tv Bloomberg Surveillance Bloomberg December 28, 2020 5:00am-6:00am EST
guy: stocks jump is trump signs the virus relief bill while a government shutdown has been avoided. by waiting until late sunday night, the president surprised 14 million americans with one week of unemployment aid. in terms of what is happening in europe, the focus is on vaccines. ofope, starting its rollout its vaccine program using the pfizer vaccine. there is an expectation that within the next few days, we could see an approval of the astrazeneca vaccine. that could have a big impact on the u.k. economy and in terms of what else we are watching, a focus on what is happening with the markets, alibaba shares under pressure in china. ant group told by authorities its business model needs to
change, raising the risk of a breakup. the whole chinese tech sector, could it be at risk? today, that sector seeing a selloff. good morning, everybody. monday morning. this is "bloomberg: surveillance ." i'm guy johnson. let's continue to update you on what you need to know. has signedt trump the $900 billion coronavirus relief bill passed by congress. he's backing down from demands lawmakers change the bill before he sign it. calling for ais vote to increase the $600 checks but the nonbinding request is unlikely to pass. the u.k. and eu have signed a post brexit trade deal, but speaking to the sunday telegraph, boris johnson admits it doesn't go as far as he wanted on financial services.
there is still little clarity on a equivalent's that allows firms selling their equipment into the eu market. the internet empire of billionaire jack ma is facing increasing pressure from china. regulators are telling his financial firm ant group to go back to its roots as a provider of payment services, threatening to throttle growth and its lucrative business of wealth management and is creating a special team to set up a timeline for the overhaul. global news 24 hours a day, on-air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you very much. the u.k. market is closed today, there is a national holiday in the u.k.. we are seeing light volumes, but markets, continental markets are hitting anax
intraday record high in the session. -- has to dois wh with delivery hero but the industrial sector, particularly autos. after thelows down signing by the president. s&p futures largely bid at the moment so we will see a positive open in the united states. in terms of where we sit with the fair value, the s&p up more than .7% once you run the calculation and bitcoin, a 26 handle. we had a 28 handle. we've seen huge moves over the last few days. it doesn't seem as if bitcoin stops the holiday, trading 24/7. the volume is piling in as people enjoy the holidays and focus on the bitcoin trade but as you can see, another big move, up 9.66%. washington, d.c. and
mar-a-lago, president trump has signed a $900 billion pandemic relief bill. the back down from the president at the last minute late sunday night, basically caving in to demands to get it done to avoid a government shutdown and to get the all important checks out to people and the unemployment benefit to start flowing. joining us to get a sense of what happened and will happen next is bruce einhorn. bruce, let's talk about what happened here. why did the president this -- decide to sign on the dotted line? nothing has really changed between last week when he said it was a disgrace and the $600 payments were ridiculously small. now when he signs the bill, the bill is the same. as you pointed out, the pressure was building and there were it would cost him
control of the senate, but to run option january, the two republican candidates getting hammered because of this. guy: absolutely. in terms of people's lives, 14 million americans basically have missed out on a week and a half of unemployment benefits. we have to calculate the impact in terms of the effect that will have on the u.s. economy. bruce: that is a good point because congress passed this whena hard deadline as to the additional unemployment benefits expire. the delay by the president in signing the bill means money gets shaved off of that. that doesn't get added at the back end so that is one week gone. this comes at a time when the economy is weakening and coronavirus cases are soaring, so there was a lot of pain across the country. final quick question, the
president basically has decided he's going to take a different approach to the republican party. is this the beginning of a split between the president and the republican party, and what long-term implications could that have? bruce: well, that is a good point. it certainly seemed that way last week when trump first came out with his opposition to the bill. around the same time, he was an effort from the for a primaryled against him in 2022. for $2000 relief checks also seemed like it was a slap at mcconnell and republicans because some republican senators were dead set against that. the fact that now trump had isned the bill, maybe that
