charge of the treasury, but president biden's team struggles to invite partisan support for their $1.9 trillion covid relief plan. conte will go, but perhaps not for long. italy's prime minister will resign today -- this morning, in fact -- in an effort to form his third government. plus, ubs announces a share buyback of up to $4.5 billion and a big beat on net income. we hear from our exclusive interview with the new chief executive, ralph hamers. good morning and welcome to "bloomberg surveillance." i'm francine lacqua in london, tom keene in new york. tom, we must look at the reflation trade. we will spend more time looking at the market, giving the setback that markets felt after we heard from the republican party, saying they will not vote, or they will not go through with the relief bill until march, and we look at politics in the u.k. the prime minister deciding whether he wants to put everyone in quarantine before they arrive

in the u.k. never dull. tom: i don't get the hotel thing. what are you going to do? you're going to go down to the bar with everybody else and get the plague. francine: i don't think that's allowed, tom. tom: the data is interesting. we have got to look at ubs. it is the start of her earnings season. this week, in the united states, -- of your earnings season. this week in the united states. francine: i love that tom thinks of hotel and thinks directly of the hotel bar. we will have more on that. tom: why stay there he echo there is no -- why stay there? there is no table that pharaoh and i have not set at. ritika: a delegation of house members took the next step in the impeachment process.

lawmakers delivered the single article of impeachment against donald trump to the senate. that triggered the start of an unprecedented trial of the former president, accused of incitement to insurrection. janet yellen's first task as treasury secretary will be selling president biden's new stimulus package. she was concerned that she was confirmed by a vote of 84-15. she has argued it is time to avoid long-term problems -- and senate republican leader mitch mcconnell is ready to move toward a power-sharing agreement with the democrats. mcconnell had refused to agree to any deal to share power in the 50-50 senate because democrats would not promise to scrap the filibuster, allowing the minority to block legislation by requiring 60 votes to advance most bills. two democrats say they support

the filibuster, and mcconnell says that is good enough. there british government is considering whether to use hotels to quarantine travelers arriving in the u.k. the goal is to stop the spread of new coronavirus variance from overseas. 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: francine and i dedicate this data check to the many people at davos that we are missing. how about barry, the piano player at a piano bar? written up by eric silvers yesterday in the wall street journal, up end of the scotia. red and green on the screen. there is a negative tinge but a better tape in the last hour. yields come in. yield to 103, 104 now. oil 66.0 seven, other than that,

sort of a churn there as well. kit juckes will help with that in a moment. francine: it is not even 5:05, and we are talking about the health drive. m&a deals are getting a boost. -- are giving a new boost to europe. it is worried about a new stimulus proposal in the u.s. that started this risk off. i wanted to share technology stocks are holding in europe, holding euro-dollar at 1.27. and the stringent quarantine possibility when you come into sterling with 36 point 153. -- 36.153. let's get to kit juckes, talking about the tray that is pausing for now, with some of the risk there as well. kit joins us. i am in sling enjoy reading your morning notes because they are

always to the point and always funny. when you look at some of the reflation trade, is this it? we start realizing about i guess the difficulty that we are going to have in dealing with the pandemic only through vaccines. kit: i don't think this is it. there may be an indication that this year -- my first thought this morning is that we have done 20% in the s&p pretty much since the end of october, so in three months. that is a lot by any stretch. so the yield curve steepening in the u.s. has followed from that, the euro-dollar rally, the dollar follows generally from that. i think it is fair to think it is going to be messy. we cannot just be one trade. rates are superlow, we have a vaccine. everything is going to be fine. this year will be messier and

more difficult than that for sure, but i don't think the reflation trade is over, partly because there isn't anything other than vaccines and easing monetary policy and continued fiscal accommodation. francine: you start off the morning saying unhealthy levels of the correlation are back. until when are they back? kit: until we get a new theme. the solution to everything is that the fed has ranked everything superlow for super long, and that has driven everything else. the difficulty with that is, you know, if we were to get inflation, what will we do? we will get more policy dynamics. rather than people putting curve steepeners on, the reflation trade, we get worried about the supply and bond markets or we get worried about corporate bond defaults. the world can get much more complicated, and these

