ay-yi! ♪ ♪ ay-yi! good morning welcome to "street signs." i'm joumanna bercetche alongside julianna tatelbaum these are your headlines european equities open in the red but chinese stocks outperform in asia after economic growth tops pre-pandemic levels coming in at 6.5% in the fourth quarter the stars align for stellantis as they complete their $52 billion tie-up to become the world's fourth

largest car group with shares pushing higher in their first day of combined trade. named new term of german's democratic union, putting him in poll position to become the next chancellor as he vows to continue angela merkel's work. >> translator: i want to do everything i can to ensure we go through this year together, pass the state elections together in a few weeks, and then make sure the cdu/csu wins the next chancellorship in the elections. it's inauguration week in the u.s. and joe biden plans to hit the ground running with a blitz of executive orders while washington is on high alert for security threats good morning, everybody. happy monday welcome to "street signs." we have a very busy show coming up ahead i want to kick off data we got

this morning out of china. there the economic growth rate topped pre-pandemic levels in the fourth quarter coming in ahead of expectations at 6.5%. for the year it grew at its lowest rate in four decades, expanding 3.2% sam filed this report. >> japan's gdp confirmed this better than expected q4 rating followed a 9% year-on-year expansion in q3 and that 6.8% slump in q1. since then we've seen a pretty impressive economic rebound as china managed to contain the virus quickly. as we see with the data today, we're seeing a bit of a mixed picture. there are pockets of the economy still recovering retail sales and fixed asset investment missed expectations for december retail sales eased from november when we saw that singles day shopping festival. officials say fluctuations in

consumer spending was also due in part to rising infections consumption, of course, did largely lag this recovery over worries about jobs, pay and the virus. overall, retail sales contracted 3.9% for the year. reportedly marking the first contraction since 1968 really highlighting this weakness fixed asset investment grew 2.9% in 2020, but it was still better than the first 11 months as we have seen investments in things like infrastructure projects and the medical sector but the real bright spot was industrial output once again, which beat expectations. the industrial sector has been largely supporting this economic recovery this is now a further sign that it is continuing to do so for the year it came in up 2.8% year-on-year. that came as domestic demand has been holding up thanks to government support for infrastructure spending, which has been largely used to mitigate some of these external

risks like the virus and these ongoing tensions with the united states in singapore, back to you. looking at asian markets in the overnight session, you can see chinese markets outperformed as investors seemed to be cheering this data overall as sam just described, the data was mixed when you looked under the hood some disappointment in retail sales and fixed asset management but overall, growth in china has surprised. looking at the raft of data that has come through, the numbers that really stick out to me are those retail sales figures coming in at 4.6% higher year-on-year that was below expectation and the reason it sticks out is because we in europe and in the u.s. are all wondering what will happen to consumer spending when we come out of these restricted -- these restrictions looking at china, the retail sales boost hasn't quite been as strong as economists were hoping

for. curious what the read across may be for other parts of the world. >> i think that's a really interesting point because if you look at the type of the recovery that china has seen this year, it's mostly been pushed forward by industrial policy that's what sam was saying at the end of the year, it was fixed asset investment that was up on the year retail spending was actually lower. no surprise given that most people were locked up at home for a good chunk of the first couple of months of the year it is actually pretty remarkable, julianna, that in the context of the world, china has managed to get back to growth growing at 6.5% china were growing around 6.5% at the end of 2019 as well not only were they able to end the year up in positive territory, but they also managed to return to trend as well that is something that is going to take a very long time for european economies to get to some people are saying it might even take as long as 2022, 2023

for some european economies to come to trend. one other big point is the fact their exports have gone through the roof now and the trade surplus is at the widest level it's ever been in history. coming out of this pandemic, not only is china growing positively, but its surplus has wide ed as well if you want to get more information on china and how analysts are thinking about it, go to cnbc pro and find out which stocks goldman sachs think could pop on china's economic recovery that's on cnbc.com for you to look at as well. switching to our neck of the woods now, european finance ministers are set to hold talks today on how to address economic balances within the eurozone as well as where to prioritize covid recovery spending. the meeting comes just days after a split in the italian cabinet over stimulus funding through the government's future into doubt now, this was followed on friday

