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January 12, 2021
Five Things - Europe
Bloomberg

Good morning. A vote to impeach Donald Trump is on the horizon, there's fierce debate about social media and free speech and the U.K. is threatening stricter restrictions. Here's what's moving markets.

Impeachment Vote

Democrats have introduced a resolution to impeach U.S. President Donald Trump for a second time, setting the stage for a vote on Wednesday unless Vice-President Mike Pence uses his constitutional authority to remove the president from power. Pence, however, signaled he will spurn these demands and met with Trump to agree on working together for the remainder of his term. President-elect Joe Biden said Trump should no longer hold office, though he said his legislative agenda is the priority, including a multitrillion-dollar stimulus package. Europe, meanwhile, is looking past Trump as it seeks to defuse trade tensions with proposals for the incoming administration.

Free Speech

Trump's ban from Twitter following the Capitol riots has sparked new debates on the role of social media companies. Germany and France both objected to the decision, saying that free speech rules should be overseen by the government and not a private company. Shares in Twitter and Facebook both came under pressure after either banning or suspending Trump's accounts. Parler, the conservative platform, is now suing Amazon for kicking it off its servers as multiple alternatives tout their own "free speech" credentials. Twitter has also banned more than 70,000 accounts which share QAnon conspiracy theories in a further crackdown.

U.K. Restrictions

U.K. Prime Minister Boris Johnson warned his government could have to tighten lockdown restrictions if people fail to follow the rules, though appeared to undermine this with a bike ride 7 miles from his home. On the domestic front, the U.K. has been warned its finance industry will need to be patient as the European Union discusses what sort of market access it will allow, while Chancellor of the Exchequer Rishi Sunak hinted at a new round of financial services deregulation post-Brexit. Elsewhere, Bank of England policymaker Silvana Tenreyro said the bank could have to deliver more stimulus and needs to keep the option of negative rates open.

Bitcoin Faith

The Bitcoin bubble debate shows no sign of abating. The cryptocurrency's parabolic rise took a hit over the weekend, shaking the faith of its followers. Prices have settled on Tuesday. The rally has shown it is an asset like no other: its rise has dwarfed nearly anything else seen in recent memory and its plunges are equally bracing, with hundreds of billions in value wiped out in days. Its most ardent fans, including those devoted enough to be tattooed, are not being put off.

Coming Up…

Asian stocks were mixed after a decline for U.S. stocks on Monday, with futures in Europe and the U.S. little changed heading into Tuesday. Gold prices steadied after a recent losing run. Investors are weighing a stronger dollar and rising Treasury yields amid expectations for new stimulus spending. The earnings and economic calendars for Europe remain relatively bare for Tuesday, though there will be results from the high-flying collectibles retailer Games Workshop. 

What We've Been Reading

This is what's caught our eye over the past 24 hours. 

And finally, here's what Cormac Mullen is interested in this morning

The jump higher in Treasury yields is beginning to exert upward pressure on the much-maligned dollar. The 10-year benchmark hit 1.15% in Asia trading Tuesday, its highest since March, and the Bloomberg Dollar Spot Index was on track for its fourth straight session of gains. Having started the year with bearish bets against the greenback at their biggest in about a decade, speculative traders have begun trimming their net short positions via a number of currencies. Leveraged funds cut net long options and futures positions across the euro, the pound and the Australian dollar for the week through Jan. 5, according to the latest Commodity Futures Trading Commission data. The Democrats' victory in Georgia has triggered a reassessment of the likelihood of further fiscal stimulus and Joe Biden's plans for infrastructure spending have the potential to boost U.S. growth and with it the currency. Higher U.S. yields also boost the relative attractiveness of American assets against those in low-yielding Europe and Japan for example, a further fillip for the greenback. This shift in expectations could be enough to scare the bears and kick-start an anti-consensus rebound in the dollar.

Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo.

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