Lower this morning. This is bloomberg television. We are bringing you all the news you need to know from london and davos well go to davos in a moment. Haslinda is there. Whats on the agenda today . Haslinda well, it is the Global Economy. There is a lot of optimism. Modi earlier and he said he is confident about the Global Economy and especially about the italian economy. Ill be sitting down with volkswagen truck chief, and then later on, mario santano, the urogroup. Of the e dont miss the interview with tony blair. Guy thank you very much. The coverage continues to be fantastic out of the swiss alps. Lets talk about what is alps. Ning in the the next few days could be something you need to think about because the way the market is to work is rebalancing those portfolios. Keep an eye on that. The nikkei was trading down because the japanese yen was trading up through that 110 level. Kuroda, looking increasingly out of control on this story. The bloomberg dollar index, down by another. 3 . And did see both the nasdaq s p pushing down yesterday. The dow didnt. Seen moves overnight. The other thing i wanted to mention was that gold looks bid as well. Lets put it into context with the bloomberg first word news update. Here is juliette sally. Juliette President Trumps arriers might put more pressure on nafta talks. This will affect canada and mexico. Trump has repeatedly threatened to dump nafta. Hard toe working very make sure our neighbors to the south recognize how good nafta is and that it has benefited not just our economy, but his economy and the World Economy. Plus, we are all very much open to more trade deals involving more people as long as it is in the best benefit. Chuck schumer has withdrawn the offer he made last week to give donald more than the initial 1. 6 dollars invested for a u. S. Mexico border wall. Republicans called the move a step back and the continuing debate of immigration while trump tweeted, crying chuck schumer. If there is no wall, there is no daca. We must have safety and security together with a strong ability for our great people. Jerome powell has been confirmed to take the helm of the central bank. They voted 8413 in favor. He was widely seen as the choice. President trump picked him in november to replace janet yellen as the first woman to leavad the fed. February 3. M ends global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Exactlys figure out what will compound the truck of the future. Were talking about electric cars, hybrids. And we return to davos. Haslinda thank you for that. Ceoave the volkswagen truck joining us this morning. You are put in this position three years ago, one of the more prominent hires at volkswagen. What have you achieved so far in making the company more efficient . Power operations, i am working on one of the big targets we had. Was ournd thing participation. Our participation in the u. S. Market. The u. S. Was a big step for us. Slinda what is that translating to . Are you looking at more sales than before . It is always a combination. You want to achieve a higher market share in different markets you are in. You want to explore the different markets you are not in. Approach. E overall there is always a combination. It is most important that the people who work for such a big company understand the strategy. That we want to be the biggest one, but we want to be the most profitable want and achieve the highest customer satisfaction. Said that, what would be your priorities . What else would you be doing during 2018 to make that happen . I think it is important to look in our business, the difference between the hard trend and soft trend. I think all production, we know how to sell it. We question is, how can connect our customers with the different logistic mediums and put together the entire world . There are many things to do. We are on our way there already, but this is something. The entire business will change. We want to deliver. Will power trucks in the future . We have been talking about hybrids. What about trucks . The truck is different. In our case, a truck is not a truck. You can have a construction truck. You have trucks in the city. So, we have to have Different Solutions for our customers from different areas. But start with the city transportation. Way thathere is a good we can also use fully electrical the eagles. The longdistance drive. In the construction field, where they are doing thousands of kilometers per week, there is nothing like that. We can do natural gas. It makes some synthetic and that it, natural gas for example. There is no Silver Bullet to say a truck will be fully electric. If you look at a good equipped truck, you have to have a battery of 1810s. What if you introduce the self driving truck for the Mining Company . Do you see these on highways anytime soon . I would say no. Yes, you could do it in protected areas, like within mining areas. It, it means a lot. My question is, it would be very easy for airplanes to drive automatic. The question is, how many passengers will go inside. We have to say the same for a truck. It will come, but not very soon. Haslinda all right, andreas renschler, thank you for your insights. Y, it will come, but not anytime soon. Guy a lot of people out there looking for the job numbers to see such a development. Thank you very much, indeed. Up next, building on the banking union. Uro area wille e move. R speak to the new e urogroup boss. Guy 16 minutes until the start of cash trading in europe. Keep an eye on the tech sector and semiconductors. Attention tor tri europe. And of course, the constitutional crisis in catalonia. The single currency is now