by the resignation of the dutch prime minister and his entire cabinet over a welfare payments scandal. i'm very happy to say ireland's finance minister and the euro group president joins us and our own european reporter sylvia will join in for the conversation minister, thank you for taking the time to speak with "street signs" today i just want to start off by asking you about one of the major challenges in the short term, and that is of the vaccine rollout in europe. europe has come under a lot of pressure for the delays in the rollout, even the way some of the vaccines have been procured. it's varied from country to country. now, i know this isn't the specific agreement of the euro group but you must be feeling somewhat frustrated that things aren't going as you would like to, particularly as it's going to have an impact on the speed of the recovery for the eurozone this year. >> what i would expect to see happen in the coming weeks now is an acceleration of the

vaccination of existing vaccines as our regulatory bodies in the european union look at new vaccines that would become available, there would also be an increase in the availability of the number of vaccines. it is obviously the case that there is a huge demand for swift and efficient vaccinations it is my expectation across the coming weeks you'll see an acceleration of where we are at the moment even, for example, here in ireland, over the last week or so, we've seen an acceleration in our ability to vaccinate. i know be from talking to my finance minister colleagues across the european union, the same is happening in many countries as we speak. >> of course, it's extremely important for the recovery and how quickly things can go back to normal. but in the interim, the euro group, you obviously have come up with the eu recovery fund those funds are supposed to

start being dispersed in the latter half of this year of course before that, the european commission needs to sign off on each member state's detailed plans as we saw in the case italy, there have been a few hiccups in the process. mostly because internal politics have started to rear their head as well. is it your view that these funds will still be able to get dispersed in the latter half of this year or could we be looking at a delay because of internal politics and because of some of the political developments in domestic economies that have come to light in the last couple of days? >> i think it's relevant to highlight that one of the reasons why this has become such a high-profile issue in italian politics, for example, is because the recovery and facility is of such scale and can make such a difference to recovery of individual european economies. to directly answer your question, i expect that the

timetable that the european union laid out regarding the availability of the early portion of the recovery in the fund will be delivered it's worthwhile noting that across 2021 it's our expectation that there will be continued flexibility regarding national budgetary decisions that finance ministers can make, and that will be the case and i believe that that combined with the availability of funding directly from the european union as we move through 2021 would show the eu continuing to respond back with both speed and scale to the economic consequences of this disease >> good morning, mr. donahue i would like to ask about fiscal policy reform because there's a school of thought out there expecting the 60% ratio to be changed to a higher number and i was just wondering, what

do you think is the right to gdp ratio post-pandemic? and if this number is increased, is that the right message to send >> i think it's a little too early to be able to say what the debt to national ratios are going to be post-covid-19. what i believe will happen is the european commission, who are the body within the european union, who have overall responsibility for the management of our fiscal rules will be looking at what their future is during this year and we all expect as a consequence of this awful disease that there will be a higher tolerance for a period of time for a higher level of debt and a higher level of annual borrowing in order to help our economies recovery quickly for now the priority of the euro group is how we can have budgetary policy in 2021 and into 2022 as part of that had i

do expect there will be continued understanding that we will have to have higher levels of borrowing to allow our economies to respond back to this awful challenge and then at the right point, we do begin to journey to looking at how we can stabilize the debt levels we have so, for now, our priority is dealing with the crisis in front of us. as we move through the year, i'd expect to see debate in relation to this particular issue begin again. >> right, the citizens and public markets need some clarity when it comes to the fiscal rules, so when do you expect this discussion to actually be concluded? perhaps later this year or are you saying that's more likely to happen in 2022 >> well, the european central bank and the euro group have already given guidance regarding what we expect to happen for

