tv Bloomberg Daybreak Europe Bloomberg December 28, 2020 1:00am-2:00am EST
in less me. and there are over 20 exercises to choose from. get gym results at home. no expensive machines, no expensive memberships. go to aerotrainer.com to get yours now. fromod morning headquarters in dubai. i manus cranny. and recorded his alongside me -- annmarie hordern is alongside me. the aidt trump signs bill but continues to push for $2000 checks. futures higher. europe is 24 hours into its
vaccination campaign. the u.k. looking to uproot the astrazeneca vaccine as early as this week. and alibaba's share buyback program fails to help. 6:00 a.m. in london. we are back together. it is a one-day special. good morning. $900 billion in pandemic relief. chaos of we did? -- chaos avoided? >> it is our last show together before the the new year. finally back together again. one of the uncertainties going into the new year was about the relief bill. the president is still pushing for $2000 checks. it does not look like the republicans will buy into it. if the fading days of toleration. we will debate a great many
things. do you buy more tech? did you enjoy yourself last week? you know the right answer. no.he answer is certainly it was a little boring without you'll. and manus is the first person to call me on christmas morning. the show continued even when we were not together. it is the final monday trading day of the final week of the 2020 year and many are ready to bid goodbye to 2020. s&p 500 futures up. this as the president finally signed the stimulus bill. that has given the market some fresh impetus to the upside. we do have moves higher when we look at the treasury yields. up to basis points. leavinging -- money
u.s. treasuries and leaving the dollar. a risk on day although liquidity is thet given that it weird timeframe between christmas and new year. it is barely like we got a trade deal. mark cudmore writing that the material risk to the pound is there is a lot of uncertainty remaining. especially when it comes to the city of london and financial services. and bit coin is the star of the session. we are up 10%. the story was christmas eve until yesterday when we pierced 28 thousand dollars on bitcoin. fascinating. we will look at that later. our top story this morning is the president signing a bill containing $900 billion in pandemic relief. avoids adown government shutdown and delays to the eight package.
legislation which passed congress last week includes one point $4 trillion to fund federal agencies through december. -- $1.4 trillion to fund federal agencies through december. less than a week ago, donald trump called this bill a total disgrace but now he has signed it. what has changed since then? bruce: nothing much but as you pointed out, he has issued statements where he uses a stronglike -- message and insisting that congress remove certain wasteful items from the bill. have ae u.s. does not line item veto for the president. choose whichet to
things to accept and which things not to. he signed the bill. he can tell congress to make changes but he has lost any leverage with them. you are right, they are likely -- the democrats are likely to pass the proposal to raise the stimulus checks to $2000, the relief checks. nancy pelosi will probably have the democrats do that on monday. it will probably go to the senate and mitch mcconnell will probably not do anything. manus: what is congress going to do now that he has signed it? , the real focus in congress will now be on the election in early january. the republicans in the senate are in a bit of a bind because donald trump has called for the additional payments but a lot of republicans don't want to that. mcconnell will find a way to
avoid having people take a vote because he won't want to put the republican senators in the runoff in a position where they have to go along with donald trump and support additional checks or they have to say no because they don't believe in raising the deficit. it is a difficult vote. mitch mcconnell probably does not want them to take it so he will figure out a way to avoid doing anything. manus: bruce, thank you very much. bruce einhorn wrapping up the political narrative. we have martin malone from alphabook. the ceo. you often referred to the vaccine. and recovery. two v's. martin: good morning, manus.
what trump hasly done with his u-turn on fiscal is an important signal for 2021 and that is who is going to run out of space on a trade? fiscal will do the heavy lifting this year and next year involving the emerging markets and advanced economies. it is quite crucial. you can see the tenure interest rates in america are below 1%. we are at the lower bound in long-term rates across the world. except for emergent markets -- emerging markets which continue to rally. that is the most important for the remainder of the year. if we get any road bumps, fiscal policy will be the first part for policy mark -- policymakers. from 2008 whennt fiscal policy was used to
bailout the banks and the property sector. fiscal policy now is being used to bridge the lockdowns we have seen for companies and jobs. scarring atto avoid the corporate level. we will continue to see it play a dominant role in that will be good news for stock markets. is the next positive catalyst to the upside for 2021. more fiscal stimulus. how do you navigate what could come out of the u.s. when we still don't know the makeup of congress but we will know after january 5? what are you watching for in terms of the georgia runoff? martin: you are spot on. there is a lot of risks on the political side. we basically have a political stalemate. on january 4, we will see the runoff for the georgia senate.