an indication he is backing down from this fight. we still have to see. guy: i think it is going to be fascinating to see that one play out. probably the near-term focus, what is happening in georgia. thanks for the input. bruce einhorn joining us on the latest in the politics out of d.c. joining us to assess the market implications, commerzbank fx strategist. good morning and thank you for joining us. let's talk about why the dollar has gone down as a result of the president signing this. why is this dollar negative? >> the reaction of the dollar was in line with what we've seen the last couple of months. reactingr has been negatively to the prospect of further stimulus because i believe the market is looking through the positive economic
in the short and medium-term and is focusing more on the longer-term implication is pushingl, which up significantly and this has long-term implications. the question is how this that will be reduced? can it be stabilized in the long-term and what we are seeing, which is interesting, in line with the outlook for both the stimulus, inflation expectations have been rising. if you look at the five-year inflation expectation, they are at the highest level for at in thewo years, and so market, you see inflationary risk because of stimulus. it is negative for the u.s. dollar because the federal reserve has changed the strategy this year and is saying it wants
inflation to overshoot for some time before it will raise so with rising inflation expectations, the real interest rates in the u.s. are going to fall and this is negative for the u.s. dollar. guy: ok, so that is one side of it and i was hoping that would be the argument you would layout. my question now is, do we get to a point when actually the other side of the dollar has an impact on the market as well? normally when you run to the dollar -- you run to the dollar when things are looking bad or particularly good. we saw the running to the dollar early on in this crisis. that is the point where relative interest rates on either side of the atlantic or real yields on either side of the electric have come into balance, but now i'm comes out of this
crisis best and i wonder if it is going to be the u.s. economy and at some point, whether that starts to get priced into the dollar and we see a reversal of the move we are getting at the moment, potentially a big reversal of the move as the u.s. economy powers out of this economy in a way that the european economy might not? driver,is one decisive and the biggest risk to our dollar forecast -- we are rather dollar bearish because of the outlook for a declining u.s. real interest rates, but in economics, there is an effect called the 10 effect, which puts gdp in line with exchange rates. economies which are more wealthy, which have higher gdp levels usually have stronger currencies and obviously, the effect you are talking about, who will recover from this
crisis faster, this will have an effect on the exchange rate. at this point, uncertainty is quite high. who will really recover faster and we've seen over the last the west had some andes handling the crisis, we did point in time, not factor this into our dollar should the u.s. economy recover faster than the eurozone, that would be positive and effect on the dollar. reversal of the dollar weakness we've seen over the last year, i'm not sure about that. it certainly depends on the pace of the economic recovery we would see, but it cannot be excluded entirely. one other factor comes to
mind that could change the calculation regarding who will come out of this crisis first and better, and that is the rollout of the vaccine. how much attention are you paying to how quickly and how effectively the various regions are rolling out the vaccine? at the moment, it is largely the iyontech, moderna race, but we could get the astrazeneca vaccine very soon as well and that could change the calculation. how big a factor is this in terms of your valuations of where currencies go? eric: -- thu lan: it is a big factor because at the moment, we forecasted eurozone economy in the second half of next year will recover quite significantly. this will provide a boost to the euro, but should we not see that post vaccine recovery, that
would obviously be a downside risk for the u.s. exchange rate forecast, and what is worrying us at the moment is so far, the has only ordered vaccines for about half the population of the ourpean union, so this puts call at risk that we will have herd immunity by auto more winter of next year. this could hamper the recovery to some extent but at this point, we remain confident as soon as we have the start of the vaccine program and at least a significant portion of the immune,on is already this would at least avoid further lockdowns, which would be detrimental for the economy. -- a positive economic effect.