2021 we've already indicated that we expect euro area economies to have a higher level of borrowing and a higher level of debt in order to support the plans to allow jobs and income to recover swiftly once we have made more progress with our public health. so, that guidance is very much in for 2021. in terms of the timing of clarity for guidance, for example, for next year, i'd expect as we move into quarter two and quarter three of this year, and as national finance ministers begin to process, putting together their budgetary plans for next year, i'd expect that across that period we will clarify our budgetary guidance for 2022 but the guidance is in place for this year and, as i said, as we approach the summer, i'm confident we'll be able to deliver a guidance on budgetary

plans for next year. >> minister, madame lagarde has been very clear since taking the helm of the european central bank that fiscal policy needs to take a bigger role when it comes to supporting eurozone economies. do you share that view and how -- how much does it matter what madame lagarde and the ecb do when it comes to future fiscal policy >> i do share that view. that's what's happening. if you look across the euro area in particular, and if you look at the scale of income support plans that are in place, if you look at the scale of enterprise supports that are in place, all finance ministers have taken full advantage of the ability that is there within financial markets to fund the right level of borrowing so, i believe the assessment that fiscal policy needs to play an active role in supporting

economies at a time of crisis is correct, and that is what is happening. in terms of the future role of the european central bank and their observations on this matter, it's worthwhile reiterating that they're completely independent of budgetary policymakers but the views they have offered regarding fiscal policy continuing to play an active role as we move through this crisis, i'm confident that is what will happen there are now support in place through what the european central bank has done to enable a big response back from the european union to this crisis. that's what's happening. and if you combine that with the availability of the recovery in the resiliency fund to later on in the year, i really believe that we're laying the foundation for the eu to recover from this crisis >> if i can shift gears a little bit, we're a couple days away now from change in leadership over in washington

and the european commission came out in early december saying the victory of joe biden presents a once in a lifetime opportunity to design a new transatlantic agenda for global cooperation. what is this reset going to look like in practice and do you think that there has been any lasting damage to it the u.s./eu relationship as a result of the tensions over the last four years? >> there's no damage that with goodwill and imagination that we're not willing to overcome. we have president biden, an american leader who is well aware of the huge value of multilateralism, and has shown throughout his political career an appreciation of the importance of the transatlantic relationship and one of the many reasons i value and really welcome the initiative that was taken by the european commission is that we all need to play a part in this now. we all need to find new ways in

which we can regenerate the relationship between the united states and the european union. and this afternoon now, with my fellow finance minister colleagues in the european union, we will be having a discussion on this theme we're going to be joined by a professor larry summers, a hugely prominent american policymaker and economist, and we'll be having an initial discussion ourselves regarding the work we can do to regenerate that relationship as president biden gets ready to take office. >> well, just a month ago the eu signed an investment deal with china and went about it on a bilateral basis, didn't actually reach out to the u.s as we know, that's been a huge point of contention between the u.s. and china the status of their relationship and the expectation from the biden administration was that they could work closely with the european allies when it comes to

the question of china and their growing economic prowess why did eu decide to do this without cooperating with the u.s. administration, especially given it was only just a couple of weeks ago that this investment paper came through? >> look, the huge opportunities in the years to come for the european union to look at how we can deepen our cooperation with the united states of america the process that concluded with china, let by the european commission, was a process that had been under way for some time what we now need to do, which there's huge commitment to doing, when president biden takes office, find many ways in which we can build on the really strong foundations that are already in place for the transatlantic relationship we share values, we share heritage, we share history with the united states of america and i think the value of that is going to be heightened in the years to come ho and i believe

within all levels of the european union there's a real appetite and desire to how we can embrace that agenda. >> joe biden says himself he's irish so also that will help with that transatlantic relationship. >> we hope it will play a role, and those us here in ireland look forward to playing our part in that reimagination and regeneration that i'm talking about. >> absolutely. but i do want to turn to another very, very important topic and that is of brexit. it's been a couple weeks since these new trading arrangements have been instilled between the uk and eu. all we hear of is companies complaining about the amount of red tape, the amount of customs declaration forms they have to hit, trading volumes getting hit, much lower activity than you would normally see at this time of the year is this a sign of how things are going to look like when it comes to the relationship between the uk and eu? >> well, this is the reality of

brexit this is the reality of a changed terms of trade between the european union and the united kingdom. i would expect and do expect that the level of challenge that is there at the moment will improve, will dissipate. we all get used to and adjust to the new requirements that are in place for this relationship, but the united kingdom is clearly no longer a member of the european union. and the entire process since we got ready for this point, here in ireland and across europe, that once brexit actually happens, the way in which trade will happen, will be very different. and that is what is happening. i think it's fair to say probably the complexity of this hasn't been helped by the fact that an agreement was reached so late in the day, but thank god that agreement was reached and as we move through the coming weeks and we adjust to