the highest level against the dollar in almost three years. This has the ecb meeting tomorrow. But germany remains without a government and italian elections loom. What direction will be euro area take in a year . Lets find out. Angie joining you from a cold, but sunny davos. Groupesident of the euro joins us, who is also the finance minister of portugal. Seems to be focus on President Trump. And then the positive story is what is coming out of europe. That growth will be sustained. The picture seems a lot rosier. Do you worry there will be a bumpy ride for europe, and that people are too optimistic . Thank you for having me. Put moree, we have than 7 Million Pounds into our economy. Iings are looking good and think they will continue to be like that. We have been able to show a lot of resilience to external shock. We have to continue our agenda, completinghe emu and our constitutional landscape. Francine . If you look at the dangers for the eurozone, you have the italian elections and monetary policy, where the ecb cuts down too quickly and then you have euro strength. What do you worry about the most . First, italian elections. Also, in terms of the prospects for the european project, this is something we have to take very seriously. , they are the reflection of the very good moments of the economy and we have to cope with that. Be prepared, those countries need more fragility taking care of their domestic businesses. We have many stories of success to tell about europe lately. Francine so, you are pretty confident. Do you worry about the level of the euro . That could hurt exports. Yes, but european exports, and portuguese exports, we can use them as an example, we have seen pretty good results. Our firms are showing their strength in terms of their competitiveness. They are very competitive with markets. Thabut i am not worried about that. Francine what will happen with greece . Is it a clean exit . They are meeting in brussels. We will be preparing the fourth and final review for the finalization of the program. Of course, the greek authorities are showing momentum in terms of the reform project, that they are engaged. For thevery good process. It has been a long process already for greece. Also, we need to Work Together. Francine but do you think it will be a clean exit . I want very much for them to take on the process. , inre preparing ourselves for the all indicators process after the program ends. Francine what do you think the eurogroup would like to hear from President Trump on friday . Well, that we Work Together on different issues, from trade to taxation. We want to continue the cooperation, in terms of the policies of the last decade. Francine will we hear that . Well, that is what i would like to hear from him. We really need to focus very much on our own agenda. And be prepared for whatever decisions can be taken. Francine do you worry about the tariffs President Trump imposed on solar panels and washing machines impacting europe . Of germana Lot Companies and Italian Companies delivering washing machines to the united they. To the United States. I do not agree with the protectionist policies. Again, we have got to be ready to respond to that. Francine what does that mean . Highest level of competitiveness . Is it tax cuts, is the europa group thinking of a way to retaliate . More cannot be profitable to anyone. We need to take our reform agenda and make the european economy stronger. We have a very large Single Market, the largest and correctly in the world. We have got to make that more robust. Right answer to the challenges. Ogroupne can the eur and europe put more pressure on china to buy things . We think it is important also to continue in that respect, to work with china, and to deepen the economic relationships. We have a very important economy in the world. The natural result would be the balancing of the trades. , minister, thank you for your time. That was mario centeno, the president of the eurogroup. It back. , i will hand guy looking forward to all of it. Francine lacqua, joining us from davos. We are now minutes away from the start of trading here in europe. Up next, we take a look at the stocks we need to be watching this morning. The british utilities were called sharply lower this morning. That mix. A factor in all of that is coming up next. This is bloomberg, the market open, now eight minutes away. Guy five minutes until the European Market open. The cash equity is about to start trading. Keep an eye on suez out of france, disappointing the market. A bunch of factors contributing to this story. The stock could open sharply lower. Novartis, back to health. We will see a new ceo coming in. Stock asye on this well. An m a angle. This could be a takeout target. Semihen there is the sector. You have had Texas Instruments disappointing. Keep an eye here in europe. Mi market open is now four nutes away. The open is next. This is bloomberg. Guy one minute to go until the start of cash trading. Lets talk about what you need to know. The eurodollar, we await the ecb tomorrow. But the real story overnight has been the yen. They seem to be on a similar trajectory as the dollar is down. That will be the take away. The yen was trading higher. That means the nikkei had a negative session overnight, down by 0. 7 . S p and nasdaq hitting fresh records yesterday, but the dow didnt. It was dragged down by some of the big consumer names. Stopped flirting with the 70 per barrel line. The numbers that reasonably mixed, slightly negative, but the individual names will be interesting. Suez and then individual conductors. Ftse is cominghe out. The cac will be interesting. Energy is good also be mixed up. The 5535 is where the cac is starting post of the idax is trading down 0. 