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tv   Bloomberg Surveillance  Bloomberg  February 3, 2021 5:00am-6:00am EST

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jeff bezos will step down as amazon chief executive. he'll be replaced by andy jassy, the head of the company's cloud computing unit. "whatever it takes" is back. former ecb president mario draghi will be asked to form a new italian government and steer the economy out of crisis. and global stocks extend the rally, this on optimism over stimulus in the u.s., earnings, and fading concerns about volatile retail trading. good morning and welcome to "bloomberg surveillance." tom and francine from london and new york. we have so much news to cover. italian politics has been all over this story. tom: i bet you have. francine: remember the druggie guesses about whether he is dovish? i think that is back. about the recovery. ," can you imagine the first press conference with the italian press? one thing i think is fascinating that i think everybody knows you
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have huge experience -- i have to fix my tie. that you have huge experience with, francine, is, will the nation get behind president draghi? francine: i think if mario draghi was wearing a red tie, he would perform more aggressively. this is likely financial nerds game of getting the ties. two things. once he gets asked to perform at -- to form a government, it needs to be approved by parliament. we are also hearing that he may not have enough support from the five-star movement. it is unclear. it looks likely he would get support but unclear what happens next. then again, it is they fight about where to spend the money that the e.u. is giving them and the reforms. that is hard to do. tom: we have chair yellen -- we got chair yellen to be treasury secretary. maybe we should have chair yellen to be president of the
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united states. i believe gamestop is open for trading today. francine: they were down 17% and german trading. down 17%, so we will have a look at the wider ramifications of that. the funniest thing i saw on twitter was someone saying biden is getting the old band back together again. tom: no question about it. we have a space launch as well, potentially scheduled. francine: let's get to first word news in new york city with ritika gupta. ritika: it is the biggest management change at amazon since jeff bezos founded the company in his garage more than 25 years ago. bezos will step down as the ceo of the world's largest online retailer in the third quarter. his replacement will be andy jassy, who runs amazon's cloud computing unit, a fast-growing division that has changed the way company -- the way
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companies' biotechnology powers businesses. ended democrats have moved to put president biden's stimulus plan on a fast-track. open debate on a budget resolution for the 2021 fiscal year, a move that would clear the way for the stimulus package to pass with a simple majority rather than the 16 -- the 60 vote threshold needed. janet yellen dealing with the tumult involving the gamestop shares and online broker robinhood. the treasury secretary's meeting with financial regulators to discuss market volatility. he wants to know if -- former european central bank president mario draghi has been approached to become the next prime minister of italy. the job is a big one. draghi would be asked to guide italy out of the recession it has been in since world war ii.
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global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i am ritika gupta. this is bloomberg. tom? tom: i want to get to this quickly, three boards this money. lots going on. equities, bonds, currencies, commodities. dell futures up 38. the vix comes in well under when he five, 24.61 -- well under 25, 24.61. backdrop of this is curve steepening, the 10 year yield out to 1.12%. give me another board if you can. lots to choose from here, on amazon, given all the announcements, came stock 86.50. that is an ugly quote, i believe that is in real time as well. and amc moving from the midteens down to the mid-single digits. francine? francine: i am looking at euro.
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the rally in global markets extending into a third day. we had amazon better-than-expected, vodafone better than expected. i'm also looking at some of the other things that were confirmed. there is also a bit of a lift to the european market, italian stocks and bonds surging after draghi is tapped to be the next prime minister. i don't think it is 100% a done deal but it looks likely. crude, 55.24. the inflation figure has risen from 0.9%, not something that we should ignore, especially after all the pains at which central bankers have been telling us about a possible rate cut. i don't know whether that holds with that inflation figure. tom: it is part of the new tension. i saw you had on more -- you had on andrew sheets of morgan stanley. we have lots more to talk about on that right now. i think we should start with amazon. scott kessler, at third bridge
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global. he owns the high ground for years at standard & poor's and cfr a. you do not follow amazon on an individual basis, but you have been through management changes time and time again. you and i know it all comes down to the lead dog's ability to delegate decision-making. has jeff's bezos that has jeff bezos set up a framework where this can be a successful chain? scott: thanks a lot, tom. one would think so. obviously the headline is eye-catching and noteworthy that jeff bezos is really within a couple of quarters no longer going to be the ceo of the company. but it remains to be seen what, if any, significant changes occur in terms of how the company is directed.