what the detail of this new trading relationship will look like, i think many of these issues will abate somewhat but none of that will take away from the fact that the terms of trade now have profoundly changed. we really want strong and positive relationship with the united kingdom for the years and generations to come. but we have a duty to protect a single market and we have a duty to recognize as well that the united kingdom now has a new relationship with the european union. this is the early sign of the reality of us. >> all right, sir. we're going to leave it there. thank you so much for taking time with us today, the minister for finance in ireland and the euro group president and our very own sylvia participating in the discussion. stay with us because also coming up on the show, shares in stella in. tis are trading on debut day after merger of pxa and fca.

we'll be right back.

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everybody. let's get a quick check on how european markets are faring. we have a mixed bag for european stocks in the early hours of trading. solidly bent towards a risk-off day. a bit of red on the board. ftse 100 down 0.50 the main one we're watching is stellantis, the merger of psa/fca. we'll get to that stock. one of the outperformers on the french index and stoxx 600 you can see the other indices slightly in negative territory, too. as for the individual sectors, at the top we have tech, sop chipmakers leading the charge. for the sector as a whole, it is up about 0.70% retail also having a good start to the week as well. on the downside we have utility down 1.1% and one stock in

particular, which is swayz energy down 0.10%. shares in french retailer carfour have stalled after talks of a 16 billion merger with kanna's stalled. both companies say they will now aim to secure a partnership agreement in areas like purchasing and product distribution not quite the end of that story. in ordeal news, suez says it has received a takeover bid from rgn and global infrastructure partners as the french waste management company looks to fend off an approach from rival violia in the auto space, shares in stellantis, the combined group of fca and france's psa group have risen after their debut in

milan and paris. the two automakers formally completed their $2 billion merger over the weekend, creating the world's largest carmaker let's get out to charlotte, who has been following this story. charlotte, last week you were looking at renault you interviewed carmaker and they were talking about all the change that's happening in the industry and the major changes that they're making. clearly this deal from fca/psa is these two companies attempt to prepare for the future. how is the investment community thinking about stellantis on this debut today >> that's right. that's interesting because you remember the fca first were in talks with renault for a potential tieup. now this marriage today being celebrated between psa and fca came after talks with honda collapses. it was 18 months to when they were in talks to today, stellantis starting to trade in

french and italian markets as we say, it would be the fourth largest car manufacturer in the world 14 billion euro merger with 180 billion euro combined and 400,000 employees worldwide. two of the oldest car dynasties, we have peugeot family the french government will still have 6.2% stake and dong fang member will have 6.5%. the beginning of the talks started before the covid crisis. that's interesting that's one of the big mega mergers that made it past the covid crisis they had to tweak some terms in the merger in particular, a special dividend addressed to the fca shareholders for anti-trust green light.

now they will have 14 brands under the same umbrella with peugeot and jeep and dodge in the u.s. being successful. the challenges for carlos tavares, the new ceo, put them together and maybe abandon some of the electric car investment and the oil import chinese market maybe joining forces will help them get into the chinese market with 5 billion per year they expect -- they hope to come to this challenge we know big car mega mergers have been challenging in the past overall, the start for stellantis is positive we see shares up in paris. about 6% on the french market on the first day of trading in the french and italian market before they start trading in italian after the martin luther king holiday. >> thanks. i was reading stellantis means brighten up the stars.