1 . Spain, looking pretty similar at the moment. We will see where that cac opens up. The utility sector could get dragged down. Not yet. 5533 is where we are trading full the french data is breaking at the moment. We have got financials trading lower with numbers out from novartis this morning. We have consumer discretionarys and Consumer Staples are a little bit more mixed. There is the i. T. Sector. I have a few brighter areas this morning. I am wondering if that Semiconductor Sector is trading a little softer. And energy, not as much of a sector, but financials are weaker and i. T. Looks weaker. Look at the trades out of london as well. Lets show you what is happening in terms of the individual names. Lets look at the individual stock stories. We will wait and get some details coming through. Here is the screen on movers. There is what it looks like on the upside. Lets take a look at the downside. What is happening there. Lets look at where some of these utilities are trading. Equity micro, down. The eula trading softer this morning. A couple of the retailers are showing signs of weakness as well. Utilities and the Semiconductor Sector that is of weakness. Tech and utilities, week in europe. We will get more details as we get the stocks opening up this morning. Of go back and talk about some of the consumer stocks in a little more detail now. We have seen steady sales growth in china and north america. However, there are still challenges. One is the profitability of its reebok rand. The restructuring brand will pay off. How long will he give it . Davos. O back to francine we are focusing on addidas. We want to focus on the brand and what the protectionist message that trump brings back. We have the ceo. When you look at adidas, the resurgence is one of the most impressive stories. This inspires many of your competitors. If you look at the landscape of the next 12 months, what are you most worried about. I have been to been to davos for 12 years. There are not many things to worry about. I see a very strong america. I am more concerned about, can europe focus on the future instead of the past . Terms of sales, the u. S. Is looking good . In 2017 we grew approximately 30 , which is similar to china. We expect it to be very strong in the u. S. You want 20 of the market share in the u. S. . Want 20 eventually. We have had three good years and we need another new year. You dont need to be a mathematician to understand. Francine one can you learn from nike and what can nike learn from you . Nike is a fierce competitor. Learn fromthey can us is up to them. We have done a lot of right things in the last few years. Francine what does that mean, being more american . Is it the colors, the actual design . It is understanding the american sports, basketball and football, instead of just understanding soccer. We have done a much better job in the marketplace. So, being a global company, but having an affinity for what the retail differences are in europe and the u. S. And china. Talking about soccer and football, how much of a boost are you expecting from the world cup . Bloomberg markets asia it is the biggest it is the biggest sporting event in the world, but it will not have a major impact on the world numbers. We believe it will have a positive impact. 2018 i expect a strong europe. Francine talk to me about reebok. Of thee closed half stores. Are you expecting to close more . Can you see possibilities on the horizon . We put a turnaround plan in place where we are making progress. We have a great three to four year plan. We are not planning to close stores and we have made substantial progress. We have done with reebok is according to plan, but we have more to go. Is President Trump going to wear adidas . I dont think so, but if he wants the shoes, we will provide him with them. Francine what kind of message are you expecting from the president . I have never heard him before, but my expectation is he will. His promise. Maybe not in the mediumterm, but the short to medium term. I assume he will reiterate the political message he has had so far. Francine we heard about ffs on solar tari panels and washing machines. Do you worry about your supply chains . To understand the supply chain, the entire Sporting Goods market is a debacle. Initiate texas impacted is, that would impact everybody. Sport is a good thing for society. It fights obesity. We would assume we do not see and hope, we do not see any duties for the Sporting Goods industry worldwide. That change or . You have a similar supply from competitors. Would it be difficult for the president to impact your industry . Of course they can, by enforcing duties, which will reduce the world consumption. That will impact of obesity. We probably employ indirectly more than one Million People in asia and finding one Million People to do these jobs in the u. S. Or europe is not possible. You cannot really move the supplies. So, it is not doable to move it back. In georgia and atlanta we opened our street factory. The supply chain is unrealistic. Byncine we saw an interview you saying, i hope europe can get its act together. What frustrates you . I think europe has been in restructure mode since 2008, getting the eu to do what it needs to do to create a competitive, strong region in that is focused on education that has not been achieved. I think it is immensely important that your become strong as one market and not as sum of many markets. Francine do you think youll be impacted by brexit . There is no doubt that brexit will impact the