guy: you do wonder whether the new variants may cause herd immunity, the percentage of the population to be higher which will be a calculation. thu lan nguyen, commerzbank fx strategist staying with us. we will come back to brexit, talk about the impact, and we will be talking with capital alpha partners senior political analyst. that conversation at 10:30 a.m. in london. this is bloomberg. ♪
relationship with the eu is changing. europe's freedoms of movement will no longer apply from 2021. for brits, you'll need six months on your passport and be able to stay for 90 out of 180 days. to live and work, and withdrawal agreement protects rights of those abroad, but to live in the new year, there will be new costs and residency requirements. goods trade will see more friction. there will be customs declarations, certificates to move food, animals, and plants, and jill need the right paperwork to get close to some u.k. ports. to avoid chaos, the u.k. is giving importers a six-month grace. bank but the eu is not following suit. to servicesanges and capital, london is set to lose its automatic rights to sell into the eu. has been narrower, granting temporary equivalents
for u.k. clearing and is in no hurry with other financial services. bloomberg's anna edwards looking at the full freedoms, the free movement of people, goods, services, and capital, how that will likely change now that the u.k. will be leaving the eu's single market, with a deal that doesn't cover services. still with us, thu lan nguyen, commerzbank fx strategist. let's talk about the pound. rate. on the cable are you surprised by the muted reaction from foreign exchange markets to this deal? thu lan: maybe a little bit. we would have expected at least a more significant relief rally in sterling exchange rates, but we were always very cautious in
forecasting a rally in the pound anyway. appreciation potential was limited because you have to remember the deal we have now, three or four years ago after the referendum, this was considered to be a hard brexit. changed when it was clear the u.k. did not want to remain in the single market or in the customs union, but it is a relatively hard brexit, which presents frictions. despite fact that this is better than a no deal, it is not the best case that we had envisaged three or four years ago, so obviously because of this, appreciation potential for the pound is quite limited. guy: where we have seen a significant move is in pound
volatility trade. do you think there is an opportunity, a buy ther? -- there? ? up anse is it sets ongoing negotiation and there is so much to be decided. services is an area that remains undecided at this stage. if volatility were to fall any further, would that be a buy because there will be bumps in the road? thu lan: i think so. there are a lot of questions that remain unanswered. we've mentioned plenty. the future for therees trades, the u.k. ,re a lot of stumbling blocks so i would expect pound volatility to remain relatively
high because there are still some uncertainties we could see, how they economy would fare with this trade deal. ,bviously better than expected that is clear and we could see economy rally, the u.k. fares relatively well in the next couple of quarters, but it could be the opposite so as long as uncertainty is this high, i would consider -- i would say pound volatility should remain relatively high and a significant decline in pound volatility would not be justified. guy: we will leave it there. thank you for joining us. thu lan nguyen, commerzbank fx strategist. we will continue the brexit theme later.
we are seeing light volume across europe. things. . the bloomberg dollar index is also tracking lower. after the president signed the relief bill, the dax hitting a intraday record high earlier. s&p futures, broadly bid. bonds are selling off. we have the capital alpha senior analyst joining us. we will find out why the president signed the dotted line last night and what the impact of the delay will have on the u.s. economy. this is bloomberg. ♪
signed a post-brexit trade deal. prime minister boris johnson admits it is not go as far as he wanted on financial services. there is still little clarity on so-called equivalence that allows them to sell services into the eu single markets. the u.k. is poised to approve the covid-19 vaccine produced by astrazeneca and the university of oxford. the sunday telegraph reports could be rolled out from january 4. the u.k. has already vaccinated more than 600,000 people using the vaccine from pfizer and biontech. it will take months to vaccinate enough people to have an impact on the spread of the disease. the european commission president says it will be a gradual process. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by over 2700 journalists and analysts in more
than 120 countries. i'm ritika gupta. this is bloomberg. guy? guy: ritika, thank you very much. let's turn to what happened overnight in asia. basically returning to the roots as a provider of payment services. team to up a special comply with the demands. what does this mean for the business going forward? our asia investigative reporter joins us now. what does the pboc want? >> the china central bank has ant tont to realize -- islize -- right now the ball with them and the need to come up with a plan and take that proposal to regulators to be
green lit. regulators stopped short of saying they could break up the company so on that front, that is a good sign -- a good sign. aey may need to come up with proposal to offload some of their assets in wealth management. that would most likely be regulated more like a bank going forward, and that means crippling growth for one of their biggest revenue drivers. guy: is down by around 1.72%. this is the free trade in alibaba in the united states. it gets sharply lower on the back of this news. what is the risk to alibaba
here? lulu: for alibaba, their trouble is that the chinese antimonopoly regulator is launching an investigation into the company. their ownuded investigations on friday and people are waiting to hear what the results and the scope of damage that the company is facing. crackdowns isly an industrywide target. alibaba being the largest e-commerce company does make it a high target profile. about thealk potential tech sector in china. there was a more widespread selloff on that risk today. how seriously should we be taking that risk? is this just the beginning of the chinese authorities deciding too sector has become