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when you look at what bezos is going to be doing, he is going to become an executive chairman come and you will see andy jassy come who arguably is the second-most visible person at the company right now, leading the unit. i really think it is going to be business as usual to a large extent. tom: the battle for market share, on the cloud they have flat market shares, microsoft advances to some extent. what has always been the bet here is that the old out of online retailing only gets amazon to would've the statistic is, 35% or 40%. do you perceive the next $100 billion of revenue growth is somewhat equivalent to the present $100 billion? scott: one of the ways to think about this is the fact that you see bezos essentially moving on to this new role within the company.
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he obviously is going to have huge influence still, but it is going to be more from a vision and strategic perspective. from what indications are, that to some extent has been his primary focus over the last couple of years. what is noteworthy, i think, is how in fact aws unit is going to be run with perhaps definitely different leadership there, and i think that is something obviously to be mindful of. i think the other thing to point out is, this is hardly unprecedented with ceo's becoming executive chairman. we saw that with bob iger. he is in that role right now after a relatively recent transition, and alibaba, jack ma -- he became executive chairman i think the better part of a decade ago before he stepped away from alibaba.
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alibaba is obviously i think thought of as perhaps the most comparable of amazon at this point. francine: i heard from people inside amazon that jeff bezos was pretty hands-off. he doesn't like meetings or he likes very short meetings or he has been more hands-off, given the empire that he has. what changes concretely? executive chairman come as you point outcome is still a fairly big role. scott: i think it remains to be seen, but as you are indicating, it seems like at least what bezos is doing may not change all that much. what i am curiouo is who is going to lead aws, and does aws increase in stature, given the fact that the new ceo of the company will obviously be the former leader of that business?
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also, what does it say about kind of the future for aws. i find the timing interesting, given that hopefully at that point a lot of the world will be on the tail end of the impact of the covid situation that all of us have been dealing with, and perhaps aws becomes more of a prominent growth driver for the company, e-commerce businesses, as you know, have been eating growth -- have been needing growth over the past couple of quarters. francine: it is a large percentage of revenue, which i guess we all know but we forget about because we buy so much of the stuff that arrives on your doorstep. when you look at europe amazon, what do you see it being like? scott: if you think about all of the assets and operations that they have, the company obviously
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is very well-positioned in a lot of ways, whether you are looking at the global e-commerce operations, you're looking at whole foods, prime video, what they are doing in terms of the echo devices, and then of course we have not even talked about aws. i do think, however, in a lot of respects, people view aws as perhaps the future of the company in a lot of respects, and i find it noteworthy that even if you look at the recent results, the revenue growth in a ws has not been as high as we have seen in the other more e-commerce oriented segments, and i wonder to what extent when you see covid normalizing around the world, maybe you see the
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e-commerce business growth normalizing to lower levels, and maybe eight of u.s. takes the baton of -- ab aws takes the baton of growth and a lot of ways for the company. tom: publishing moments ago, a week or so ago, a 4000 target on amazon. he says they have a solid bench. scott kessler, the heart of the matter -- and we see it at apple and maybe we have seen it at microsoft as well -- is you have to move from growthiness and west coast innovation to some form of blue-chippiness. is it a surprise here maybe in the next 24 months that amazon finally will migrates to more of a blue-chip kind of mentality wrapped in 1.3 million employees? scott: i don't know about that, tom. what we have seen, frankly, from amazon, is a real prioritization on a couple of things.