economy. I hope we will have a soft brexit. I think we belong together. Eu. De or outside of the francine that was kasper rorsted, the coo of adidas. Back to you in london. We have great, fantastic interviews. Fivee speaking to four or heads of state in the next bubble days. Guy plenty of great guests from davos. Francine, thank you so much indeed. Lets talk about some of the other Corporate News that is being generated from the rest of europe this morning. Inz stock is being pounded paris this morning, down nearly 20 on the back of the news delivered from the company last night in terms of the earnings story. We have recovered a little bit and are only trading down by about 15 this morning. But we were down at the start of trading, at the getgo by about 19 on the downside. Energies are being affected by this. Seeing the rest of the utility sector in france ineffective. There are a bunch of reasons behind this. Alone it is one of them. In early is another behind them. That story is being factored into the market this morning. That is the water story. Lets add a little bit of flavoring. One note i read earlier on about this company talking about an exceptionally strong set of tree is, as you can see, trading up by 6. 65 . We have to bear in mind that this stock has had a sensational run. It is rallying on the m a story. Arertis, another stop we watching this morning, watching what is happening. We are about to see a ceo shift. Looks like the company out of switzerland is starting to put more momentum he had the story this morning. And then i want to mention the South African rand. The dollar rand could be within the next three minutes, about to go through 1. 12. We might talk about that later on in the morning. Lets carry on with the davos story. President trump will address the World Economic forum in davos on friday. He is expected to push back against globalization and unrestricted free trade. This is a subject our next guest wants to talk about as well. Francine we are joined by tony blair, the former Prime Minister. Thank you for joining us. When you look at brexit, you have been advocating a second referendum. Is that not counterproductive when we are trying to negotiate a deal with the eu . We will have to see what do we get, but i believe we will be faced with an acute dilemma. The closer we want to stay to the European Market, the more we follow the european rules. I think as that dilemma becomes clear, then there will be even some people who voted leave who will say, why are we going to leave if we now know we need most of the european migrants . We have to abide by many of the european rules. There will be a longterm economic cost. If somebody says, we dont want this deal in the first place, does it not we can theresa may in getting a better deal . That is not what she is saying. The European Union will deal with her as she is the duly elected Prime Minister. I think the problem derives from the nature of the negotiation. As your previous guest was saying, people want a soft landing and when they look at what a soft landing means, people will say, is this really worth it . You cannot tell what will happen. You only ever get to a second referendum if it is clear that Public Opinion has shifted. Think back in june of 2016, we obviously voted to leave the European Union. At that time we could not know the alternative proposition. All people are saying is we have the right to think again when we know what the government has come up with. Francine what are people looking at when they determine if brexit was a success or not . Is it the access to the Single Market or the level of the pound . Some people will say they want a brexit that keeps us in the Single Market and others will say they want to brexit that maximizes our freedom and we should go for a canada style free trade agreement. When you have got many different outcomes of brexit, there is not one outcome of brexit, then it is sensible to take your final decision, once you see the deal you have been offered. Francine which is what parliament will do. Parliament will have a say on that deal and the question is, can parliament agree with the proposition that is brought forward . Brexit is a problem for europe, not just britain. Europe will be weaker, without the strength of the british economy. Francine which is what the people voted for. That is what the people voted for during 2016 and the question is, will they hold to that once they see the alternative. Francine is Jeremy Corbyn the next Prime Minister of the u. K. . Toit is up to the people decide. , it is going to give us considerable challenges of the country. This is something people are talking about here. How do you pushed back against the populism, both left and right. At the same time, we saw some of the same protectionist measures introduced by donald trump, coupled with higher stock markets. I guess the warnings we had that populism will materialize. Depends on what populism you are worried about. There are things President Trump yan do that frankly, and the mainstream republican could have done. But i think the populism i am talking about is populism where you are either on the right exploiting immigration in what could be a dangerous way for the cohesion of a country or on the left, going to the antibusiness agenda, which will get you a certain amount of support, but when i am looking at at the moment is, if you look at the next generation of technology and how it is going to transform the world, one of the reasons i am so against brexit is the distractive impact. Government should be focusing on what is the right set of policies to make sense of this