francine: a historic week in washington. the house as the resolution demanding that president trump's cabinet removes him from office. mike pence won't agree. a second impeachment vote today. investors await guidance today. and the search is on. unicredit has approached candidates as chief executives. good morning, everyone.

welcome to "bloomberg surveillance." i am francine lacqua here in london. malcolm a lot going on, certainly a lot going on on the political front, and grows negative interest rates. central bank governors in europe in the coming days. the dollar is fluctuating. if you look at treasury yields, they are sliding. dollars holding onto losses after two federal reserve officials pushed back. in the last couple of minutes, we also had a headline from russia, and this is from the central bank of russia. actually, it is from the russian finance ministry, i stand corrected, they say they will review asset purchases in january. we put our backs to the markets. it is very clear whatever we are hearing in terms of what investors are trying to grapple with is an implication of rising treasury yields and the spread between the two- and 10-year

not. now let's get to the bloomberg first word news. here is leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, francine. axios says that senate majority law enforcement officers are treating it like a counterterrorism investigation. so far, more than 70 people have been charged with crimes ranging from trespass to assault. now, the u.k. government is urgently calling on the public to follow the lockdown rules. a continuing surge in -- has continued to push the number on ventilators to the highest since april. they are putting the health of the nation at risk. italy's government is on the brink of collapse. a junior ally to prime minister giuseppe conte -- only at 3% in

opinion polls. but if it pulls out, the government would lose its parliamentary majority. president-elect joe biden is likely to pick wall street critic gary gensler to lead the sec. he ran the trade commission during the obama administration. he was in frequent contact and conflict with the banks. he was a driving force behind the government's new oversight of the massive over-the-counter swaps market. 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 leigh-ann gerrans. this is bloomberg. francine? francine: leigh-ann, thank you so much. after a historic day on capitol hill, the house when i'll vote today whether to impeach president trump for a second time. malcolm of the vote comes a second time after a mob of drunk supporters swarmed a congressional building. the house is demanding vice president mike pence use the

25th amendment to remove the president from office. that vote was mostly symbolic. joining us is bloomberg senior editor stephanie baker. stephanie, mitch mcconnell, according to people familiar with his thinking, would, you know, i am choosing my words carefully, because they did not say he would support impeachment, but he was not against it. stephanie: that is right. it does seem that senate majority leader mitch mcconnell has changed his mind. the tide is turning. that report in "the new york times" was confirmed by fox news, that macconnell will not stand in the way of impeachment and is "done" with trump. what that means in practice.

is unclear at this. point. you know, after the house vote later today to impeach donald trump, the other issue is how many house republicans will join in that impeachment vote. it looks like there are at least five, possibly more than a dozen that will support the impeachment, the articles of impeachment, and then the unclear thing now is -- when does it move to the senate? it is unlikely that his senate trial could happen until january 20, and how will that play out? how many republicans in the senate will support that moved to impeach and convict donald trump after he has left office? i think legal scholars are split on whether or not they can proceed to do that. and of course, you know, the political momentum changes, the political calculation changes. it becomes almost more of a

censure and a way to prevent trump from running for federal office again, and that may be part of mitch mcconnell's calculation, that he does not want trump to have a grip on the republican party going forward. francine: but it is unclear to me, stephanie, would mitch mcconnell actually vote for impeachment, and who would have the power to recall the senate before january 20? stephanie: well, he has the power to recall this event before january 20, because republicans remain in control until then. he has indicated previously that he would not recall the senate for a trial. now, the thinking on that is unclear, and you are right, it is unclear how many republicans would vote to back that after the 20th, after they then lose control of the senate. you know, it is uncharted

territory now, and, you know, i think some republicans may be calculating it is in their interest to vote for impeachment, long-term, so that trump does not have this sway over the republican party and, you know, position himself for a run in 2024, raising funds, and, perhaps, deciding who might, you know, the primary challengers against certain republican candidates in 2022, even. francine: stephanie, why is mike pence so categorically, you know, not wanting to use the 25th amendment? stephanie: he said that he does not think it is in the national interest. you know, i think there is perhaps a feeling that it is unclear whether or not this is the real, intended use of the 25th amendment.

