that we appoint the next ceo who will continue in my view, the company path. secondly, within europe, there is lots of upside within the banking sector. the sector has the cash of about 150 euros share. basically it is one of the

factors in the world that trades $.50 on the dollar. and with a rising rate and the possibility at the same time of further -- i do expect the sector to keep on for the next two or three years. it is a structural reflation, so it is possible. francine: cross-border consolidation, davide, or does it have to be within borders? have we already seen that in italy? davide: i think domestic will keep on happening. spain, italy, it will keep on happening. cross-border along business lines, i think there will be more cross asset management, you might see cross payments. i don't think you will sit in -- there are no synergies, and as a

result it makes no sense. francine: thank you so much, devotee sarah -- davide serra, ceo of algebris. jack ma appears for the first time in public in over three months. that is next. this is bloomberg. ♪

>> my fellow countrymen -- >> i, dwight d eisenhower, do solemnly swear. >> i, john fitzgerald kennedy, do solemnly swear. >> let us encourage individuals at home and dacians abroad to do

more for themselves. >> ladies and gentlemen, the president of the united states. >> a few of us here today, this is a solemn and most momentous occasion, and yet in the history of our nation it is a commonplace occurrence. the orderly transfer of authority, as called for in the constitution. >> president, neither prince nor pope, and i don't seek a window on men's souls. in fact, i yearn for greater tolerance. >> my fellow citizens, today we celebrate the mystery of american renewal. >> i, george walker bush, do solemnly swear. >> that i will faithfully execute the office of president of the united states. >> that i will faithfully execute the office of president of the united states. >> that i will execute the office of the -- office of

president of the united states faithfully. >> so help me god. >> i, donald j. trump, do solemnly swear -- >> that i will faithfully execute -- >> that i will faithfully execute -- >> the office of president of the united states. >> francine: the office of president of the united states. that was a look back at previous inaugurations. let's get to the business flash leigh-ann gerrans. leigh-ann: netflix has ended its biggest every year with a bang. it attracted more than 8.5 million new customers in the final quarter, pushing the total over 200 million for the first time. it was helped by new shows like

the queens gambit. bob iger saw his -- disney was hard-hit by the covid-19 pandemic, being forced to close theme parks and postpone movie releases. executive pay was reined in, and that is your bloomberg business flash. francine: china's most famous billionaire has reemerged for the first time in almost three months. jack ma attended an annual event he hosts. the founder can be seen touring a primary school in his hometown . it is the first time he has been seen in public since beijing's tech crackdown last year. lulu, great to have you. one of the first things that we are reading about today, on the bloomberg terminal, after

inauguration, is of course what happened to jack ma so far. lulu: absolutely. investors are taking -- all we can see from the share price reaction. some people think that this is a message, that the billionaire is sending out without being too innocuous that he is out of the doghouse, but it is unclear whether he made that appearance with the government's blessing and also what it means for his company going forward. francine: francine: what do you think it means going forward? we had a bump up in alibaba shares. what are investors making of this thing? lulu: i think what we should interpret this is that there is no personal penalty against jack ma, but the investigation is

still ongoing. that it needs to overhaul its business, the antitrust investigations against alibaba are ongoing. just now the central bank sent out a new regular asian saying they are going to step up against any payments company and if they have more than 50% of market share, they could be subject to antitrust probes. so there is still this overall tone of stepping up regulation against the tech giant. francine: how would shareholders actually -- once they understand the implications of this, how quickly could it be rolled out, and what does it mean for shareholders? lulu: i think right now the shareholders initially had a strong reaction and probably were bracing for the worst, so this is a step up against that. but the timeline for solving the issues are going to take a lot longer.

that is what our sources have told us. the likelihood of revising an ipo in 2021 are still very slim. francine: thank you so much. lulu chen, our reporter on the ground, joining us with the latest on technology stocks in china in particular. coming up, netflix surges as much as 13% after it shows joy in more subscribers. we will have all the details next, and this is bloomberg. ♪