correlations will have to break apart. the biggest danger of all is that the answer has been repeatedly, let's cut rates further and that will help get equity markets up. as long as equity prices are higher, not everybody is happy. we cannot do this forever. we are badly addicted to this particular drug now. tom: well said. i think we all intuitively understand the correlation between bonds and equities, giving fed action -- given fed action. how does chairman powell's action and other central banks and their ultra accommodation -- how does it affect foreign-exchange flows and interest rate dynamics he echo -- an interest rate dynamics? kit: in simple terms, you're not going to get much keeping your money and treasuries. look for something better to do

with your money. get yourself optimistic about economic recovery elsewhere. the good side of that is it gets money to countries that need investment to get it going, and if we get the vaccine will be stronger currency, and that is correct. on the negative side, he is playing beggar thy neighbor backwards. to get euro down by crowding investors out of german bonds. and what chairman powell is saying you can have that back on your side of the court and you can have a strong euro back. tom: i look at the strong urodynamic, and we wait and wait. is the euro broken now? as we stagger into 2021, is that it for a 1.23 euro, and the closest way is a path back down, weaker he echo -- weaker? kit: i think we will see 1.30

roughly as a hi, but not for months and months. there is too much disinflation for the europeans to want it, and there is not an of good news on the europeans. if they can reignite accommodation talks across europe, act together on vaccinations, then we can accelerate. but for now -- and in many ways i hope i am wrong because it is not exciting -- but now i think that we may find we are in a period of consolidation around these levels while we let the world catch up with how markets have moved. francine: are we going to get something substantive in terms of the covid relief package in the u.s.? kit: i think we will. the markets are a little nervous about the idea that it takes four to seven more weeks. i don't think we should just give up on the idea that now that democrats have control of the political process they are going to be able to push through

fiscal it had nominations -- fiscal accommodations. the idea that you get a massive package with money being handed out next week, certainly the bond guys who got the curve to steepen and got the yields up so far, they got a little bit over that, and they are going to have to pick themselves up and it will just take longer. francine: thank you so much. we will get back to kit juckes, from societe generali, who stays with us. you can follow remarks on bloomberg at live go. we will have a number of world leaders speaking. there is emmanuel macron and a number of other prime ministers also in europe. they will talk vaccines. a bit of a controversy regarding the astrazeneca vaccination. we will have more on that. and on the imf world economic outlook report, the chief of the

imf will be in a conversation with our very own jon ferro. this is bloomberg. ♪

>> all we have in terms of digital innovation, yes. have we learned from the design governance and arrangements for a lasting digital currency? no, i don't think we have gotten there yet, honestly. i don't think that the currencies are originally formulated. tom: mr. bailey with the

skepticism of the davos agenda. i remember five years ago were all of crypto showed up in happy valley, and they were humbled over two or three days as they gathered elite said maybe not. kit juckes with us, with socgen. we are thrilled to speak with him about this. i don't want you to give me a buy or sell on bitcoin, but i want to talk about institutional rationalization to move from effective bank transactions over to outright purchase of the crypto story. it is all part of the -- it is part of a carefully balanced portfolio. i get that. is it? kit: i think the world is going to move towards digital money. central banks are going to work it out that they are doing an enormous amount of work on it under the guidance of -- i think to that extent we will get digital money. that is a whole different

question from whether cryptocurrencies, which are intended to avoid the financial system will develop a serious value as a store of wealth. what is clear is that they cannot all -- there will be more losers than winners out of that crowd of cryptocurrency, but it is a rebellion against the world we are in, zero negative rates, and the kind of monetary policy we have had for the last decade, and that is real. at the same time, it is a realization, but we are losing -- we are using less and less cash, and the digital money and the digital central bank money is going to be a thing in our lifetime. but we are still in the foothills of this story and how it plays out. and trying to guess what wins in it is really hard. tom: on the bloomberg -- you cannot see that, i guess. i was going to put up the

bloomberg keyboard, but it is tethered in here because of my big fat fingers. it has yellow keys, one that says bonds, one this is currency. under currency -- does it have any currency attributes? kit: it has about as many as gold does conceptually, minus the jewelry aspect. if you look at bitcoin, if you are a gold bug, fanatic about the value of gold, your advantage is there is a supply and demand of gold that comes from its use as a store of wealth and from its use in some industries that are not so enduring. bitcoin aspires to be one part of that. so we debate gold as a currency or a commodity. we can debate it going as, doesn't have the currency aspect of gold because it does not have the commodity aspect. that is one of its weaknesses,

