♪ francine: italian senate showdown. giuseppe conte wins the first about, but the real test comes to date. yellen on the hill. biden's treasury secretary pick is telling the senate that it plans to act big on stimulus. the president is expected to issue pardons, but not to himself or family members. he leaves his term with a 34% approval rating. good morning. welcome to "bloomberg surveillance." i'm francine lacqua here in london. the markets firmly focused on

what janet yellen will say in front of the senate committee. it's not really an interview for the top job but she is getting vetted as treasury secretary pick. it will also be a way of her to explain exactly what they are trying to achieve with the recovery plan. we are getting some news out of the iea, cutting its oil demand forecast. this is something we had talked about with the iea in the last couple of weeks. i did want to show you brent crude up 55.21. the focus firmly on it janet yellen as she explains the recovery and that $1.9 trillion stimulus package and the impacted as on demand for oil. let's get to the bloomberg first word news with leigh-ann gerrans. >> president donald trump is ending his term in office with historically low approval ratings, according to a gallup poll. his approval numbers have dropped to 34%. he has a ready had the weakest average rating of any president

back to the 1940's, when the survey actually began. his final two weeks saw a significant drop in support amid the storming of the capitol and his second impeachment. white house officials do not expect president trump to pardon himself, family members, or close aides. clemency is in the works for a famous rapper and others. he is expected to announce the list of pardons later today. there is speculation that trump would try to pardon himself. he previously claimed that he had the power but it has never been attempted. u.k. prime minister boris johnson plans to host an expanded g7 summit in june. johnson wants to establish a so-called deep tan coalition to counter china and other coal -- other states. global news 24 hours a day,

on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this. francine? francine: thank you so much. let's talk about italy's political situation now. giuseppe conte faces a high-stakes confidence vote today in the senate. a narrow win would allow him to stay in power while 80 defeat would force him to submit his resignation. joining us now is carlo cottarelli. thank you so much for joining us. what is the mood like in italy right now? is there a danger that mr. conte has enough votes but does not have any real power to push the recovery through with reforms that italy so badly needs? carlo: the general mood is that many people are surprised, very surprised by what happened. it was something that nobody

would have expected a couple of months ago, or even at the beginning of december. the controversy relates to the design of the recovery plan, but the issue has been raised. since the beginning, the plan has already been changed. at the same time, i was very surprised yesterday when prime minister conte in his speech clearly said that there is a way to have -- it is not clear what is going to happen now. francine: personalities aside, what needs to happen with the reforms? what needs to happen to make sure that this recovery fund puts italy on a better, more solid footing? carlo: the plan, as it stands

now, has some positive aspects. putting more money in public education. a lot of emphasis, perhaps even a bit too much, on public investment. in my view, there is not enough effort to introduce the -- to make it easier for the private sector to invest in italy. perhaps you would have to have a tax reform that makes the tax system simpler and lowers the tax rate. none of this is in a very meaningful way in their reform packet at this point. i think that the european union will insist to have reforms in these areas. francine: is this something that you, i mean, the reforms asked

by the eu, will it be counterproductive? will it make a faction of the italian citizens against the eu? or is it necessary reforms? is it things that italy should have done a long time ago? carlo: it is nothing that anybody in italy would be against. the only reason they have not put this forward in the plan is probably they do not regard this as a priority, which is a mistake. they put a lot of emphasis on something that is important, like public investment. it is possible that during the discussions with the european union, european union managed to -- the italian government. they put these things as a

priority, a condition for growth in italy, led by private sector investment. francine: do you think that personalities, as you started by saying at the beginning of this interview, is getting in the way of italian recovery? carlo: [laughter] i am afraid yes. we still do not know how these problems will be resolved. it is possible that conte will go ahead with a government that does not have an absolute majority in the senate. it already happened in the past. legally, they can go ahead. the issue is whether there would be a government -- now, the government is relatively weaker. and even weaker government might be unable to push forward the reforms with the energy that is needed. italy is in a crisis. leaving aside the money that