high-profile and as a result needs to be knocked down a little bit? is that a risk for the entire sector? lulu: that is a good question, and what investors hope to find out. regulators have not been very transparent, in terms of what their intentions are, apart from saying that this is to protect the concernhts and is that some are saying this is a watershed moment where the chinese government has largely left china's internet companies alone and that is one of the reasons they have been able to grow so big over the past few decades, and this is a watershed moment where things are going to change in the iron fist is going to come down. the optimists would say this is like the previous revelatory crackdown that has made the
companies think ahead but the largest companies like tencent and alibaba have come out unscathed largely. right now, people are trying to figure out what this round of revelatory crackdowns actually means. absolutely. as a result, people are going to money.sting lulu chen, bloomberg's asia investigative reporter. thank you very much. in the next hour, we go back to politics stateside. about 6:30 a.m. in new york, around 10:30 a.m. in london. this is bloomberg. ♪
guy: good morning and welcome. this is bloomberg surveillance. i am guy johnson. let's talk politics. president trump has finally signed the $900 billion relief deal put forward by the u.s. congress, avoiding a government shutdown as well. while signing the bill, president trump demanded congress increase the $600 stimulus checks that are going to go out to 2000 dollars, basically a nonbinding request. joining us now to discuss all of this, james lucier, l for
partners senior political analyst -- capital alpha partners senior political analyst. ofes: he has a track record changing his mind at the last minute. the last shutdown we had in 2019 the longest shutdown ever. forp was refusing to sign funding unless he also got funding for his border wall. had sent hised he message and he did relent. unemployment benefits people -- for people expired that day, as many people did with their protections from evictions and so forth. on that, president trump decided he did not want to see people being a victim. the bottom line is that trump has sent his message and people know he wanted to thousand $2000 checks -- he wanted
checks. he took command of the situation, at least in his own mind. the thing about trump is you don't watch what he says, you watch what he does all stop he has shaken things up -- you watch what he does. he has shaken things up. guy: what do you think of georgia in a short time? james: the georgia race is interesting because the senate is at stake. republicans got more votes at all levels of government other than in the presidential race and even then, it was close. it is a real risk that trump's demand for a $2000 check for -- per person would undercut the republican senators who voted for the $600 per person check. trump also method an attack on what he called the corrupt republican establishment in washington, appealing to his
base against that establishment and both of the republican candidates in georgia are effectively members of that establishment. while republicans have had an edge in holding onto those seats, it was very possible and is still possible they could lose both, in which case joe currentll contrary to expectations, have a chance to implement the greatest part of his agenda with regard to energy , infrastructure, health care and stimulus. back to theto come split between trump and the republican party in a moment but let's talk about georgia. you said it is very tight. what is your reading and the tea leaves and the political polls? what is your assessment? james: i think we have learned not to trust the polls at all at the state level, given the experience of the presidential election cycle.
oflsters have told us if 3% the people that answer the telephone are a valid sample, they are not biased in some way and the polls are accurate. in fact, we just don't know. likewise, the fundraising. democrats are out raising republicans substantially. we thought that would be a factor in the last election, but it really wasn't. i think the best predictor of how people vote is how they voted in the past. on the actual voting in the last election cycle, republicans do have an edge here, but the situation is really opaque. i don't think the polls or some of the other metrics we are seeing like voter registration or absentee ballot files really tell us much of anything. back to thist split between the president and the republican party.
thatis just sour grapes, the republican party has not done more to support president trump in his battle to win reelection and his frustration that he hasn't, or is this something more? is this the start of the trump political party? the fracturing of the right? notstill wonder whether or the president has his eyes on the next election cycle, whether he feels he has one more shot at this. you do wonder whether or not this is the beginning of that, the firing of the starting gun on that process, this split over the last few days. james: this is absolutely the first move of trump's post presidential future, whether he is running in 2024 or not. he has gone on record as being in favor. that donaldremember trump has more in common with than most peoplen
think. the democratsgs, who seeblicans washington as dysfunctional and unable to move on key topics. trump sees this as an indictment of the current system, and there are a lot of people on both the left wing of the spectrum and the right wing of the spectrum who says this -- or thinks the system is broken. democrats were to win in georgia and you were to see an unleashing of the democratic party's spending agenda and potentially a bigger voice for the left of the party because the opportunity would be there, how much would that
undercut that trump argument? if the democrats can deliver that agenda and bring the working class back to their party rather than leaving it on the trump side of the ledger, does that undermine and undercut the trump case going forward? james: you've got to remember that the democrats have at their disposal, budget reconciliation so we would see significantly more spending, more fiscal impetus. $5ould say on the order of trillion to $7 trillion over 10 years. that is what we expect the democrats want. bill,ould get a stimulus infrastructure bill, energy
bill. they could do a lot of that, as opposed to the current outlook, which is one big effort by joe biden early in the year. that would be a single bill that does the best he could do under current circumstances, on stimulus and covid and health care. james, let's assume that we end up with the biden -- with divided government. that early effort by the biden administration, is it going to look similar to the relief bill we have just seen with a little bit more of a green agenda and a full focus on that $2000? is it basically a cookie-cutter process? have seen that this works and we continue with it? james: i think biden needs to take advantage of the post-pandemic crisis.