new technological revolution to access the opportunities and to mitigate this risk . But that is not part of the debate. One of the things i am trying to do with my institute is to structure the conversation between people changing the world and the Public Policy makers because if they are not locked into the same conversation with each other, you will find democrats he and find governments business going their own way, without really a voice. Francine you think the brexit will split the conservative party or the labour party . It is splitting the conservative party. You have got to remember that during 2015 we had a general election in the u. K. David cameron won that. Europe was merely an issue. This is a longstanding disagreement. Francine but it is unclear where labor stands on this, whether they would be proeurope or not. I think the labour party is proeurope. Francine Jeremy Corbyn proeurope . He says he is. That itur party feels has got to say, we are still in favor of brexit. But i think once you see how the labour party is moving, it is moving very much towards, lets keep the Single Market position. It nuances that in what it says. But i think in the end, there is a majority within the labour party for equipping a close relationship with europe and i think the moment you get to that position, it is a very short distance to the next position which is to say, lets not forget our seat at the decisionmaking table, but still be the passive recipient of european rules because then you have neither got your freedom, nor your voice. Do you believe Jeremy Corbyn is the right leader for the labour party . Would you vote for him . I voted labour laster year and i of course, will vote labor. My disagreements for Jeremy Corbyn are quite wellknown. It is not breaking news. My own view is that what is necessary right now is what i would call a progressive centrism. The values that are motivating political parties, such as the labour party and the progressive , but where we are coming up with solutions that are future oriented, raising this issue of technology. If i was back in government today, i would be focusing a lot of time and effort on that. Francine but then who would be the right figure for the kind of party you are talking about . We have the leadership that we have. I am not talking about changes of leadership. All i can do from my position is try and share the issues we should talk about. One of the things i think is very clear is he will not deal with this populism, not in america, not in europe, not anywhere else, unless you deal with the underlying anxiety that people have. Change andto be the not the status quo. Francine you could argue brexit will give the u. K. Its mojo back by bridging the northsubdivide. Divide. Orthsouth i would argue the opposite is the case. Matt Bond Investments go to the north . The fact is, a lot of the investors come to the u. K. , particularly in the north. They want access to that European Market. You take us out of that market and you diminish us. There is nothing that we want to do as a country that we cannot do economic the as part of the European Union. In todays world, particularly with the rise of china and this huge power of america in the west, india coming up as a major power as well, the thing for a european country, which in terms of population, is to come together in europe that is the rationale for europe as well today. It is not about peace and the second world war, it is about power. To remove itself, to which it is joined by civilization and the market, it is to believe that we have a solution to our challenges that seems simple, that actually when you analyze it, it is not a solution at all. Francine what would make you change your mind . Is there some kind of agreement the u. K. Could strike with the eu, worn agreement with the u. S. And u. K. They could make brexit a success . There is nothing that could change my mind. I think the country will proceed with brexit if the government succeeds in bringing forward a deal that retain the benefits of membershipmarket benefi finish without the trouble. If we go through with brexit, that is a complete change and we have got to fashion a new future for ourselves as a country. And the moment that happens, people like myself. And work ont it what the right future for ourselves is. Francine is there another way of not doing brexit, aside from a second referendum. You could have a second election. The question is, will the public shift its opinion once it sees the deal with the government and what it brings forward . That is the central question. Francine do you think it will . We dont know, but if the whichs the one i suspect, will be one where it will hodgepodge, where the government attempts to remain close to europe, leave without leaving, i think it will be difficult to persuade the british people that that is better than what we have now. The risk of that is we have this regulatory alignment with europe, but we have lost our seat at the decisionmaking table. I think for a lot of people that will not be a satisfactory outcome. Bencine what would you telling donald if you are Prime Minister of the u. K. , and what are you expecting on friday . I dont know what to expect. He is unpredictable. Responding toot the latest thing that donald trump has said. I think the issue is responding to the reasons that brought him to power and the reasons that similar bringing european politics as well. With those you deal underlying questions of cultural and economic alienation, or you will not deal with the root of this problem. You can respond to donald trump on a day by day basis, or you can say, what does that tell us about what is happening in our society and how do we deal with it . Francine that was the former u. K. Prime minister and we are speaking with the italian Prime Minister later on, the saudi aramco ceo and more. Exclusive interviews throughout the week. Francine looking forward to it all. Africanching the south rand. It is about any second to break the 12 line. We are very close to it. In november, we traded 14. The move has been incredibly swift. Some of this has been generated out of order in south africa, by what has been going on in the United States. But Christine Lagarde says the bold and timely reforms have environment that reduced inequality in the african nation. Lets go back to davos. Haslinda has a perfectly timed guest. Haslinda we have the african bank chief. It is perfect timing. 