needs to be received from the european union, we need to introduce reforms. italy has been lagging behind other countries for 20 years and there is no further time to lose. francine: carlo cottarelli, talk to me a little bit about what you think the trajectory is for italy. is there going to be a reckoning point when the ecb has to actually start normalizing monetary policy and are you confident that italy will be able to deal with that reckoning point? carlo: it depends on when it comes. certainly, we need time to restart the engine of the italian economy and put italy on a growth trajectory with at least a growth rate of 2% per year. in the last 10 years, we have been at 0.2% per year, leaving aside 2020. we need some type of reforms. i think the monetary policy will remain extremely expansionary

for the foreseeable future. we see a problem more so, at least the first half of 2022 or until perhaps later. it depends very much on these very low interest rates, on the financing power of the ecb, the ecb purchasing italian government paper. the italian deficit is entirely financed by the ecb, and practice, although the ecb is not doing this for the purpose of financing italian debt. we are entirely dependent on the. -- that. monetary policy continues to be very relaxed in europe. it may go up in the future. that is going to be quite

difficult. we had a deficit -- last year of over 160%. the italian nation was formed in 1861. francine: what do you think, given where we are, ahead of the senate vote that a technical government would have more success than a cobbled together coalition at last minute? carlo: it depends. the technical government had the support, had a very large parliamentary majority. but yes, but i don't see a parliamentary majority, a unity government being formed. they know very well that if there are elections, they are going to win. they are going to get perhaps

60%, 65% of the seats in parliament. they have no interest in forming or supporting a technical government. they form on their own a government which can benefit from a very strong majority in parliament. francine: all right, thank you so much for joining us today for. carlo cottarelli their, the former imf director. coming up, it's a big day for janet yellen. biden's treasury peck has her senate confirmation hearing and will have to sell his blockbuster stimulus package. we have the story next. this is bloomberg. ♪

♪ francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua here in london. the biden administration begins tomorrow, but janet yellen's work starts today. her confirmation before the senate finance committee begins today and so does her sales pitch for biden's nearly $2 trillion stimulus plan. let's get more from mark cudmore. great to have you on a really important date like today. what will you be watching out for later? >> i think probably the most important thing to watch out for is the tone and type of questions that we get from some of these senators, in terms of the republican side. we know pretty much exactly what yellen will say. we know what her beliefs are. she has spent a lot of time in the public eye. she is focused on inequality, the labor market, is quite dovish. we know her views on the currency side. i think that unless there is --

it is more about the tone and questions. that will give us an idea of how likely the stimulus bill is to be passed as proposed or how much watering down there will be. personally, i think janet yellen is far too experienced. she knows that ms spoken word can move markets significantly. francine: apart from a blunder, is there anything that you want to know or understand or that markets want to understand from her when it comes to this stimulus package? mark: i think there is two things that markets want to know. there is obviously the currency view is what markets are most focused on. we appear to know what she's going to say on that. it will be interesting to see if there is any extra reaction from markets when the currency view is expressed. she might get some follow-up questions around that because she has been someone who has

been in favor of a weaker currency. that is against the previous terms and previous secretary. it is less about what she says. we know her views, we know the biden plan, we know what she wants, we know she is focused on this k-shaped recovery. she wants things like minimum-wage, state aid, much more to help people that are struggling at the lower end of the income spectrum. it is much more about the tone of questions. how aggressive are the questions? are these questions are these questions seeking to undermine the plan or genuine questions of wanting to get more knowledge on her views? i think in many ways, it's more about the questions she is dealing with as opposed to her responses that people in markets will be watching for. francine: what might move markets over the next few days? mark: well, i think there is a lot of potential things to move markets.

i guess it is a little bit glib to say we do not know exactly which one it is. we are about to have a whole new administration in the u.s. this comes after a very controversial administration. obviously, many of the plans that we are expecting from biden will be -- have been made clear in advance. i think that we are getting such a large shift, there is always a chance for a surprise. will there be a buy the rumor, sell the fact part of biden's presidency? will we get social unrest ahead of the inauguration? the stimulus package, we still want some more kind of clarity, detail, how much will be infrastructure focused and how much of that -- how quickly that will come through. there are a number of catalysts in the next few days. it's hard to identify exactly which one. the backdrop is that we have a market that is overstretched -- that is very stretched on a