>> the last time the senate convened, we had just reclaimed the capitol from violent criminals who tried to stop congress from doing our duty. the mob was fed laws. they were provoked by the president and other powerful people. francine: that was mitch mcconnell speaking yesterday ahead of biden's inauguration at noon d.c. time today. we will bring you live coverage

on bloomberg throughout the day during an inauguration like no other. burberry shares gaining this morning as stores remain closed across much of the world. let's get that story and other stock movers with dani burger. dani: a lot of luxury goods reporting today. burberry is an interesting one. they disappointed, their sales in the quarter fell 9%. burberry at 4.5%, a little bit more than that, are the third biggest gainer on the stoxx 600. according to morgan stanley, they say part of this has to do with the fact that there price sales are doing better. they are not discounting as much, and that in turn will elevate the status of burberry. the thing that burberry has to deal with right now is their stores being closed, less tourism, less people coming from overseas to buy their goods, so that is the stress on the other site. richemont beat earnings

estimates. their sales propelled heavily by chinese sales rising 80%. that means for the entirety of all the regions, they had more than 4 billion euros worth of sales. that be the estimate. we have some positive analyst reaction to the city. their jewelry segment is doing well. we have seen the share price fade throughout the day. part of the disappointment might be that their online sales did not do as well as some expected, especially because richemont has put billions of dollars into getting up digital sales. the chipmaker trading at a record high of 2.7%. the chip boom continues for this company. they beat analysts estimates. ing calling the results very impressive, thinking that the momentum is going to continue. asml also talking about doing a sizable share buyback in the first quarter as well. francine?

francine: thank you so much, dani burger with the main stock movers after we had quite a lot of earnings. under the big stock moving, netflix and negative biggest year in its history, adding more customers than expected and saying it no longer needs to borrow money to build its entertainment empire. shares are surging as much as 13% in premarket trading. that's get more with our bloomberg billion economist -- bloomberg opinion columnist. what do investors need to focus on and looking at netflix? >> it is free cash flow. have borrowed a lot of money in the past in order to invest in content and ensure they have a rich library of content. of course, that meant they had significant negative cash flow, stuck at about $3 billion in 2019. last year, very different story. 1.9 billion dollars of positive free cash flow. that means they do not need to borrow money in significant

quantities any soon, and it is a trajectory for other companies looking to get into the streaming space. francine: what is the significance of these earnings? does it bode well for others, or is netflix creating great content which means that they will have more subscribers than other providers? alex: it certainly indicates that this is a path worth taking. there is a lot of pressure on the likes of cbs, viacom, disney, other companies who are building their own platforms are warning that they will have to take a hit upfront on buffet ability as they invest. netflix demonstrated that it can be -- on profitability as they invest. neff looks demonstrated that it can be worthwhile. indications are, the question becomes, what are the three or four platforms going to be?

there is space for everyone. netflix clearly has the advantage here, and perhaps others, disney has enough of the head of steam to be one of the others. francine: you mentioned disney plus. how is amazon doing? is it too soon to know who will make it and who won't? alex: i think amazon is a different proposition because amazon is trying to make money -- it's way of getting money into amazon prime, then it makes money on the back end by getting people to order products, with rapid delivery there. amazon prime is maybe losing a little bit of luster compared to significant investments being done by others, but it has of course deeper pockets of amazon behind it. the bigger question is perhaps

if you think about the fact that netflix borrows something like $15 billion to invest in content over three years, apple has very deep pockets. at the moment it is spending a lot less than that but could decide to flip the switch and accelerate it, given that it is seeing now that netflix is able to become cash flow positive. that has been the question mark, the sustainability. does it have a way of becoming profitable? perhaps apple will continue -- will consider flipping the switch and doing the same. francine: alex webb, thank you. coming up next, the biden era begins. what to expect from an inauguration like no other. we will bring you live coverage throughout the day. this is bloomberg. ♪

francine: a new dawn in america. joe biden becomes 46th president today. the celebrations have been replaced by a military lockdown. in his final hours, president trump partners dozens but none for himself and his family. jack ma resurfaces for the first time since beijing began clamping down on his empire. shares in alibaba surge. good morning, everyone, and welcome to "bloomberg surveillance." tom and francine from london and new york. tom, a huge day in washington. we will have full team coverage. a different feel partly because of covid, partly because of the insurgents january 6. many more security measures have been put in place. i think we have some breaking news out of the biden administration. just breaking on the bloomberg terminal. we understand he will sign 15 exec of actions today, right after the inauguration, to undo some of the actions in the