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one is obviously being extremely customer centric and really kind of fulfilling any and all customer needs. i think the second thing -- and bezos actually sent a letter to employees in conjunction with this pending transition, and one of the things he really highlighted was the continuing importance to the company and success of innovation. and so i am not so sure that you are going to see that kind of cultural and corporate shift from just because we are seeing bezos may be move offices, so to speak. tom: amazon pretty much flat off the management change. you would think it would be down, it is not. scott kessler, thank you so much for your industry-leading perspective there. futures up 12, a nice look to
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the market. we are looking at yields, each means we are looking at the central bank of the united states. later, william dudley, the former federal reserve of bank of new york chief executive officer. bill dudley, writing on the responsibilities of the american central bank. stay with us. worldwide, this is bloomberg. ♪
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tom: "bloomberg surveillance," from london and new york. what an interesting day. 3:00 p.m. yesterday, francine and i were deep in the surveillance naps and you think it is going to be a boring wednesday. draghi is leader of the known world as we know it.
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on a continuing saga, days of our gamestop, marcus ashworth joins bloomberg opinion. marcus, ok, it went up, it went down. if you move on x number of weeks or months, if robinhood and their backers -- is it like this never happened? marcus: sort of. you cannot wait this out. this is an experience that sort of needed to happen. you check stimulus into the system, things are going to burst out from the mattress, and people try to stuff it back in, and i see yellen is doing the right thing by pulling people together, an approach to try to prevent excesses. but the underlying move here, which is that retail can get involved in the short-sellers are totally confident, that is probably a good thing. we have reduced leverage in the system dramatically because of
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this short squeeze. we are in a rocky place at the moment. tom: what does a short squeeze process do if some, if not all -- many of the people who are squeezing the short enjoy losing money? is there a history where they climb on the next rate idea? marcus: well, as we discussed, we will find out more and more the actual power of the reddit crowd was massively overstated. this was other hedge funds probably piling in here, using other ai technology and other cutting methods to squeeze other hedge funds, so this was more they blue on blue, shall we say. but i do think there is a cult to this that is interesting because it can morph in other ways. tom: marcus comes on and the stock popped 90 to 100. that is the power of marcus
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ashworth there. francine: i was quite taken by your column yesterday saying that reddit was not the real danger. why do you have sleepless nights because of qe? marcus: the only answer is more qe, we must have more, and more scary than that is the talk of tapering. i always thought the fed headed the wrong way around. they should have reduced exposure before increased interest rates, and powell sort of learned that the hard way, shall we say. but nonetheless, the traditional balance sheet, that makes it cost you, the central bank, with your holdings. this time around they will be much more careful, but i just find it weird that the world just can only answer, it can ever put more stimulus in it. monetary has played out. we need to back away from monetary and act away and let governments -- and back away and let governments take response
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ability. francine: can the reddit crowd go for something bigger that would make you more uneasy, and if there is a big hedge fund -- and we are not at all insinuating that they would -- but if someone were to go bust, with that change your mind? marcus: no, it would not change my mind. we had oil -- we had a look at oil a couple of days ago, and there were potentially a lot of shorts in there. what i don't think they have the power. i don't think the reddit crowd have the oomph that people think they have. nokia was a worry potentially, but we take the small stuff. tom: as you know in economics, we think about the nominal, the current yield, inflation-adjusted real yield as well. i would suggest with the central-bank action that you talk about, the gross accommodation, that we have margin loan rates that we think of in a nominal yield, and those low-margin rates allows for much of the viscosity that gets the
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short squeeze going. do you agree with that? marcus: the whole system has got itself in such a situation whereby this is the risk of zero interest rates, let alone negative ones. you create anomalies which do not make a lot of sense. they create a lot of leverage and a lot of cash, and strange things happen. i don't think all of this reddit stuff is bad. i think it is healthy, something like this it in fact in into the system, and i think it will be a better place. leverage needs a good shake out every now and again because we were getting a bit too confident . it needs to balance out. francine: marcus ashworth, bloomberg opinion columnist. coming up in the next hour, david kirkpatrick, author of "the facebook effect." we will talk amazon, but we will also talk reddit. this is bloomberg. ♪ this is "bloomberg
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surveillance." tom, a lot going on. we look at amazon with the departure of jeff bezos, the chief executive. he still remains executive chairman, so we will look at what that means for amazon and for italian politics. if you look at italian politics, it is moving euro and btp's at the margin.