12ernor, the rand has broken to the dollar. What do you make of where it is right now . Nk the central ba francine but are you comfortable with where the brand rand is . We do not talk at the extreme trade. It is a very important input. I think what we need to be asking is, what is the strength of the rand . Francine what is different this year . Nt this is differenc year from leicester . South africa has these very good institutions and we have demonstrated that what you have seen since december in south. Frica has been ill confidence having said that, the. Conomy remains fragile certainly, the economy is fragile. He will have to revise their group. We had to balance the rift. We thought about the appropriate systems, taking what they offer. Francine where will rates be,d the fundamentals . Is there no need to look at another rate hike . We are not targeting Interest Rates. We are targeting inflation. What is the most significant inflation outlook . Rate is closer to the midpoint of the inflation target, where we would like to be. Inflation does not matter. It matters what inflation is over the horizon. Close to 5 and close to the midpoint of inflation. The path of the Interest Rates group looks like. It will not be in davos in march, but when i talk to your colleagues in march, i will be able to tell them what the opinion is. Of thee the mandate central bank has been under a lot of pressure over the last year. Hasconcerns the anc rectified to nationalize the central bank . How independent can you be . Things. Mandatependence of the needs to be protected. Many Central Banks were in the hands of private shareholders. Our central bank is not only owned by private shareholders. It happens to have participation of private shareholders. The bolt goes to the government. Whether the government nationalizes the central bank believes it as it is, for us, the mandate is enshrined of the constitution of south africa must be protected. Calls onitution remaining protected. One percentile of the bank is orther it is in private public ownership, the important thing is what happens to the mandate. It is always already useful for us. People with experience in mining, finance and so on with focus on governance. They have not got no say on the policy. what is the risk of a downgrade and how much more difficult would it downgrade be for you to fulfill your responsibility . Two lesetja two important things. South africa is in a better state now than when it was. I think that we have a good case to make about the strength of the South African credit. Haslinda despite corruption, misrule . Lesetja corruption and misrule will soon be insufficient qureshi corruption and misrule will be history. You have seen institutions of our democracy. Au have actually seen reassertion by the parliament of the republic of south africa hold to account, the Public Servants to account and that is what the constitution of the republic of south africa tasks the parliament with and parliament is finally playing the role it is supposed to be plain. More importantly is the other institutions of our democracy, bar all acting according to the constitution and with respect to them, when those actions are taking place, what is, governor, the biggest risk to south africas recovery . Lesetja the biggest risk to the first is a cyclical recovery. That cyclical recovery is underway, bolstered by the rise in Business Confidence and last iar at this time in davos, was looking for people to convince that south africa is worth investing in. This year, i having a lot of people come to me saying, it looks like a lot of things are changing in south africa. Where are the opportunities . I am saying to you south africa is reasserting itself. But as a place for investment. Haslinda thank you for your insights today. Breaking 12 per dollar. We continue to watch that space. Guy thank you, has linda. As the governor was speaking, we have continued to watch the rand strengthen. Dollar rand through 12 now, trading at 11. 11. 98. It will be interesting to see whether that makes the governors job more interesting. That was Lesetja Kganyago speaking to has linda. Nonperforming loans or nonperforming governments. Which is italys greatest risk in 2018 . Ae the italian fivestar movement winning the election in march and a rightwing coalition falling short. Could instability derail recovery . Lets go back to davos. Francine we are focusing on italian politics, but also looking at the Banking System and anything that comes between european growth. We are joined by the ceo of san pablo. Of youru for a little time. Are you worried about the elections and the discount it could go on your share price, or are you focusing on business as usual . I business as usual because think it is very important to look at the real economy. The real economy in italy is recovering about 1. 