on generally six will be the first day of congress. and january 19, the inauguration. there is a lot of political risk. we see a stalemate. to 1994 andimilar clinton. he came in with grand plans but the market decided that you can't do any of that. it is crucial that market could potentially again did tate political -- dictate political movement in america for the next four years and that is why it is so crucial for example, for the level of interest rates and the dollar. if they don't like what they see, markets could move quite violently if there is any perceived risk on the political side. manus: martin, the other thing that will drive market is definitely going to be where interest rates go.
i take you to one of our bloomberg columnists said this morning -- here is the killer line -- for the traditional 60-40 come if the 40 is getting zero or negative returns, holding more cash is going to keep going. this is the narrative. utterly bound to sell 1% rates?- sub-1% martin: we had negative growth in 2020. year forave a record global economic growth in 2020 one and into 2022. and this is not just for
governments. most households did not do what they would do this year. theee private savings at household level and corporate level. dropped quitevel sharply and america this year and we have seen positive growth in china this year. we are literate -- they are literally the only country to have positive growth in 2020. we will have asia lead and then advanced economies will catch up and that will be needed to see further reduction in private level savings. and that is why governments are going to continue to have a road to recovery as the main mantra this year. malone, the road to recovery continues. let's get you up to speed on the first word news. the u.k. and the eu have finally
signed a post-brexit trade deal but speaking to the sunday telegraph, boris johnson admits a does not go as far as he wanted on financial services. there is still little clarity on so-called equivalents. the internet empire of jack ma is facing increasing pressure from china. regulators are telling his firm, the ant group to go back to being a provider of payment services. it is threatening his business and ant says he is creating a specialty. 3% drivenay sales up by a boom in online shopping according to mastercard. much better results than in the last recession in 2008 which saw a 3.8% drop. made up for a massive 49% and shopping.
into your- get back own lane and stick to payments. ant group has wealth management, billione, a half a customers. not a gazillion. the fallout is all around the tech space. a gazillion. there you go. that is why people tune in to daybreak europe. arehe united kingdom, they running a coordinated vaccination campaign. months to vaccine enough people to have an impact on the spread of the disease that the european commission president says it will be a gradual process and caution is still needed. annmarie: this comes as the united kingdom is poised to approve the covid-19 vaccine reduced by astrazeneca and the
university of oxford. the shot could be cleared for use early this week. it is more easily transferred and does not require refrigeration. martin malone is still with us from alphabook. what do you make of the vaccine story in europe? itspe is vaccinating citizens and the u.k. is out in front. does this bode for a quicker recovery for europe? would you want to take on more risk in the continent? martin: potentially yes. i think the game changer will be the astrazeneca vaccine. because of the speed of its rollout. if we look at the last four weeks, we have had cases surge around 80 million globally. 3 million-4see million doses of the vaccine before the end of the year. a game changer in january from astrazeneca.