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we still have to wait for the president to ask him about -- we are waiting for mario draghi to be the next president of italy. good encouraging figures from amazon and the retail trade frenzy that we saw -- i know you don't like the word "frenzy tom: but it is definitely subsiding a touch. -- word "frenzy," tom, but it is definite the a touch. tom: subsiding a touch. futures up 12. coming up, richard windsor will join us with radio free mobile. this is bloomberg. good morning. ♪
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tom: good morning, everyone.
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jobs week here in america. we will have full coverage starting today with an adp report on claims. mike mckee giving us good perspective there. we continue with what global wall street is focused on with all this new trading, of the so-called short squeeze. richard windsor joins us. with decades of work out in the middle east, thanks so much for joining us. i know you trade out of abu dhabi. it's a worldwide phenomenon. do you perceive robinhood and robinhood like social media trading truly becomes a global event? simply will the governments allow it? richard: that's a great question. simply because what you've got is potentially is you -- you could argue the retail protections for the uninformed
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investor are not strong enough on this app. a lot of people take the view buyer beware. they are not doing any fundamental research. as a big debate to be had on the regulation. i think that will define how global this goes. tom: let's to china were a think there is heir to gin culture of speculation very different. -- there is a different culture of speculation. richard: i think it is a little bit different because obviously the government has a much greater influence over everything that happens in china and it has been known to step in at a moments notice and change things. there was an issue like this when retail investors had
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speculated on the stock market and the stock market had a major correction. there was some clamp downs at that time to try and minimize the losses from arguably what they would refer to as uninformed investors. francine: what happens next? what does the rented crowd go after? talking about regulation of robinhood, do the hedge funds get regulated first? richard: the hedge funds are already very well regulated to be honest. if i knew what the reddit crowd was going to go after next, i would be putting my money into it immediately. i think what you seeing is there's been a bit of a change in the focus's, certainly two of the things they've gone after our two areas where they are looking more from a fundamental point of view rather than trying
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to stick it to short positions because if you look at the silver market, even the guys on robinhood, they don't represent enough total volume in order to really cause a major problem. you are seeing that now, a silver is going up to a strong correction today. francine: what are your thoughts on amazon? that something else we are looking at. does it make a difference if jeff bezos becomes executive chair instead of chief executive? richard: amazon is moving into another phase of its life which you can tell from the financial results and the share price. while the last 20 years have been characterized bank readily rapid growth and no profits, the share price has gone sideways since september. and all the while profits continue to go up. amazon is at such a size where it moves into a different phase
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of its life, maybe the slower growth, more profit, potential for a dividend phase of its life. that's -- that requires a slightly different management style. they've done a great job with aws. perhaps it's the right time for that slightly different management style. tom: you're a claim is in the ericsson, the qualcomm's of the world. as bezos shifts here and the focus we have on the fangs and all of that, do you perceive a different technology industry 10 years out or does it just grow and grow and morph around the invention mr. bezos launched? >> that's a very good question. it's quite possible in 10 years time amazon is no longer considered a technology company but is more like a walmart for
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example. what we are seeing though is there's a lot of innovation in many other areas. i'll give you a few examples. this is an area where amazon is not present so things are artificial intelligence, like robotics, or amazon is present, but not a major focus. things are quantum computing, telemedicine, telehealth, all of these sorts of areas. i think what you will see is the big technology companies are more -- almost in many ways have become a bit like telecom operators in 10 years time in terms were the focus of innovation will have shifted into the other areas where the technology is much less stable. >> so what exactly, of the amazon web services, how important will they become? richard: amazon web services