5 gdp growth 10 years ago in italy, so i think we are in a very good position. I am not worried at all in italy. Francine what are you worried about . If you look at the outlook going forward, is there something you want to fix . Carlo it is clear we are affected with the italian really economy. In the end, in italy, we will have a government coalition. Ofking on the real point weakness and reinforcing points of strength of italy. Place inl remain a which you can stay because there is a lot of wealth in a tight and families. Francine are you any closer to an m a target . Are you still interested and are you looking at something right now . M ao we are not looking at at all. We want to look at a possible option for growth in china because we think europe, more or less, is something we cannot have growth exceeding the growth in italy and in italy, we exploit our with our client base. Francine for our viewers and areeners on radio, there one or two helicopters flying by. I dont know whether it is the trump administration, but it is loud, so bear with us. Maybe they want to give us an exclusive interview, which we would welcome. When you look at china, would it have to be a joint venture . Authorizationive to be the 100 owner of the Financial Advisory company. We will invest a lot in this and we are also ready to evaluate an alliance with chinese partners in china and we own 15 of a bank in china and 49 of an asset vendor management. We put together all this areas and china would be the second area in which we grow to italy. Carlo when you look at the banks you bought last year, you said they would have a positive impact on earnings starting this year. Is that still on track . Carlo absolutely. In considering the cost ,eduction that we are doing because we already agreed with trade unions to a reduction of 9000 people within the total amount of our people within the group for the digital implication of the future, this is something that will bring out significant cost advantages, and also, the improving conditions of performing loans would allow us to lose customers. I am confident we can have positive or earning per share. Arecine i know you reviewing at the moment your bad Loan Servicing business, including the sale of portfolio in vent. Are you closer to negotiations on who to sell it to . Carlo we reduced by 10 billion euros working on our recovery machine. We have to accelerate, so we have to be the best bank of europe. We need to reduce nonperforming loans. We are evaluating conditions to make strategic alliance. To acceleratehing the rhythm of production. Francine are you talking to them . Carlo we are talking to the i want toclass but accelerate my already best inctice rhythm of recovery nonperforming loans, because it is important to accelerate recovery. Francine Carlo Messina talked to me about the World Economy. We expect growth at a sustained level in 2018. What does it mean for volatility, making traders happier . Carlo 2018 could be a good year. Maybe also 2019, but it is important this year to make right the next possible prizes prices. We are looking at the real economy, financial markets. Economy point of view, it could be a good real economy situation. Francine are you worried about italian bonds and if they ecb were to end qe a little earlier, you could see spreads widen . Carlo we have to come back to the fundamentals because it is clear that in quantitive easing, there would be a reduction. There would be impact on the spread in italy, but the next government will have to reduce public debt because it is a priority that you have to in absolute terms. Asset toreal estate the public, they have to move. The spread can be on the reduction trend in this case. Francine therefore, whoever wins on march the fourth, whether the coalition or not, it needs to push through with the reforms. Carlo also, action. Reforms are important, but to take the amount of public debt and say, we have 600 billion euros of real estate, we have to dispose 200 billion. Unemployment in italy, is a social threat. You have to recover these kind of employments. It is not not only a matter at of, but at actions. The government will have to assess this point if italy wants to play a role in europe. Francine you are positive whoever comes into power in europe will have to do these actions and decide to do them . Carlo absolutely, because otherwise we lose the opportunity for unique growth. It will not be possible to work on this point. Thankne Carlo Messina you so much for joining us. Of intent tocoo paulo. Ablo san francine, looking forward to that. Francine lacqua joined by the sanpaulo ceo. We will go back to davos. The lineup of guests awesome this morning. Next, the ceo of russias btb bank. This is bloomberg. We are 45 minutes into the equity market session in europe. Lets talk about the movers. Suez trading lower this morning. It was down to around 20 . We have narrowed the loss is a little, still down by 16 in paris. A big loss theyre coming through. Also losses in the technology sector. Overnight, Texas Instruments trading lower. A downgrade on that out of switzerland. Sage trading down by nearly 6 . Down. Ue semi trading suez the downside big story. Down by 20 nearly at the start of trade. Down by 16 . Lets refocus on russia and the future of the countrys banking sector. Vtb bank is the secondlargest der with a international Francine Lacqua is in davos over to you. Francine also, the world Banking System and we are joined by the vtb bank ceo, andrey kostin. Thank you for joining us. What will be the main theme of davos this year . Optimistic when they are pessimistic, things