20,000,000-30,000,000 doses. the vaccine doses will surpass the number of global cases. and that is really the narrative to take over. the hesitancy on the vaccine. the surveyse from we have seen is that people do want to take the vaccines. the other game changer is that in the u.s., we want to see a johnson & johnson vaccine. we want to see it get past in early or mid january. and both of those will basically deliver the scale and the speed that we need to get vaccines over taking the level of infections. to veryranslate that bullish health narrative and timeframe to market implications. or maybe more importantly, martin, will it unseat any bank
assumptions, fed, ecb, boj? martin: you can see that most of the central banks are really trying to figure out how to deal with the negative output gap, the potential for drops, the scarring affect in 2021 two per minute break had euro -- to permanent behavioral changes. they will see how this plays out. if weill have to step in get an unexpected surge in long-term rates because that would upset the apple cart at this time. fiscal policy is going to be the dominant policy lever rather than monetary this year. monetary will just play as a safety net on markets whereas
fiscal policy will play a dominant role in economic sectors. and that is why we have to be quite careful in the u.k. and that is why the pound is not a buy because of brexit. there is talk from rishi sunak about tightening fiscal policy and that would be disastrous. you have led me there on the pound. we are trading below 1.36. do you still maintain that the pound is a by even though there are many questions related to financial services that have yet to be addressed? martin: i think you are spot on and that is the 80-20 issue. the trade deal is a box standard trade deal about things that you can check. the u.k. economy, 80% of it is services, financial services is
by far the dominant part of it and europe is not going to give toy its financial services the u.k. post-brexit. it will be a fight. thei sunak has to to have equivalents issue with an mo you in february or march and that will probably prove to be very difficult. manus: maybe it is time to load up on some of that low vol. martin malone, chief advisor over at alphabook. coming up, chinese regulators announce that the ant group should return to payments. overhaul the business model. we discussed. this is bloomberg. ♪ are you frustrated with your weight and health? it's time for aerotrainer, a more effective total body fitness solution. (announcer) aerotrainer's ergodynamic design and four patented air chambers create maximum muscle activation
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chinese regulators have ordered jack ma's ant group to overhaul its business model and returned to its roots as a provider of payment services. ant group says it will set up a special team to comply with the demands. let's start with ant group. what is the pboc demanding? how will it affect the ambitions for ant group for its future? >> it is turning out to be a nightmare for investors who two months ago were expecting a windfall. the company has been told by regulators to come up with a plan and the timetable is as soon as possible. the pboc has not said what it is expecting but the tone is firm and harsh. now ispany right evaluating the situation and investors and analysts expect
that to take the form of worst-case scenario, breaking up the company to curbing some of the business growth as the business scene has become more regulated by banks. manus: just how worried do you think alibaba is about this great me from china? is there a real breakup risk? this is theeem that strongest or the toughest crackdown we have seen from the regulatory front. the of that is because statement is coordinated from not just the banks but also from the antimonopoly watchdogs issuing this crackdown. also, it is interesting that jack ma is in the spotlight because it is the biggest in the
country. the wider industry is also suffering. the tech companies and internet companies including tencent and community buy-in company platforms. they are all under the radar right now. manus: ok, thank you so much. can'tg up the alibaba and story of dislocation this morning. let's get back to martin malone. we have a cracking title. china assets in a virtual circle. 30% return on anything from equities to other assets. does that circle expand in 2021? , absolutely it does and there is a simple reason. at everywhere that has had negative growth in 2020 but for china. in the next two years, china's
growth could be over 8%. 6% in 2022 and that is way ahead of america or european markets. is atrowth differential the main driver. and because we have such low interest rates globally and signs of a negative interest rate structure on assets, the whole world will asset relocation into china. there will be a proactive growth strategy focused by a domestic driver in china which is a lot different than the last couple of decades. those number of factors will continue driving that. aboutie: you talk domestic consumption. martin malone, thank you for joining us from alphabook.