but it aims to be in the future. then we get back into the questions about what do we do with the fact that it is so volatile, and that the buyers at the moment are buying it because they think it is going to go up in price. francine: i was going to ask, what does, if anything, bitcoin track? what does it move on the back of? kit: it moves on the same things as gold, the value of -- the idea of a store of value where negative real interest rates will support it, whether it is going -- where it is going to see a reflation hedge. outside the regular financial system. so competing for the swiss private bank contention with other assets. that is where it has to be. certainly it can be used for transactions in a big way.

you can imagine a world where any of the three of us might use cryptocurrency for big transactions as being a convenient way of doing things. but if they have to evolve into that role and they have to cope with the desire of some regulators, not to lose control of money. francine: we have tuition fees, and tom also has veterinary bills. when you look at the swiss franc, is this one of the things you are watching for the next six to seven months? they have negative rates, it is unclear what the path forward is for this currency. kit: we are stuck with negative rates in all sorts of places. we discussed earlier, the big accounts for economies all got strong currencies last year when everybody's rates went to zero. this year we are taking a pause and saying what now. where do they go now, now that we have repriced from that?

and the swiss franc has become probably what authorities would like it to become a which is an extremely dull currency. but at the same time, they still have all the snow and they still have foreign exchange reserves that are growing at a huge rate, because they cannot find anywhere to recycle that around the world. so it is doomed to go on being strong. tom: one final question, kit juckes, your call on sterling, please. on pound sterling. kit: i think it will trade around here against the euro. ever since the referendum, it has traded down near historical trade-weighted terms. it cannot get lower than that, it can only go up. all it needs is some good news. i cannot find any. tom: cable's from 1.40 echo kit:

if euro-dollar gets above 1.45, cable will be. tom: kit juckes is with societe generale. dow futures -14, the vix a fractional 23.45. coming up, the year ahead forum of bloomberg. the prime minister, anna silberg, of norway come along with the ceo of -- this is bloomberg. good morning. ♪ 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.

ritika: this is bloomberg surveillance. leon black is retiring as ceo of apollo global management because of a scandal involving sex offender jeffrey epstein. an outside law firm found that black paid epstein $158 million even though the firm never retained him for services. black will stay on as apollo's chairman. the swiss bank is doubling the size of its previously purchased program after finishing strongly in 2020. fourth-quarter net income beat estimates thanks to the performance of the investment bank in the world management unit. him stop is at it again. shares up 30% in premarket trading since the first of the year. the videogame retailer was at

307 -- 308% yesterday. it triggered at least -- him stop has been a battleground for short-sellers and retail traders. that is the bloomberg business flash. tom: francine and i should be in davos, along with all bloomberg. we are not. as well as barry the piano player at the piano bar in cloud fair yesterday. futures at negative six, dell futures -17. the fixed 23.47. yields come in. francine highlighted that and that is a big deal. 1.03, lower yields there as we talked to barry in nova scotia. francine? francine: barry really wants to come on "bloomberg surveillance." according to the world health organization, that is why we are seeing market worry about the

pandemic. also the hurdles to the bidens stimulus proposal. that is still coming true in certain parts of the market. european stocks gaining from technology, expecting quite a lot of earnings later, and i'm g at pound, 1.3660. later today we will speak with -- we also speak to the j.p.morgan asset manager. we talk about finance, the stability of the financial and monetary system. you can watch that on bloom to free -- on bloomberg tv also on live go. this is bloomberg. ♪

francine: bloomberg surveillance.

always a good time to talk about -- according to unnamed officials. it is never dull. much like u.s. politics in the last 3-4 years. a former residence -- we did see conte leave. let's go straight to fernando. the fact that you resign but you still have a chance of forming a government is confusing.