theme that we all agree on, there is too much in the system. francine: thank you so much. mark cudmore with the very latest. he is from our mliv team. i suggest everyone go and actually check it out. we are hearing from giuseppe conte. we were just talking to carlo cottarelli about some of the issues. if we do not have a strong majority from mr. conte, he says that the government, they can steer the recovery. or, he says italy needs a government that can steer the recovery. i think he is suggesting that it is his government that can do and italy's economy will need the support. should governments and companies have been more ready for the catastrophic crisis which was starting to unfold 12 months ago? we discussed the risks the world faces in 2021. that's a little bit later in the program and this is bloomberg. ♪

>> the trade war, dlisting chinese companies, just some of the policies joe biden must decide on when he takes office. among his team, tony blinken. he has already indicated the pressure on china will continue, at least over the crackdown on democracy in hong kong. commerce secretary pick gina raimondo is another. hurt moderate stance on beijing has been noted.

katherine tai, a fluent mandarin speaker who wants to confront china over its trade practices. joe biden is said to want unity among western powers amid concerns beijing could divide them instead by offering preferential market access. he could have a tough time convincing traditional allies. the eu is the latest to reach its own investment deal with china. for its part, beijing says the plan is to ease tensions. the foreign minister is calling for dialogue to restart and high-ranking diplomats will reportedly be sent to washington to explore areas for cooperation. if u.s. restrictions are not repealed, beijing is ready. new rules mean the government can prohibit the application of foreign rules to its companies, including those issued by the u.s. joe biden says he is not planning any immediate moves, aside perhaps that the -- used

by trump against china are still on the table. francine: those are some of the things to watch out for in the coming months as joe biden takes over the u.s. presidency tomorrow. more on the business, political, and economic implications of his presidency throughout the program. let's get straight to your bloomberg business flash with leigh-ann gerrans. >> german sandal maker birkenstock is in talks to be taken over by cvc capital partners. a deal could value birkenstock at more than $4.8 billion. the company launched the sandals in the 1960's but the company's routes actually go back to 7074. the french government is urging a friendly resolution to a takeover battle. the months long stalemate was shaken up this weekend with the news of a possible rival bid from two private equity firms. suez wants to discuss the offer, but veolia is only willing to

talk about a takeover. european car sales plunged to the most on record last year. demand recovered someone in the second half of the year but cannot make up for the collapse during the initial outbreak of covid-19. electric vehicles were a rare right spot. bloomberg's new energy finance estimates that europe's e car sales topped china for the first time. that is your bloomberg business flash. francine: we are getting some breaking news out of giuseppe conte. after winning a vote in the lower house of parliament late last night, he now faces the senate. mr. conte giving a speech, talking exactly about what italy needs right now. global markets are climbing ahead of the speech by treasury secretary janet yellen, and wish she is expected to call for extensive government action to help the economy. if you look at the advents, it is pretty broad across equities. futures on the russell 2000 of

small-cap companies registering also stronger gains. 10 year yields in the u.s. coming back to 1.1%. oil prices and emerging markets also advancing. manatt, make sure to catch our coverage of joe biden's inauguration tomorrow. we will bring you the latest from 4:00 p.m. london time. this is bloomberg. ♪

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

we are alerted by tweet, matt hancock, the health secretary in the u.k. has to self-isolate because he has come into contact with someone from covid-19. we don't know what that is. he was alerted to this by the nhs service. what we call track and trace in the u.k. system. we will see whether it changes any of his plans in the coming week. let's get to the bloomberg first word news in london with leigh-ann gerrans. leigh-ann: italian prime minister urges a picante is facing a crucial confidence vote in the senate after -- just epic content -- giuseppe conte is facing a crucial conference vote in the senate. the incumbent biden administration -- incoming biden administration plans to block president trump's plan to block travel from e.u., the u.k. come