>> good morning. from bloomberg's european headquarters, i am annmarie hordern with manus cranny, from dubai. this is "daybreak europe." here are today's top stories. president trump signs the $900 billion virus aid bill but continues to push for $2000 checks. uterus trade higher on the news. europe is 24 hours into its vaccination campaign as the u.k. looks poised to approve
astrazeneca's vaccine as early as this week. alibaba share buyback program fails to boost its shares. 10:30 am where manus is with the sunshine. merry christmas. happy holidays. it is our last show before the new year and i think i speak for probably everyone when i say we are excited to get 2020 done and dusted, out-of-the-way, and with that, going to 2021, we finally have this meal is deal we have been talking about for not just weeks, but months, signed, relief going to u.s. businesses and individuals. manus: there might be a few wrinkles before it gets stamped and out the door but my guests over the past 24 hours suggested there is a variation of white swans to come between the
vaccine, which is obviously ramping higher, martin malone has been through that with us. market the hidden disruptor for 2021? i feel almost tired myself of saying it could be inflation. annmarie: the inflation. i was looking at the breakevens this morning. to beforety much back the pandemic on those breakevens. precrisis. and yes, but bloomberg opinion did write a piece talking about the fact that is it a mirage in terms of inflation? you have to look at what is going on in terms of the labor market and that is starting to stall. little did you know your life would get this exciting that you would be up at 4:00 a.m. in the morning to be reading about breakevens in the united states of america. did you think joining me on the show would get that exciting? did you think so? annmarie: no. [laughter] --hink you have a lot more
you usually offer a lot more excitement to me than breakevens but that's where we are today. the final week of 2020. manus: indeed. we look forward to 2021 and so do the whole crew as well. let's talk about markets because they are all going to scream at the tv that we are chatting too much. we had too good of a time on "daybreak europe." it's christmas. it's another day for nvidia and apple. will we go to the movies ever again? will we stay at home forever? is our societal state irrevocably changed? what we do. bonds, will they ever break 1%? rolet up. have a look at the rest of the markets. we are up 65% from our lows in march of this year on the s&p 500. it is whimpering. 135.60 eight. services are not included in the
deal. in the summer. we put on 10%. is that enough? astra oxford vaccine change the narrative for cable? still have not bought any bitcoin. i could have retired if i bought the bitcoin. but anyway, let's talk about the trade deals instead. it has been reached finally with the european union and the united kingdom and it could see some upside for u.k. stocks which have been amongst the worst performers since the 2016 brexit referendum. juliette saly is monitoring all the calls. jewels, have you got any bitcoin -- juliette, have you got any bitcoin? juliette: you were talking about somebody getting a tattoo with bitcoin. might hold off on that one. it has been an underperformer since the 2016 vote but since october, it has risen 17% on vaccine optimism and on the
optimism there would be a deal which was finally reached so now, we are hearing a lot of analysts saying it's time to go value hunting. the end of it could be an interesting trigger to rediscover the ftse 100 and over at goldman sachs, they say they remain positive with the market looking cheap. they are overweight the ftse 100 relative to the stoxx europe index and a tilt towards value. that value trade also plays into what artemis is looking at. they are looking at financial and energy shares as a rebound and recovery in dividends in 2020 one as well as companies are more confident to move away from this year's extreme prudence. you can also see some upside in the likes of the banks and home builders that were hit by the ongoing negotiations. as you can see on my chart, the white line, the ftse 100 has certainly underperformed in dollar and local currency terms, down .7% since the vote and that has left british stocks trading
near record low valuations relative to global stocks, so has many of these analysts are saying, time to go value hunting here with some potential upside coming through for 2021. annmarie: juliette saly in singapore. on that note, manus is telling me about what this bitcoin tattoo is about. it's from mike who says when bitcoin breaks 500,000 by 2024, i will get a dragon tattoo on my left forearm. that's the tweet. 14 hours ago from mike. pass onwill -- i will that one. juliette saly in singapore. sticking with brexit, from finance, the long far brexit deal is raising questions across the board after four years of negotiations, leaders announce an agreement on christmas eve, but at least some major issues up in the air. joining us now for a look at this is emerged u.k. economy reporter. what does the deal mean for the u.k.'s economic growth?