there we are it's a bright spot on the heat map today, up 6% thank you for the latest on stellantis' opening prices and european trading. stay with us because also coming up on the show, germany's cdu elects its new leader but will he be the name on the ballot sheet come november's election

signs," everybody. i'm julianna tatelbaum with joumanna bercetche and these are your headlines european equities open in the red, but chinese stocks outperform in asia after economic growth talks pre-pandemic levels coming in at 6.5% in the fourth quarter the stars align for stellantis as fca and psa complete their $52 billion tieup to become the world's largest car group with shares pushing higher in their first day of combined trade armin laschet is named the new chairman of christian

democratic union, putting him in poll position to become the next chancellor as he vows to continue angela merkel's work and bring the party together. >> translator: i want to do everything i can to ensure we go through this year together, pass the state elections together in a few weeks and then make sure the cdu/csu wins the next chancellorship in the federal elections. and it's inauguration week in the u.s. and president-elect biden plans to hit the ground running with a blitz of executive orders while washington is on high alert for security threats welcome back to the show, everybody. let's get a quick check on how markets are faring slightly in negative territory for the first couple hours of trading this week you can see it is mostly leaning towards red. the ftse 100 is down about 0.1%, even though we got positive news

over the weekend on the vaccine front. almost 3.4 million people in the uk have taken the first dose of the vaccine. promising signs there as far as the vaccine rollout is concerned. one stock in particular we're very focused on in france and italy is stellantis. that is the joint carmaker of psa/fca now that the merger is complete that's up 6% on first day of trading. dak in germany, infineon, the chipmaker, a lot are doing well in europe on the back of better than expected data we got from china overnight. foreign exchange, one continues to be of dollar strength last week the dxy did rebound. the strongest week for the dollar since october so, that is playing out versus the currency pairs as well we have euro trading on the back

foot around 120.60 is where we're at the pound hovering down 0.4% the pound is interesting, since the brexit deal was signed, we have moved side ways it tells you a lot of good news, vis-a-vis, the price was baked there before we got the deal at the end of the year. that's the picture for the pound this morning. one of the major stories this morning in europe, german's christian democrats have elected armin laschet as the new leader of the party at saturday's virtual party conference but germany's conservatives are still questioning whether laschet is the most suitable candidate to succeed angela merkel and lead the party into the federal elections. laschet said he and the party

will have to once again earn the public's trust as angela merkel prepares to step down. >> translator: there are many people who think angela merkel comes first and the cdu second the chancellor's reputation among people here and internationally can be summed up in one word -- trust we now need this trust as a party and this trust is not a gift or an inheritance it's not something you can just pass on. you have to work for this trust. >> let's get out to the co-founder and ceo of cv and annette joins the conversation as well. you work for a polling company so i'm interested to see how the selection of laschet is going to play out as far as the federal elections later in the year. people say because he is the continuity candidate from angela merkel, he's most likely to capture the vote from sdc and the greens as well what do the numbers tell you >> yes, good morning

>> i am not so sure. we can see or what we have seen over the past month is that the union parties -- the cdu and cdc could benefit a lot from the coronavirus crisis management. and they are still ahead of the green and social democrats and it's true that for the cdu, it was important to choose a candidate who was considered to be a suitable chancellor as well but what we can see in the data is that even though four out of ten germans think laschet is a good boss for the cdu, you might not be considered a suitable chancellor yet only one out of every fifth thinks laschet would be a suitable chancellor in september. >> what do you reckon, how much

will the cdu look at those popularity ratings of armin laschet when it comes to picking the candidate who is running for chancellor next? in other words, how big are the chances for marco zuda. >> that's only a question the cdu can answer themselves but if they're interested in polling data, they can see that. the chance for march cust soder to be chancellor is higher every second person in germany who might vote in september thinks he's a suitable candidate. one thing i see that can be important is that what we've seen in the past is that, especially women have brought the cdu a lot of votes in the polls recently they were much more satisfied with the crisis management in the covid situation, but also with angela merkel, its

leadership and the question might be, who of these men is able to win the female vote in the future i mean, laschet could win the female vote, but what we see in the moment is that markus soder is much ahead. >> which topics will, in your opinion, will be decisive when it comes to the general election in september will it be corona, the economy or others? >> in the past year we've seen there can be a huge shift. in the beginning of last year, it was the climate situation that was one of main topics for people in germany. and then it got shifted away by coronavirus. what we see at the moment is that people think the economy labor work, that is the important topics for the future.