and brazil. the white house was planning to withdraw the ban due to new rules on testing, but joe biden -- joe biden will keep the restrict is on the advice of his medical team. it is time to act big on stimulus. that will be the bessette from janet yellen at her senate confirmation hearing today. it will be the first time lawmakers will get to that the president-elect's 1.9 trillion dollar rescue plan. according to her prepared remarks. she will say the borrowing costs are so low, now is the time to spend. 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'm leigh-ann gerrans. this is bloomberg. francine? francine: president donald trump is ending his term in office with historical low approval ratings. his approval numbers have dropped to 34%. as already had the weakest average rating of any president

back to the 1940's when the survey began. his final two weeks saw a significant drop in support. michelle joins us with more. she was in washington where she was a former white house and congress reporter. great to have you today. it is trump's last full day as president. what do we know about how he will spend his remaining hours? >> certainly an unusual end to a presidency, to say the least. what we know from the official white house schedule is that he will work from early in the morning until late in the evening and make many calls and many meetings. but removing the -- we have more confidence in what he won't be doing. there is a lot he will skip in terms of the usual ceremonial duties of an out going president. he won't be welcoming president biden and his wife to the white house, which is typical on the

day before the inauguration. he will also skip the inauguration altogether. we expect he will issue a number of pardons on tuesday, which is typical for outgoing presidents. people familiar with the matter say the white house counsel is not prepared preemptive pardons for trump and his family, shed being a big question, as well as many court cases he will be subject to post-presidency. he could sign more executive orders than in recent days. sometimes for trivial things like a statue garden for american heroes. but any of these things could be overturned once biden enters office. there is expected to be something of a celebratory sendoff awaiting trump outside d.c., from where he will take his last air force one ride to florida and begin his put spread and see. so a lot awaiting him in those presidency. safe to say he won't go out quietly even as he's losing the

so-called bully pulpit as president. francine: we are not expecting him, president trump, to pardon him or those closest to him. who could be pardoned? michelle: any number of people. he has kind of had this somewhat odd and at odds with some of his other policies, this policy of removing people who have had long-term drug crimes. he is done favors to certain people who have petitioned for removal from sentences, so people i have seen -- snoop dogg has petition for certain people in his orbit, so there are always a number of requests of the now going president to commute sentences of those in legal trouble. there could be hundreds, there could be dozens, but we do believe at this point from

reporting that it will not be himself. francine: michelle, apologies, i think i just called you emily by mistake. what are we expecting joe biden to say tomorrow at the inauguration? michelle: we will hear a message focused first of all on the pandemic. have a very interesting and unusual security backed up from the -- backdrop from the capital mob fallout, as you suggested, as well as the pandemic and the restrictions therein. what we will expect to hear is a message of unity, and about the $1.9 trillion stamos package that jenny asked stimulus package that janet yellen -- the 1.9 trillion dollar stimulus package that janet yellen will mention as well. we know he has talked quite a bit about rejoining the paris accords as soon as he gets in office, so that and other issues

that are close to his heart the on the virus fighting will certainly get a look in the first 100 days. francine: thank you so much, michelle jamrisko, with the latest on the inauguration tomorrow. let's shift gears and talk about the middle east. at the beginning of the year, saudi arabia and its allies -- we will speak inclusively with qatar's foreign minister, who is called for a summit between jcc leaders and tehran. >> the time has come when the jcc will sit at the table and reach a common understanding between the concept that we have to live with each other, and iran cannot move jcc away from his nape -- from its neighborhood. >> is that time now with a biden

administration, perhaps returning to the 2015 deal? >> we hope that what will happen between the u.s. -- we hope that iran will reach a solution between the gcc and iran. >> do you want qatar to be the center of those discussions? oman played a very large role last time around. is this something that you see yourself? >> for us, what we want, we want the accomplishment. we want to see the deal happening. whoever is conducting these negotiations, we are going to support them. we will be asked by the stakeholders to play a role in this. we maintain the relationship with the u.s., a good relationship with iran.