across the board, many economists are saying they are very happy a deal is done but it still would have been better for the u.k. growth had they just stayed in the e.u. >> exactly. good morning. it's obviously better than no-deal. bloomberg economics had forecast that no-deal would knock an extra 1.5 percent off output in 2021 namely because trading on wto terms would have meant tariffs on many goods and while having a deal will soften the blow of leaving the e.u., bloomberg economics predicts it will be cushioned by a 5% covid bounceback in 2021 although that forecast was made before this new mutant strain took hold. deal or no deal, there was always going to be more friction. there's noey said such thing as a frictionless deal. let's not forget, this is the
biggest reset of an advanced economies commercial relations since the second world war. to give one example, by the government's own estimate, almost 600,000 extra declarations will need to be filled out every day and that's going to take time and money for businesses to organize and there is still disruption, risk of disruption which could lead to shortages at supermarkets. we had a preview of that with chaos in dover with the cross channel traffic. i was there. bloomberg economics predicts that overall, the new friction will mean growth is lower each year for the next decade than if the u.k. had stayed in the e.u. course, those numbers have been run and the question some people would say is the currency. the lows.10% from do you think the currency has
run out of steam? what do you think has been no building consensus around the calls on the pound? bya weaker pound is helped making exports cheaper but you have to remember the uncertainty of the past 4.5 years means sterling never fully regained its initial losses in the aftermath of the brexit vote and that uncertainty translates into weaker business investment, which in the u.k. has grown well below the levels of the u.s., germany, and france, and that is a problem that could get worse. a study by the university college london and london school london forecasts it could drop after brexit. a weaker pound is a double-edged sword and certainly not some sort of panacea. annmarie: what does this mean for the bank of england? we have a deal with more clarity from them, but can we forget the idea that the boe will cut rates
into negative territory? it lessens the urgency for emergency stimulus but the bank of england was already running out of ammo. 0.1% and it of ramped up bond buying through the pandemic. negative rates will be more likely to see strict tier four lockdown restrictions last until easter or beyond. a committee member telling bloomberg this month, if the economic recovery slows in 2021, it could -- then negative rates. the momenth says where no one thinks negative rates are likely is exactly the moment when the bank would pull the triggers or just because we have got a deal, don't forget it has to go through parliament first. negative rates could still be on the cards for 2021. manus: growth will not be back
to pre-covid levels until at least 2022. great to have you with us. the very latest on the implications for the economy and growth. met me get you up to speed with your first word news this morning. president trump signed the $900 billion relief bill passed by congress. he is backing down from demands that lawmakers change the bill before he signs it. the president is calling for a vote to increase the $600 checks to $2000. that nonbinding request is unlikely to pass. the u.k. is poised to approve the covid-19 vaccine produced by astrazeneca and the university of oxford. bloomberg sources say regulator could clear the shot for use as early as this week. it could be rolled out by january 4. the u.k. has already vaccinated more than 600,000 people using the vaccine from pfizer, biontech.
the european union has begun a coordinated vaccine campaign less than one week after clearing the shot by pfizer, biontech. it will take months to vaccinate enough people to have an impact on the spread of the disease. the european commission president, ursula von der leyen, says it will be a gradual process and caution is still needed. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. bitcoin mania is alive and well. can the momentum last? what is left for crypto and 2021 -- in 2021? this is bloomberg. ♪
i am annmarie hordern with manus cranny in dubai. centin was less than one originally. it reached 28 thousand dollars for the first time before paring some of the advance. digital coin has more than tripled in price in 2020 and the question is, can it sustain the rally in 2021? are we going to see a repeat of past bitcoin bubbles where it bursts? eric lam joins us with his take on the crypto. where do we see it going? does it continue to trend higher? or does it quickly evaporate? eric: it's funny. the crypto bubble burst right around the same time back in 20 to 17 -- 2017. a lot of people are having the same debate around the dinner table over the holiday weekend because as you point out, we saw bitcoin hit another record high, 28,000 on the weekend, and it is
up again today, just trading under 27,000 now. it has pulled back a little bit. seems to continue to keep hitting those record highs every time we try and call a top so going into 2021, feels like the sky is the limit. manus: good to see you this morning. it's almost as if this asset has been given a blessing. you have a whole host of others who are real stalwarts coming in to say, yes, this has credibility. how does it compare to other assets to gain that moniker? year is far as this concerned, there is no comparison. when you are talking about bitcoin posting, you know, almost three hundred percent return this year, the s&p 500 -- a good, which is
year. gold is up 25% this year which is a fantastic year for gold. but you know, when you're talking about almost tripling in value, you are not going to find that hardly anywhere, especially given the pandemic this year. you talk about the big heavyweights weighing in on bitcoin and that's really been part of the narrative around bitcoin legitimacy is that these institutional investors that everyone in the industry has been waiting for to enter the space since 2017, they finally are talking about it like it's a legitimate thing and not something that's going to go away. annmarie: what about the other cryptocurrencies? we talk about bitcoin constantly, but the others, how do they perform in 2020? eric: it's been a good year overall for crypto's but in the last couple of weeks, obviously, there's been a little bit more concern about the regulatory issues around crypto, which has been an ongoing issue for years now. but we saw the fcc file a lawsuit against x rp, or rather,
ripple labs, which is affiliated with x rp. that's an interesting situation because while bitcoin famously, nobody controls bitcoin. it's kind of an entity unto its own, x rp has a more interesting history where it was deployed or sold by a company called ripple, which also uses x rp in its business, so there's some interesting debate about whether or not x rp is a security. that's the basis of the lawsuit. there is a concern there might be a splash effects for other crypto's like bitcoin or ether, the others in the space. overall, as we get to the end of 2020, crypto's overall have had a great year across the board. manus: thank you very much. eric lam, our cross-asset reporter with the very latest on bitcoin. show, brexit'sis unresolved issues, yes, there are one or two.