this is the dark winter of covid. things will get worse before they get better. i think biden needs to take the opportunity and put a large covid stimulus and infrastructure packet she wants package he wants to do. in other words, he would use the need to pass something urgently thatal with the pandemic, would be his single greatest opportunity to do as much of his agenda at once as possible. that would be something much bigger and much broader than we have seen in the current bill. it would be a broader spectrum of things, but it would be a relatively smaller subset. a quick question, james.
theelaying until sunday, president has effectively denied around 14 million americans of unemployment aid. what are the implications of that? do you think we are sort of underplaying the economic pain that this caused? james: there is quite a lot of economic pain. i think that may be a factor at the end of the day as to why the president finally relented. he made his statement but did not want the bad press of denying those benefits. it is likely there will be more in the spring. , byink that the president making his statement and then deciding to sign the bill is at least allowing something to happen, we are turning the page and moving to the next chapter. james, we appreciate your
ritika: this is bloomberg surveillance. i am ritika gupta. -- driven by a boom in online shopping. it is much better than the result during the last recession in 2008, which saw 3.5% drop. online sales rose 49% from the year earlier. acommerce now counts for fifth of all dollars spent during the holiday season. -- merger of the first and second largest platforms in the country could lead to higher
fees on restaurants and hurt customers. together they would have over 99% of the market. an additionaluild 250,000 electric cars in the next three years. that is up from around 8% but there is concern that germany's transition to electric cars may be hampered by a lack of charging infrastructure. elon musk said it would be impossible to take tesla private. he says shares have surged eightfold this year. advance of thehe next best performer on the index. lufthansa has cut -- euros inout 10 billion available liquidity.
that is your latest business flash. guy? guy: ritika, thank you very much. let's get back to the stimulus package that has been signed. former treasury secretary larry summers spoke on wall street deal.bout the relief >> we are better off with stimulus than we are without stimulus. the $2000 checks make much sense. the main issue is going to be sustaining this expansion. the bill about it, would probably pay out $250 billion a month for the next three months. the level of compensation is running about $30 billion a month below what we would have expected. gdp is running about $70 billion a month below what we would have expected.
in a way that is quite unprecedented, we have stimulus already, much more than filling whole. given the fact that people -- given the fact that it is not that people don't want to spend, that they can't spend, i don't necessarily think that the priority should be on promoting consumer spending beyond where we are now. i'm not even sure that i am enthusiastic about the $600 checks, and i think taking them to through thousand dollars would -- taking them to $2000 would be a serious mistake and we risk a temporary overheat. i would like more assistance to state and local governments and more money put into testing, more money put into accelerating vaccines. i think it would be a real
$2000. to be going to guy: former treasury secretary larry summers speaking on bloomberg's wall street week. a german press conference within the last few minutes, revealing that the german cabinet has deal, the eu-u.k. trade according to a spokeswoman. closed today. the dollar is going down. bitcoin continues to climb. much more to come in the next hour. this is bloomberg. ♪
finally signing the virus relief bill. a government shutdown has been avoided as well. by waiting until sunday night, the president basically depriving around 14 million americans of one week of unlimited aid. that is a big deal -- one week of unemployment aid. that is a big deal. the u.k. government is expected to approve the astrazeneca oxford vaccine within days. alibaba shares sinking as chinese authorities tell ant group to shrink its business model. is the whole chinese tech sector now at risk? this is bloomberg surveillance. i am in for francine lacqua and tom keene, both of whom have a day off. let's check the headlines you need to know about. i