Squawk Box Europe Express

U.S. Treasury Secretary nominee Janet Yellen is to warn that the country is on course for a major recession unless lawmakers “act big” with her Senate confirmation hearing set for today, less than 24 hours ahead of President-elect Joe Biden’s inauguration. The incoming administration has said it plans to reinstate travel restrictions on European and Brazilian passengers lifted by President Trump. In corporate news, food giant Danone is under activist pressure from Bluebell Capital, which is calling for a leadership overhaul citing a slump in share price performance. Meanwhile in tech news, computer accessory maker Logitech has raised its 2021 guidance after posting a near-200 per cent surge in Q3 income on the back of the work-from-home phenomenon. And in Rome, the political chaos continues with Prime Minister Giuseppe Conte facing a key confidence vote in the Senate. The government coalition was split after former PM Matteo Renzi withdrew his party’s support over an EU virus fund rift.

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China’s economic recovery gathers speed with Q4 growth beating expectations at 6.5 per cent. President-elect Joe Biden pledges to immediately repeal President Trump’s climate policies as Washington DC braces for potential violence ahead of Wednesday’s inauguration. In Germany, Armin Laschet wins the vote to become the new chairman of the CDU party and is now the frontrunner to take over from Angela Merkel as Chancellor. Samsung shares slide in Korea on the news that de facto leader vice chairman Jay Y. Lee is to serve a two-and-a-half year sentence for bribery and corruption. And in M&A news, French waste management giant Suez has received a potential takeover proposal from Ardian-GIP following an offer from its principal rival Veolia.

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U.S. President-elect Joe Biden has unveiled a massive new stimulus package worth $1.9 trillion dollars. The plan includes new relief cheques to some individuals, in addition to an earlier round of payments included in federal spending measures last month. Fed Chair Jerome Powell said the central bank will eventually raise interest rates and slow its bond-buying programme. But he added these moves will not happen in the near-term. U.S. weekly jobless claims rose to 965,000 last week, worse than forecast and hitting their highest point since August.

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Italy is embroiled in political turmoil yet again after former prime minister Matteo Renzi pulls the plug on the Conte government. Renzi removed his party’s ministers from the coalition after a row about EU funding distribution following the pandemic. In the U.S., President Trump becomes the first ever American leader to be impeached twice. Ten GOP members joined Democrats in the House of Representatives to vote for the motion. Chinese December exports rise by more than 18 per cent on the same period last year. In another U-turn, the U.S. Treasury reportedly blocks plans to blacklist some of the biggest Chinese tech firms from markets Stateside. And in France, finance minister Bruno Le Maire has told Canadian retailer Couche-Tard to back off its proposed €16.2bn tie-up of supermarket giant Carrefour, citing concerns over national food sovereignty.    

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U.S. Vice-President Mike Pence rules out invoking the 25th amendment to remove President Trump. The House of Representatives is set to vote on impeaching the president today. In a further crackdown against the outgoing U.S. leader, YouTube has suspended his channel for at least a week in light of the fatal storming of the Capitol building. Deutsche Post DHL enjoys a pandemic-related e-commerce boom, prompting the logistics giant to hike its outlook. Preliminary Q4 profits have jumped by 54 per cent. In retail news, Quebec-based convenience store firm Couche-Tard is reportedly eyeing French supermarket chain Carrefour in a tie-up that could be worth up to $50bn. And the U.S. has revamped its vaccine strategy with states asked to issue the dose to citizens aged 65 and over.

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The U.S. House of Representatives moves to introduce an article of impeachment against President Trump which it plans to vote on tomorrow, a week after the deadly storming of the Capitol. As a result, Big Tech firms join other corporates in suspending political donations. However, social media giant Twitter sees shares nosedive over a growing backlash against the permanent banning of the U.S. president from its platform, along with more than 70,000 other accounts. German Chancellor Angela Merkel weighs in on the purge, calling it a “problematic” violation of the right to free speech. Goldman Sachs brings forward its $65 call on the oil price from the early end of Q2. Its commodities chief Jeff Currie tells CNBC that by 2022, oil is set to rebound to levels higher than before the pandemic.

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Senior Democrats prepare to proceed with articles of impeachment against President Trump following last week’s deadly storming of the U.S. Capitol. Markets Stateside saw record highs on Friday despite the events. But futures point to a lower open this week after a disappointing jobs report for December while the 10-year Treasury yield rises to 1.1 per cent. Meanwhile, fallout from the White House ban against companies with connections to the Chinese military continues, as top Wall Street banks look to delist up to 500 structured Hong Kong market products. Both China and the U.S. suffer a record number of Covid-19 cases while UK health authorities warn the NHS is buckling under the weight of hospitalisation numbers. And, we speak exclusively to Daimler CEO Ola Kallenius who says the pandemic will affect H2 demand but is confident of delivering a sales increase for FY 2021.

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The recently confirmed Democrat-majority Congress has boosted U.S. equities on hopes of further stimulus. President Trump promises a peaceful and orderly transition of power following Wednesday’s deadly storming of Capitol Hill. Tech and autos join forces with Chinese search giant Baidu linking up with Geely to create their own electric vehicles. Hyundai and Apple are also set to tie up on an EV project. Elon Musk overtakes Amazon’s Jeff Bezos to become the world’s richest man with a fortune of more than $185bn. This, as Tesla’s shares outgrow Facebook to become the S&P 500’s fifth-most valuable company. And in pharma news, Pfizer’s new Covid-19 vaccine appears to be effective against a number of new and infectious strains.  

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There are chaotic scenes on Capitol Hill as hundreds of Trump supporters storm Congress, forcing both Republican and Democrat lawmakers to flee the chamber during a session to confirm Joe Biden as the next president. Congress was eventually reconvened after one woman died from an alleged police gunshot wound and three others passed away due to medical emergencies. This, as Democrats secured a second Georgia Senate seat and control of Congress following the victory of John Ossoff in run-off elections. In Hong Kong, online retailers Alibaba and Tencent see shares fall on reports that the U.S. is mulling whether to add them to a Chinese firm blacklist which already include three of the country’s biggest telcos. And in Europe, Moderna becomes the second Covid vaccine to gain approval by Brussels. The bloc has ordered 160m doses.   

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Markets eye the Georgia Senate race which still remains too close to call. Futures see-saw and the 10-year treasury yield is up 1 per cent for the first time since March. Meanwhile, President Trump signs an executive order to ban 8 Chinese apps, renewing trade tensions between Washington and Beijing. China sees services activity slide to a three-month low but it is still expanding with several regional outbreaks of Covid-19 hampering recovery. And in commodities, Saudi Arabia makes a surprise voluntary cut of one million barrels of oil a day, sending prices soaring to more than $50 for the first time since February 2020.  

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