they consider that -- economic topics to be the most important topics for the election. >> now, before we get to the election, the immediate task for mr. laschet will be uniting the cdu party itself this is really a crucial task if they want to succeed in september. what can you tell us about this task and the chances that he will be able to unite this party in a more meaningful way >> yeah, i mean, i can refer to the opinion of the voters. they have doubt in the fact whether mr. laschet can reunite the party. four out of ten write him to be a good head of the party, but they are very unsure whether he managed to keep the party together >> just to round out the conversation, i want to ask you

just in general how the polling looks right now in terms of the approval of how the government has handled the coronavirus situation? how are things looking >> yeah, we saw a year in 2020 where the germans were very satisfied with the government and the way they were handling the corona situation they got approval ratings for that, up 60% in the past month now with the second or even third wave of corona in germany, we see the approval rates dropping a little bit. it's still every second person who thinks the government does a good job but it's way less than six months ago >> i will leave it there thank you so much for joining us to shed some light on what the polls are telling us co-founder and ceo of sivy thank you for joining as well. i want to bring you some fresh comments we just got crossing the wires from the

german health minister in response to the news pfizer will be cutting its covid vaccine deliveries in europe as it upgrades its production facility the german health ministry saying very definitively, i call on pfizer to stick to its commitments on delivery volumes and dates. so, fresh comments out of the german health minister we'll watch to see if pfizer comes back with anything in response to that. now we will take a short break. when we come back, we'll be talking earning season as u.s. banks kick off results season. we'll have the latest after the break.

welcome back to "street signs," everybody. it's a big week in washington. in his first ten days in office, president-elect joe biden plans to announce a slew of executive orders his administration plans to tackle what it calls the four crises -- covid-19, the economic downturn, racial injustice and climate change following his inauguration on

wednesday, biden plans to begin issuing the new measures aimed at both turning the page on some trump era policies and moving forward with his own plans meanwhile, washington is on high alert for possible security threats during biden's inauguration following the deadly events on capitol hill. dan scheneman has more >> reporter: the nation's capitol is on alert. >> having our fellow americans storm the capitol in an attempt to overthrow the government certainly warrants heightened security. >> reporter: some 15,000 national guard troops deployed across the country, state capitols are under heavy security. >> we're ready for two people and we're ready for thousands of people >> reporter: in michigan, a small group of protesters gathered at the capitol in lansing. >> a bunch of people decided not to come today because of fear of the national guard and our state

boys over there watching us right now. >> reporter: at other statehouses there was a heavy police presence and the national guard has been called in to protect at least 13 state capitols. >> hopefully peel will go home we just need people to take a deep breath for a bit, kind of relax. it will be okay. >> reporter: hope that peace can be achieved with a massive demonstration of strength. dan scheneman, nbc news. alongside developments in washington, the investment community is bracing for earnings to kick off this week and kick into high gear. jpmorgan has reported a 42% jump in fourth quarter per share, beating estimates when they release their numbers. as america's biggest lender released almost $3 billion in reserves, cite canning hopes that vaccines and a fresh u.s. stimulus package will boost growth citigroup also posted better than expected earnings and lowered provisions by $1.5 billion. wells fargo released $757

million in reserves. also that -- after topping forecasts. the three lenders released more than $5 billion in provisions. shares in all three banks fell after results. now bank of america and goldman will post their results tomorrow with u.s. markets closed for martin luther king day today. morgan stanley and bny mellon report on wednesday. daniel morris joins us now great to have you on the program. just a high-level question to kick off u.s. equities are trading near record high. european equities have been soaring since the early november period does this actually set the stage for disappointment this earnings season >> not necessarily disappointment, but i would say the expectations are all that much higher. the experience over the last year since the pandemic hit is every quarter you've have

significant, positive, fwid answer has been positive essentially we were too pessimistic back in the spring of last year since then things have gone better than expected you see that in the results from the banks reducing the provisions by now we have caught up to that hopefully and at this point you should see a better alignment of better expectations. you anticipate not quite such a big amount of positive surprises in the quarter, but then you combine that with, as you point out, at this point certainly somewhat elevated valuations if there is any disappointment on those surprises, i think you're going to see a pretty significant reaction in the market for those particular companies. >> it feels as though in addition insight into how quarters have gone, management will be looking for commentary as to quarters ahead it's very early in the year, so