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incredibly important already. it's quite clear that that part of the market is going to grow. what is likely to happen i suspect is this competition will get much tougher. at this point in time, amazon dominates the market, microsoft is a healthy number two. but also in the last quarter, google reported yesterday its cloud business did very well and on top of that they -- google managed to win a major landmark client in ford for its cloud services in terms of helping ford to modernize all the areas of its business. so i think what you will see is greater competition in that push. francine: what does it do to margin -- tom: what does it do to margins? they had free lunch for years. do you just assume reduced margins off of brutal competition? >> that is likely and what
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amazon has done to try and push back against this is is very easy to get onto amazon web services, it's much more difficult to get off amazon web services. they have this captured area. obviously there will be a number of businesses that emerge, which is what allows you to do to run on multiple different cloud services and switch between the two. when that industry becomes more established than it is today, then you see commoditization at the bottom and of -- end of that industry. tom: richard winsor, thank you so much. greatly appreciate it. right now with the first word news, here is britt's group to -- ritika gupta. >> jeff bezos will step down in the third quarter. his replacement will be andy
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jassy, the head of the cloud computing unit. for years he's been seen as a potential successor. jeff bezos will become the executive chairman. the european union faces a price i first bungled rollout of the vaccine. they found lockdowns mean the economy is operating at 95% of its pre-pandemic level. that's about $14 billion a week of lost output. the eu will have to keep lockdowns in place whilst other major economies get back to work. a second test flight of the new deep space vehicle ended in another fireball. one of the engines appeared not to reignite during the landing attempt. the stainless steel starship would be a fully reusable craft that could carry 100 tons for
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missions to the moon and mars. the arising of the delay tokyo olympics, they've come out with rules governing how athletes move about and interact in order to avoid spreading the coronavirus. olympians may be tested before and after they arrived in japan and then at least every four days. global news 24 hours a day on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> tom and i once spent a bit of time talking about inflation shortly. we had that number about 39 minutes ago. that of course will change projections of the ecb and could change the trajectory for interest rate cuts and one thing we are trying to find out is imported inflation from china. some of the freight shipping costs, it is something more structural that's here to stay.
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watch out for european inflation. tom: what we really got is curve steepening over the last number of days. most guests telling us in conversation that we have not broken out of the range but were buttressed right up. >> we will look more than inflation expectations going forward. up next we speak to the former italian prime minister to talk about mario draghi and the possible next italian prime minister. this is bloomberg. ♪
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>> mario is a great leader on every level.
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it is up to the italians in the italian government to decide the leader to be. on a personal level at the greatest respect, his famous words, we will do what it takes. i wish him the best and i am sure he will deliver. tom: -- francine: that was the santander chair on mario draghi. we understand the president is expected to ask mario draghi at noon. some parties say they won't back down. joining us is the former prime minister of italy and now dune -- dean. what's happening italy is something only italians truly understand because if mario draghi says he will do the job,
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than the parliament also needs to say yes. >> it's very important. let me ask you a question of never asked. does he go out and start kissing babies in venice? how do politics of this work? >> i can tell you for free. first of all has to get approval from parliament and the needs to focus on reforms and have to spend that. let's get straight to enrico letta, of the former prime minister of italy. thank you so much for joining us on this very important day. what is the main concern if mario draghi gets asked to form a government, will he get through? we are hearing the five-star movement could oppose his nomination. >> i think that is the point. the key point is a parliament, a
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relationship with the parliament , italy as you know is a parliamentarian system so you need to have a majority -- a solid majority to correct an effective work. so he needs to get this majority and not given for granted. i think a big welcome at this nomination is having and in italy there think is big support in the country and in europe, i think that will help. i'm sure the key point is the relationship of the parliament and that is a decisive point. francine: let's say mario draghi becomes prime minister, the markets are loving the fact the former deputy -- the former chief would be in charge. how difficult will it then be