iran is our neighbor. we have borders together. they have stood with us during a crisis and supported all of our -- i believe there is mutual respect between the countries. that allows qatar to play such a role. reaffirming that if any country is going to play that role, qatar would be supportive of that, and would not do anything unless asked by the parties. >> it looks like south korea is perhaps reaching out to qatar for assistance in resolving the tanker and the crew that are detained in iran. what assistance are you providing them, if any? what is the situation right now? >> with the south korean tanker crisis, we have received a

request from the korean government. right now we are working on it to find a way. they are talking to each other directly, actually, and they might need qatar's support for the process. but they have their own direct link. our response to our friends in korea, that whatever we can do to help, we are going to help. we are talking to the iranians, and we hope we can help in facilitating any of the talks. francine: that was qatar's foreign minister. coming up, two governments and companies are ready for the catastrophic crisis which was starting to unfold 12 months ago. that is coming up next, and this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get business flash with leigh-ann gerrans. leigh-ann: european cartel plunged the -- european car -- electric vehicles were a rare bright spot. bloomberg's new energy finance estimates that europe's the car sales topped china's for the first time. germans handle maker birkenstock has been in talks to be taken

over by cbc capital partners. bloomberg has learned a deal could be valuing birkenstock at $7.8 billion. the company launched the sandals loved by hippies and preppies alike in the 1960's, but the company's rips -- the company's roots go back to 1774. the company is trying to find a friendly resolution to a takeover battle. the month-long stalemate was shaken up this weekend with news over a possible rival bid from two private equity firms. so is wants to -- suez. tesla has begun delivering the first model why suv's built over in china. it is the first electric vehicle that tesla has sold in china. last year the model three was the most popular electric car. francine: 2020 saw an unprepared

world face the biggest challenges in recent times. which is governments and company have been more ready for what was starting to unfold 12 months ago. this year's epic global risk report by the world economic forum says the catastrophic pandemic was an event that had been signposted at a's -- as a potential danger for the world. looking ahead, the west warns covid will increase disparities in social fragmentation and can cause more crises for years to come for it says environmental concerns still top the list in terms of likelihood and risk impact over the next decade. joining us now is the chief risk officer at commercial insurance, zurich insurance group, and co-author of the report. thank you for joining us today. you and the west say that we should have been better prepared for the pandemic. is this private companies or is this government? >> this is really everyone. this is governments, private companies, individuals. it is very important that when we look at the global risk

landscape every year that we act upon the risks that we face. as you mention in your introduction, we were forewarned. we have seen sars and mers, and yet failed to be prepared for this pandemic. that is probably the key lesson from covid-19, and it gives us a particularly good lesson with the expected the 10 year horizon risks around climate and weather related events. because there is no vaccination for those events. francine: you also are the chief risk officer at commercial insurance at a huge group. how do you prepare for something like a pandemic? we have had various lockdowns, and it doesn't seem we are more prepared now than we were in march apart from the fact that we have pretty impressive vaccination results because the medical profession was so quick to find something that could counter what we are working through. eugenie: i do think one of the

silver linings to covid-19 is we have seen the agility of the population at large, and i think that is something that we need to remember as we face a global risk landscape. what i would say is, in terms of preparation, it is key that you look at -- determine the direct and interest -- erect and indirect risks facing you and your country or you as an individual. it is not a matter of singling out one risk. for example, the physical risks in covid-19. it is not enough to single that out. you also need to look at mental health risks and risks to the economy. you need a holistic view. you need to do an assessment of those risks and create a mitigation plan and act on it. with fairly extreme risks, something like a pandemic, the way you might do that is with a

scenario. in other words, imagine a panera -- imagine a pandemic hits and role-play that out. some governments did that prior to covid-19. francine: but they are not doing better in actually dealing with it, because then reality hits and suspending at and telling people they cannot leave their homes is something completely different. eugenie: indeed. the risk plans need to be balanced. it is not a matter of the dressing one risk completely and not addressing others. if you do that, you will probably exacerbate the other risks. it points out that if we don't act on some risks, like rising inequality, then we will risk a lack of social cohesion, for example, and that in turn can lead governments to look inwards

in dealing with those problems and they we will face the problem that we will want to come together multilateral across the world -- problems like climate change. francine: what is the one thing that we are underestimating? everything you're putting right here makes sense, is common sense. i would hope governments are looking into this, but is it a problem of actually taking action, or are the biggest risks what we don't talk about, which the pandemic, for example, was simulated but was not in the top four risks of 2020. eugenie: i think it is a combination of both. for example, this report does not have a deep dive section on climate risks. that doesn't mean those risks have gone away. in fact, they are populating to a large extent the top quadrant of risks. so those risks haven't gone away. the fact that we are not talking about it doesn't mean that they have disappeared or that we have mitigated them. so it is important that we take