full guidance is unlikely for most, but how much incite will management be able to offer inve investors? how much visibility are they going to have on things like capital expenditure, dividends and the revenue outlook? >> well, we certainly would all like that certainty. i think certainly we're probably not going to get very much of it what we've seen with the pandemic is any kind of predictions, any certainty goes away pretty quickly because of the surprises on the vaccine front. on the good side we had, don't forget a month or so ago, good results on the vaccines but now it's the difficulties in the rollouts, it's the mutations and everything is changing certainly companies are going to try to provide as much guidance as they can, but we all appreciate we're in an incredibly unstable, uncertain world. and even if they were to pry to provide more certain guidance, i don't know that investors would take it all that seriously. >> looking out to the rest of the year, daniel, which sectors

would you say are poised to benefit the most from a pickup in the recovery? specifically from an operating leverage standpoint, which sectors are you focus the on right now? >> i think what everybody has in mind is all those sectors that benefitted from the lockdowns should do less well on a comparative bases. this has already played out to a degree and we have to think about in those beaten down sectors that have come back, whether or not they've gone too far, is there too much enthusiasm nonetheless, if you think about services, if you think anything around transportation, around leisure, we certainly feel there are opportunities there, or particularly if we do get a bit of bad news, the markets pull back, that's probably going to be the time to look at those sectors again because we don't want to forget in the medium term, we really should be in a much better place six to nine months from now. and i think it's going to be in those stocks you'll see the most reflected.

>> can i ask you how you're thinking about biden's stimulus plan because i've heard two opposing views. many people are saying that obviously given the size of the plan, it's clearly going to add to some reflationary dynamics of the economy in 2021, but other people are concerned about the possibility of raising corporate taxes, perhaps, in 2022. how are you marrying the two together and are there certain sectors you're looking to avoid? >> well, i think there's two things to keep in mind number one, i would anticipate this initial proposal is, you know, probably a bit after christmas now, but if you could get everything you ever wanted, this is what it would be with the expectation that you're not going to get everything you wanted and part of what the market is going to go through over the next few weeks or months is to see, this is the plan, what's actually going to be realized and we try to price that in. that's going to be one of the dynamics as you point out, the more you get at some point, i think we do need to pay for it

at this point we're not focusing too much on where the revenues are going to come to pay for this at this point it's really just the significant increase in the budget deficit, so we're anticipating yet more issuance of treasuries. we should see that to some degree reflected in nominal bond yield. there are two risks in the medium term. one is, the fed, investors are looking for more inflation, but that means higher nominal yields and could that in and of itself become a problem the second question further down the road, we don't anticipate allowing the budget deficit to be this large indefinitely at some point it has to come down how that happens, how quickly will be the next big focus for the market but certainly not in the near term. >> daniel, when it comes to virus control, it feels as though the u.s. and europe have been trading places a little bit throughout the last year each one taking the lead when it comes to controlling the virus

at different points. at the moment, restrictions are more severe and more prevalent in europe than they are in the u.s. and the u.s. is bracing for this additional fiscal support is the u.s. going to materially outperform europe this year? >> if you look at gdp growth, that's almost guaranteed because you'll have this massive third package of fiscal stimulus in the u.s. where in europe you're not even distributing the funds from the very first package that was passed last year and it seems politically much more challenging for the eu to come up with another big package in the way they did with the next generation eu package individual countries may do that to a degree they are able. this is really the challenge for the eu as a whole, countries like germany, which have much more fiscal room to have further stimulus, to support businesses, to support households, whereas we think in the periphery we thought about during the eurozone crisis, spain, italy,

greece, countries that already had high debt levels have less to push those even higher. i think you'll see this disconnect open up between the u.s. and europe and that will be an issue for the markets. >> daniel, we'll leave it there. thanks so much for joining us today. daniel morris from bnp paribas management a quick look at travel stocks. the uk has temporarily close all travel corridors to stop the spread of coronavirus. passengers arriving in britain will have to quarantine for up to ten days and provide a negative covid test 72 hours before traveling this is the picture for travel pretty negative as we head out towards the end of the show. that is it for myself and from julianna tatelbaum w "worldwide exchange" is coming up next.

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