>> he certainly hopes he will be able to stay. we are talking about a man who has had no difficulties switching from the coalition to one of the left wing democratic party. the head of the party and what the troublemaker of this party wants. we keep the same governing party with a different prime minister. perhaps we have a bigger coalition and maybe conte has a chance to remain as prime minister. the ever present opportunity, the technocrat's government.

mp's do not want to lose their seats right now. francine: what is the most important thing? is it reform to make sure that recovery fund money is not squandered? or that you have to vaccinate a large percentage of the population quickly? fernando: there are two incredibly priorities. we are counting more than 8000 official dad. -- official dead. in the vaccine rollout -- and the vaccine rollout. you mentioned the recovery fund. my point is you need an effective government.

the last administration, not so effective. tom: what do the people want? they want mario draghi to come in and do the technocratic thing? what is the goal of the people of italy given the unrest of the elites? fernando: conte seems to be quite well-liked. this party could reach 18%. people have been a bit dismayed by the government crisis at the moment. the population is very divided. this reshuffle happens because the last election, there were

really three blocs, and none of them reached enough seats to form a government. incredibly difficult challenges from the economic crisis and the health crisis. unfortunately, no real sign of a strong government ahead. tom: very importantly here, you say this leader is popular. if he is popular, why is he doing this? fernando: he is doing this because italy is a parliamentary democracy. it matters if you have enough support in parliament. at the moment, conte does not have that. the first critical issue, a vote on a reform of justice, the government did not have the votes. he benefited from the fact that

italy is a parliament terry democracy -- parliamentary democracy. now he is paying the price for that. does not have the votes in parliament. francine: you are italian, it's ok. tom: i'm working on it every day. thank you, frank. i am the ugly american. continue. francine: a+ for effort. why is europe so far behind the u.k., for example? fernando: the u.k. has been superfast in approving the pfizer vaccine. i think the astrazeneca story is a bit more complicated.

the trial -- the u.k. has been fast in approving that but that vaccine has not gotten close to getting approval in the u.s. if we look at the numbers, the eu is around two doses per 100. the u.k. is more than 10. there needs to be -- politicians should, course, enforce their contracts. the pharmaceutical companies are a part of this. tom: i was on the west side of manhattan yesterday and observed a complete collapse of small business in america. i was thunderstruck. italy is the land of small business.

how is small business in italy coping, venice, and on south? -- down south? fernando: if you are thinking about the tourists places, the wonderful mountain ski resorts. many of these restaurants and bars probably will never open again. some businesses are displaying a lot of ingenuity, moving into online sales. that is great. we'll make it to the end of this pandemic -- when we get to the end of this pandemic, we will see hundreds of thousands of businesses that will no longer be there. francine: more takeaway espressos, please.

let's get straight to first word news. >> it is up to the senate, house delegation went to the senate to formally present with a single impeachment charge against donald trump. he is accused of incitement. arguments are set to begin february 8. getting a conviction could be difficult. former president trump has opened an office in florida to carry on the agenda. the statement was released just before the article of impeachment was delivered to the senate. the former president moved to his resort in palm beach last week. janet yellen, her first job include selling biden's stimulus

package. she will be the first woman to hold the job. she argued that it is time to act big with deficit spending to avoid long-term problems. that argument was rejected by republicans. president biden says he is open to negotiating the proposed $1.9 trillion stimulus but he will not rule it out. republicans have rejected the price tag as to height. -- as too high. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. tom: thank you so much. the vice president of the u.s. will swear in janet yellen at noon. that is scheduled today. as secretary of treasury. the second gentleman and the

vice president with the second dose of their vaccine later this afternoon. citigroup, head of research on the state of banking. last time we talked to him, it was very valuable. francine lacqua with a great panel today in london. this is bloomberg. good morning. ♪

>> he has made it his job as president to bring the countr together. >> the capital reserve that we already had gives us the confidence that we can announce the buyback program for the next three years. the biggest risk is where this

pandemic is truly going. on one side, we see the light at the end of the tunnel. we are increasingly confident that this pandemic will come to an end. on the other side, specifically here in europe, the lockdowns are more strict than ever, which will have a deteriorating effect on the economy. that unpredictability, and what is that shape of the economy, that is the true risk that we need to manage this year. francine: that was ralph hamers. here to talk with us is our next guest. great to speak with you today.