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for him to push through the reforms that frankly the e.u. is asking to disperse the money? mr. letta: i think it will be difficult because the italian situation and european economic situation are different. it is not easy to have reforms during this pandemic. but i think mario draghi has the right recipes, i think he has the good legitimacy and i think he will be able -- he has in the past for saw a way in which he worked as general director of the treasury, and not just a banker as we usually say. he was director of the treasury, he was the one who managed many transformations during the 90's in the country. so i think if someone is able to
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negotiate compromises and it will be one of the key points because the parliament is very fragmented. even the social partners are very fragmented. the country has big fatigue. it won't be easy. francine: what is the one reform you would put on straightaway if you were in charge the think mario draghi will focus on? mr. letta: i don't know. mario will have all the recipes. but i think there are many topics during this pandemic not only for italy, i think it is something that is linking many european countries, the problem of delivery. civil service. the system or government
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regions, they decide something and it is not easy to say that what is decided is immediately implemented in life. so i think maybe this topic of the deliveries or the effectiveness of the public administration is one of the key issues. tom: what were the lessons learned from the era of mario monti in 2011 to 2013? what are the lessons mr. draghi can learn from their? >> i think the situations are completely different. there is another example, someone is raising, it is during the 90's. he was prime minister and 93. i think today's situation is completely different. in the past, they were obliged
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to cut and cut with the key topic, they were obliged to reduce the deficit, to reduce the debt and there was no money for investments. so it is very complicated. they had parliament, more able to work with them. that is not the case today. i think the relationship will be more complicated for draghi. but at the same time there is this big envelope of the next generation that is something that is completely new. so i think it is it complete difference, unexpected and unusual situation. >> how will he do politics?
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the world is fascinated as each country tries say who will be our draghi. if we did this. how does he prosecute politics day one? >> i think it will be one of the main topics we will discover. and it is clear that this option , president of the republic decided to have this option because it was the last resort and it was clear that all the steps we had in the last days were steps without substance because of all the fragmentation and politics. you know my judgment as prime minister is a positive one. i think in the situation he had, at his best and it was not easy,
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it was very complicated because parliament politics in italy is -- but the political important royal that we had in the last weeks created a sort of stop to the possibility to continue with that completely true political government. so this unprecedented situation today would become something we will -- step-by-step. in this moment they are talking and i think it would be clear -- it will be clearer which kind of government. francine: on that point,
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bloomberg is calling sources and according to people in the now, draghi should be given complete freedom to choose who he puts in his administration. what kind of people do you think he would put as finance minister and in other important positions? >> frankly speaking i don't know. i'm beginning just a question of hours. maybe we'll know tomorrow or friday. i think you have to ask him or maybe you have to wait? >> thank you so much with some great insights on the former prime minister of italy. -- insights from the former prime ministers italy. i guess the politics and the machinations of italy. coming up we speak banking with the former credit suisse chief executive.
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we will talk about valuations at 6:30 a.m. in new york, 11:30 a.m. london. this is bloomberg. ♪
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tom: bloomberg surveillance, good morning everyone. equity lift up 16, dow up 54 points. 24.43 on the vix. stronger dollar. you see that with euro beginning to test 19 -- 1.19. gamestop, lift off 90 up to the 100 level. amazon unsure of the bezos announcement. amc churning there single digits. silver testing new lows. jay powell and robinhood next. ♪
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tom: stocks find a continued bid. amid higher yield, the weak dollar bet is in retreat. the gamestop squeeze is in continue to treat. whatever it takes to salvage italy. draghi to the rescue. the economy is depressed at 20 plus years and it is without question the most robust return on capital in modern business history. jeff bezos on invention first and then shareholder return. amazon employees 1.3 million bodies. good morning everyone, this is bloomberg surveillance. i guess we are waiting for a draghi appearance, we saw this with mr. monty, some guests have said it's not a redux of the technocracy, if that's not the case, what is it we are
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