♪ >> no matter what, the u.k.'s relationship with the e.u. is changing. freedom of movement will no longer apply in 2021. you will need six months on your passport and only be able to stay for 90 out of 180 days. want to live and work? the withdrawal agreement protects the rights of those already abroad. in the new year, there will be new costs and residency requirements. goods trade will see more friction. there will be new customs declarations, special certificates to move food, animals, and plants, and you will need the right paperwork to even get close to some ports. the u.k. is giving importers a six-month grace period but the e.u. is not
following suit. a lot remains unclear. the city of london is set to lose its automatic right to sell into the e.u. granted broad equivalents, but europe has been narrower, granting just temporary equivalents for u.k. clearing and it is in no hurry with other financial services. that was the voice of anna edwards. the reality of what the brexit deal really means for people living in the united kingdom. the deal is over the line and it's been four years of wrangling between brussels and intensebut there's been scrutiny in terms of the unresolved, the unknown knowns, and that comes down in essence, annmarie hordern, to the physical square-mile you are sitting in which is about services, financial services. annmarie: financial services is
the big papi they were not able to get a full agreement on. this all has to come down with equivalents and over the weekend, boris johnson was speaking to the sunday telegraph and he says, perhaps the deal does not go as far as he would have liked. hedid not go as far as wanted on services which make up a bulk of the u.k. gdp but even things that they were able to get a concrete deal on. they have to review it in five years, but even the fishery organization, they found they were "betrayed by what had gone on because they were stark supporters of brexit. they feel like they did not get enough. the end of the bargain is that when you compromise, of course, it's talking to be what either side would always want but the fact of the matter is, it's not over yet. ,t's the end of the beginning but now, is the beginning of the end of that agreement. manus: it comes down to, as it
were, sovereignty, and perhaps what was bargain for. of course, fish, incredibly big, vocal point near the end, perhaps not the biggest in terms of economic consequences for the united kingdom, but a 5.5 year transition period for fisheries during which you have the british fleets. they will see and uplift people to 25% of the catch previously caught by e.u. boats in u.k. waters. this wassh part of incredibly contentious because the very symbolism of trawlers and fishing and european fishermen in u.k. waters goes to the heart of what sovereignty is about, i suppose, from the press side. maria,ust check in with maria tadeo is with us come in and she's going to take us
through some of these issues. seasons greetings. there's a lot of things that still need to get clarified and need to be done related to this deal. it's a very comprehensive trade deal, but nonetheless, first of all, it needs to be ratified by the u.k. parliament. that should not be difficult in principle but the european parliament said they really want to give this real scrutiny so we are looking at potentially three weeks of about before we get that ratification. you are quite right on that. this is a deal that essentially sees a member state leave the european union. when it comes to financial services, financial firms have said they would have loved to see more detail on the so-called equivalent. it does not guarantee we will see the same status quote in the u.k. and europe, and of course, you have the pending issues around arbitration and potential retaliation in the future. the two sides have made it clear that if they deviate from the
trade deal, they could go into that and we could see tariffs at --e point so clearly, u.k. two days time, but this is a story that's probably going to play out for years to come. annmarie: what is coming up on the brussels addition -- edi tion? maria: we are joined by a member of the european parliament. i want to know exactly when this deal will be ratified by. he will give us some hints and clues. and we are going to talk about who won on this trade deal, who is the bigger winner in his eyes and where do we take it next? as we wait for that ratification, annmarie. maria tadeo in brussels. it's been great to have you on this show for 2020. i look forward to having a bit of fun in 2021. happy new year. annmarie: happy new year.