there are a number of questions about cross-border consolidation, what exactly these banks will come -- will become. what is your immediate thought on ubs? >> we have a constructive view on the european bank sector and we are within that positive on the swiss banks. the results we have seen coming through already shows third quarter was good. investors are now asking questions about the outflow. what is 2021 going to be like? can this amazing 2020 trade performance be sustained? francine: will we see cross-border consolidation in 2021? ronit: we have seen m&a come

back on the map. cross-border is harder. the ecb tries to encourage it. the regulators want to create bigger european banks. initially, we think it will be domestic in-market consolidation, like we see in spain and italy and the u.s. and also banks to nonbanks. tom: good morning. i want to congratulate you. as we protect the copyright of all of our guests, you can protect that through citigroup. what permeates your 61 page deck is a lack of profitability. how do they fix that? ronit: there is a structural

problem, particularly in europe. the swiss banks and the american banks -- in the eurozone, interest rates are low and costs are high. the hopes of rates rising at the long end of the yield curve, asset quality will be better. a structural underline problem -- underline problem. -- underlying problem. the only kind of europe where banks make good money is in scandinavia. it allows them to make money. it is a structural problem. tom: it is a structural problem, i understand, but they have to fix it. you mentioned the european banks doing business in america.

i do not want to get you in trouble but what is holding back the mating of profit desiring u.s. banks and profit desiring eu banks? culture? ronit: consolidation is much easier inside markets. most big u.s. banks already have established capital market operations. buying a big european bank comes with other issues, and it does not tend to be high up on the agenda for an american bank right now. i would expect consolidations to be more in countries within europe. bank to wealth manager.

i am not expecting asia to u.s., u.s. to europe cross-border m&a. francine: do you have a favorite european bank at the moment, either because it is unfairly valued or the market potential? what is the most lucrative part of the european bank right now? ronit: the regents we like -- regions we like, we like the u.k. domestic banks. we think there will be better profitability this year. those are among the big banks, two areas we are fond of, the swiss and domestic u.k.

most -- those tend to be in northern europe. francine: what is the difference between ubs and credit suisse right now? ronit: that is a long question. we are positive on both. there is a valuation difference. tom: we love having you on. switzerland, do they have room for two major banks? is it inevitable that they consolidate? ronit: the two banks are beyond the local markets. those are two of the biggest global wealth managers out there. there is no reason why there cannot be two swiss banks at the top of the list. there market is the whole world

-- their market is the whole world. tom: what is the distinctive threat of the american banks that want to take marginal business in europe? what is the distinction of how they do business, including citigroup? ronit: the american banks in europe tend to be focused on targeted clients. most of the american banks in europe are not universal banks. they are not trying to do everything for everyone. there are certain clients, large companies, certain products and services, ipo's, it is a very targeted approach. there was a time 10 or 15 years ago when u.s. banks had credit card businesses and consumer

operations in europe. that time is gone. francine: thank you so much for joining us. coming up, the united nations climate change conference. he will be joining bloomberg exclusively. glasco is the host -- glasco is the host city. this is bloomberg. ♪

>> this is bloomberg surveillance. shares of china's internet behemoth tencent slumped in hong kong. an advisor to china's central bank made comments to local media indicating excessive liquidity and cheap borrowing costs are creating trouble. mike lindell was banished from

twitter. he continued to insist the election was rigged even after the u.s. capitol rise to left several people dead. harvard and yale are amongst the universities is endowments through digital currency. the biggest of those currencies, bitcoin, rose four-fold in 2020. that is the latest business flash. francine: this is what the markets are looking at. we had a correction yesterday because of a pushback, a possible delay in the recovery fund. global stocks mixed. we do have a bit of m&a news here in europe. worries about new virus variants. i am not seeing a lot on the

market of volatile politics. tom: earnings coming in. a price move up to $4000, a nice lift for joe feldman. his enthusiasm on amazon. bitcoin is down a little bit. we need clarity on the american economy. it will be delivered by andrew of citigroup, next. this is bloomberg. good morning. ♪

tom: suddenly, yields reversed,

schumer says a lack of stimulus until march. equity futures split this morning. the minority leader relents as the majority says the senate will not like -- will not be like the rabble in the house. senator portman of ohio dealing with gridlock. secretary yellen will listen to chairman powell's press conference tomorrow. good morning, everyone. francine lacqua in london. i am tom keene in new york. we are waiting for news, as we saw in the netherlands, from italy -- is it right to say a collapse of the government? francine: of course, it is something that is calculated. it is not really a collapse.