it may be that he does not want to further anger trump supporters. he says he thinks it will be "divisive." but, you know, given everything that happened on wednesday and rioters were storming the capital saying, "where's mike pence?" and some are even saying "hang mike pence," it is extraordinary that he is being so cautious and has had very little on impeachment. and likewise, you know, the reporting on mitch mcconnell, this is not mitch mcconnell coming out publicly and saying these things, this is whispers behind the scenes and being confirmed, you know, off the record. when he comes out and says something publicly on this is perhaps when the tide will really turn, and other republicans will feel like they have political coverage, come out and support impeachment. you know, the house vote today, or in 2019 when they impeach

trump, there were no republicans who voted in support of it. you now have prominent republicans, including house number three liz cheney, saying that she would vote to impeach trump, and that may give political cover to other republicans to do the same. francine: stephanie, thank you so much, our senior writer covering the white house, stephanie baker. coming up, much more on the historic week in washington. we will have more on not only what mitch mcconnell will do next, but we will have more on security surrounding inauguration day. this is bloomberg. ♪ this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in london.

now let's get straight to the bloomberg business flash, here's leigh-ann gerrans. hi, leigh-ann. leigh-ann: hi, francine. unicredit is narrowing its search for the new ceo. "the financial times" is reporting to of europe's top bankers. the paper reports the bank's board will likely make its decision in the next four weeks. faces a tighter timetable after ceo jean-pierre mustier resigned. casting doubts on predictions of markets. bitcoin hit a record of almost 32,000 dollars on january 8. since then, it has mostly slumped, hitting a low of around 30,000. and a canadian convenience store is exploring buying a french grocer. it would be a strategy for the firm, which is focused on

smaller stores and gas stations. the deal would help it expand its present share. carrefour operates 700 hypermarkets. and that is your bloomberg business flash. francine? francine: leigh-ann, thank you so much. patrick, a million things going on, and of course the spread between the u.s. two- and the 10-year, but how should things happen on capitol hill and with republicans? patrick: what is happening on capitol hill, i do not think that matters to treasuries, i think what is happening in politics matters, with what is happening with control of the senate and more fiscal spending. that is pushing up that yields as well. i don't think it will happen

this year, but the fed is showing it is not even thinking about thinking about raising interest rates, but they are thinking about tapering. francine: are they looking at, you know, the political mayhem in the u.s.? how difficult is it to actually take a completely neutral view of what is happening in your pocket? patrick: well, i think the fed would be reacting if the market reacted. if the fed gave confidence that the markets were still there providing liquidity, that it is needed, but because the markets are ignoring it, i think the fed, short-term, is making sure there is no crisis in confidence, and there is definitely no worry about that. so this is bad material for the fed at this point, surprisingly. francine: when you look at some of the concerns over the treasury yields, is that the level or the pace of getting there? patrick: probably both.

i think the fed has shown it is reactive to equity markets. september 2018, when they pivoted from hiking to basically ending the hikes, because of the equity markets selloff, they have shown they are reactionary to markets. i do not think they have a firm level in mind. i think they will see how equity markets are spot, hallow credit markets respond, and when their there is signs of stress there, talk about purchases, yield control if they need to, they do not want to upset markets. so i do not think they have a fixed market in mind, but as soon as there is a market impact, it will prompt discussion and basically focuses their thinking. francine: patrick, does it change dollar trajectory? patrick: um, a higher yield

potentially could be dollar positive. the thing with the higher yield is it is probably with a backdrop of a strong rebound in the economy is how you get higher yields, basically. there is growth, there is a reflationary backdrop, and with the u.s. being the larger consumer in the world, can consumption is the driver of the u.s. economy. when consumption goes out, the deficit goes out in america, so i think you will have offsetting forces they are, and the reflationary backdrop is dollar negative, because it is funded with fiscal stimulus and a widening of the current deficit. so i think that would actually trump the interest rate market that you would get -- margin that you would deny treasury. francine: given all that, patrick, will be the thing for the central bank in 2021? patrick: i do not think other central banks have decisions they can make. most central things are going to be driven by what the fed does. any loosening from the fed will probably have to be matched by other central banks. the other central bags are not