action on the risks landscape that we see, and, shall we say, be prepared. the problem is, typically what we see is the preparation is worth more than recovery in terms of effort, in terms of reward. so it is quite key to be prepared than actually take action. francine: talk to me a little bit about digital inclusivity. do we underestimate the impact this could have for rebellion or social unrest? eugenie: yes, clearly. clearly, it is one of the side effects of covid-19. what has happened is we have accelerated the industrial revolution. the problem is, in the meantime, have we brought everyone along with us? training, for example. on technology. for old people. particular leave for people who may not be able to work from home because their jobs will change going forward. one of the risks that we see

with this acceleration is that you have whole sectors of society that may not be as digitally literate or as deadly -- or as digitally trained as they should be, and they will need to be trained in a hurry because more and more of those entry-level jobs are being automated, so those jobs will disappear. we run the risk of creating, if you like, digital haves and have-nots in this world. francine: thank you so much for joining us today, eugenie molyneux. coming up, big bank earnings continue after a long holiday weekend in the u.s. bank of america and goldman sachs top the earnings report. we have the details next, and this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get the latest on the earnings season. after a long holiday weekend in the u.s., goldman sachs evan bank -- and bank of america are

expected to announce quarterly earnings today. so is morgan stanley on wednesday. the results follow citigroup and j.p.morgan, who share prices slid friday after reporting their outlook. joining us to discuss this is dani burger. what should we actually expect from results today? dani: the banks that have a strong president -- presence in capital markets and banking is set to shine, that his government text today, morgan stanley tomorrow, and that is because of the fourth quarter. we saw a sizable pickup when it comes to things like m&a, when it comes to ipo, and when it comes to volatile markets. it means that trading debt is going to be doing better. on the flipside, what you see is some concern about the more consumer oriented banks. that is perhaps why some of the ruins -- wanted -- some of the ones that we reported on friday struggle more than the others. this is where the u.s. banks show their domination over the european ones. you have goldman, morgan stanley

topping the leaderboard when it comes to ipo advisors in the last quarter. europe doesn't hit that board of the top banks. that is what is really going to help them carry through this quarter. after what was already a very strong three q for these more capital markets focused banks. francine: what will investors be looking at for the outlooks? dani: this is something we heard talked a lot about in the banks that reported on friday, and indeed gave some reason for concern. j.p.morgan's cfo, for example, cited the fact that the bridge might have been big enough in terms of stimulus for the consumer the first go round, but it needs to be longer. there needs to be more stimulus in order to get consumers through to the next part. her example, make of america with their credit card data looks like it will be important. we got a snapshot into that we see credit card data at the start of january benefited from more stimulus payouts, but it

sounds like leaks executives will express the need for more buybacks, a capital return plans are also going to be important. the fed is allowing u.s. banks to start again, issuing dividends and buybacks. we heard morgan stanley and goldman sachs in their last quarterly report expressed the desire to start them up again this quarter. we are going to want to keep our ear out for that as well, francine. francine: dani burger with the latest on some of these earnings from all street. "bloomberg surveillance" continues in the next hour. tom keene joins me out of new york. we will look at the hearing from janet yellen, what that will do to the treasury market, and we have a full round of asset classes, and then we look at the inauguration tomorrow. this is bloomberg. ♪

francine: italian senate showdown. giuseppe conte wins the first vote of confidence, but the real test comes today in the upper house. yellen on the hill. biden's treasury secretary pick is set to tell the senate that it's time to act big on stimulus. and trump's last day. the president is expected to issue pardons, but not to himself or family members. he leaves his term with a 34% approval rating. good morning, everyone, and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene in new york. tom, i have been reading extensively of janet yellen, her testimony, what markets are looking for. they want to ask janet yellen through the senate committee, and of course it is about a very different inauguration this 2021. tom: we can go short-term chair yellen, secretary yellen, and look at the history of the moment that we will see tomorrow, i'll cov