in a position where they're even considering it tapering or lessening the purchases they are making. i do think the fed is probably the one who has to make a decision made by q4, or thinking about thinking about things, anyway. by 2020 when i do not think is going to be much in the way of any action from central banks. they will be reactive to markets. if things do not go as well and the recovery as we expect, i think there will be dovish moves rather than the hawkish tapering that people were talking about a couple of days ago. francine: patrick, this is an mliv question, and a ghost equities, not nasdaq -- and it ghost equities, not treasuries. but the nasdaq or russell 2000, which one will win? patrick: that is an interesting question. actually, i will put my money on the nasdaq for 2021, because the russell is off to a flying start. i think big tech represents reasonable value at this point. i think a lot of these smaller

companies without cash flows in earnings, i think those multiples probably have gone too far, but it is the big cap tech that drives the nasdaq. francine: thank you so much, patrick armstrong, plurimi wealth sheave investment officer. a lot to talk about, banks with patrick, next. unicredit considers ubs and credit suisse heads to head the lender. more on that so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

francine: this is "bloomberg surveillance." i am francine lacqua here in london. now the course we have christine lagarde speaking, saying that central projections are very clearly plausible. i am sure she will be asked about some of the different projections because of the vaccine rollout, and the fact that many parts of europe have to extend their lockdown measures. on to banks and unicredit narrowing its search for your -- for ceo. "the financial times reports they are looking at andrea orcel and tidjane thiam. chief executive jean pierre mustier is stepping down, i

think, in april. let's get back to patrick armstrong of plurimi wealth. due to vaccine rollouts, do projections really expand? patrick: well, i think the ecb -- remember, it was projecting 4.2% economic growth for 2021, succumbing into the air, we thought there was an upside risk. germany was extending lockdowns, all of europe facing various lockdowns for the first few months of this year probably more strict than we expected, so i actually think that 4.2%, it is fair to say it is plausible at this point. a strong second half rebound, pent-up demand, and basically the government spending, the fiscal power to make sure it maintains a large portions of the population that are suffering income drawbacks from about down -- from the lockdown. francine: they recovery fund in

italy, now there could be a government crisis yet again at a key time for vaccinations. patrick: within equities, we are significantly overweight european equities. it is a function of it being cheaper than the rest of the world. it is a function of it going to grow with the vaccines, they have a high level that will see a sharper drawdown, so the banks are not something we own widely. we own ubs on the equity sides of things, the only european bank we own, but we do have significant exposure in coco bonds. it is one area we were adding to in the spring when they were 6%, 7%. today they are a little over 4%, which is still a very big carry. i think they do have a very

strong capital buffer it i do not think there is a huge amount of upside in the equities. you will be buying bank equities when they are reinstated, and i prefer to get the bond when that income is more stable. francine: patrick, do you have a view on what type of banker should run unicredit? patrick: um, i don't. that is a question you are throwing on me that i have not thought about right now, so i will pass on that one. francine: [laughs] ok. patrick: sorry. francine: talk a little about consolidation. we talked about this, and i remember a conversation with actually the unicredit chief executive about a year ago saying there will be consolidation when share prices go off. do they need to go down or up? patrick: um, to really buy something, as a ceo of a bank, you have to feel like you are missing out by not lowering and acquiring and buying assets that are cheap. i do nothing the animal spirits are there in the boards of these

bangs that they really feel if they make these acquisitions it will be a game changer commit will put them on a growth path, and the mergers that are being contemplated have been mergers of weakness, basically, the boys realize their business is falling apart, commerzbank and deutsche bank have talked about it, ubs and credit suisse have talked about it, things like that. not really focusing on, this is going to be a game changer, this is going to be a merger that is really going to strengthen our position. so i think a strong economy, potentially a steeper yield curve, if that ever happens, and europe would be the catalyst for those kinds of things. francine: patrick, thank you so much, patrick armstrong there, plurimi wealth. coming up, etf iq europe. ♪ etf iq europe. ♪

francine: welcome to etf iq europe. everything you need to know about the funds and the flows. best month on record. european etf's take it 21 billion euros total, close to the 100 billion mark. we ask if investors can keep up the pace in 2021. demanding diversity, fate state becomes the latest money managers use voting power to make company boards more representative. and -- first off, let's get a look at which countries and sectors have been attracting the money. dani has all of the details. dani: hi, francine.