stabilize. Do you come here to have a thermometer for the World Economy or mainly for business . Andrey this is my 33rd and i come for business mainly because it is a unique way to meet people from all parts of the world. It is a lot of business here and also interesting to hear this davos, particularly mr. Trump because last year in davos, there was a lot of discussion that trump was antiglobalism and would create problems for international trade. It is interesting how trump will cope this year and make his speech. Francine what are you expecting from the president . Davos we will see. He will try to establish a Good Relationship with european his position on trade and the economic relationship. Somehow to invite them and have a more positive approach. Francine how do you describe russian u. S. Relations right now . Andrey terrible. We believe that is partly because of the domestic american political in fight. Infight. After being elected, mr. Trump is under great pressure from democrats and other parts of American Society who dont want him to be president and part of is russia,ic war unfortunately and there is strong antirussian sentiment in america that doesnt allow President Trump to establish a Good Relationship with mr. Putin and the whole nature of our relationship. Of building an economic relationship, we are building arms, im afraid. Isncine do you feel it toxic, being a russian ceo and does it hurt your business . It does really affect my business, definitely. It creates uncertainty among the investment community. They do work with us and banks work with us, but the concern of what is going to happen next, whether to invest in vtb, whether to work with vtb. At the moment, business is more reasonable, and most of the Business Community says politics is politics, but stay away from business. Business is a driver of the Global Economy and global disparity. Francine what would you like to hear from President Trump on friday . Andrey i definitely would like more of a stance on antiglobalist approach and less trade sanctions, less trade barriers. It is quite a dangerous thing because the world is becoming interdependent, but when we start to create the trade barriers, i think that will affect the Global Economy. Francine what do you think you will hear . Andrey i have been to vietnam when mr. Trump came after his visit to china. On good termsas with the chinese but as soon as he got to vietnam, his speech changed a lot and he was negative on the Chinese Foreign trade policy. We shall see. I think he will give some olive trees to European Business. He should Say Something which the European Business will like. Francine how much do you worry about fresh sanctions from the u. S. Against russia . Andrey very unfortunately, because it would further worsen our relationship and i am not so much concerned about personal they are the least evil. But further sanctions, Financial Institutions will undermine our relationship with america. I call it an economic war really, because the purpose of this is to exert pressure on russia, economically and politically. Francine do you have contingency plans to deal with that . Andrey of course. Francine secret plans, so nobody knows. Because weody knows know very little about politics possible sanctions. We have to wait until treasury and ounces. Francine when you look at the concerns for russia at the moment, there is a election, inflation, what worries you about your country . Year over entered the positive and stable economic growth. It is not as big as we want. Growth. 2 gdp taking into account our domestic situation, reasonable growth would be 3. 5 we plan to achieve in a few years. Francine we are hearing from Steve Mnuchin briefing reporters here in davos, saying a weaker dollar is good for trade. You were talking about economic war between the u. S. And russia. Do you think we are seeing currency wars right now . Andrey for russian currency . Francine Steve Mnuchin was talking about the dollar, but is there concern everyone is trying to devalue their currencies . Andrey the russian currency used to be more dependent on oil. Still, with the price of oil at about 60 a barrel, the ruble could be considered quite stable. As far as the dollar is concerned, it is more difficult for me. Bettersaid i would forecast the weather than the Exchange Rate of currencies. Francine the fbi for some of the bond selling for mozambique. What is the latest on the investigation and have you put procedures in place . Checked byhave been british authorities many times and they didnt find any wrongdoing on our part. Officials ining mozambique soon. For structuring the debt and any positive discussions. I dont think somebody else will find anything wrong. If they do, i will be very much appreciating them informing me because we are concerned about the good name of our bank. Francine are you in contact with the fbi on this investigation . Andrey im not sure. Maybe our lawyers in america, yes. Francine you also recently visited the end goal he and president. Visited the president. Andrey we are talking about restructuring the debt. I think that is a country with lots of potential. Capital we understand is hiring in. Are you positive about Growth Prospects for that arm . Andrey very much. Very well known all around the world. Francine what kind of planes are you focusing on for vtb capital . Andrey first of all russian, but we would like to see more bond and share. Recently, aanies big influx. Focusing on countries like india and asia, and africa at well. As well. Francine do you look at bitcoin . Andrey no, i dont like this. I think it is a fake currency. Francine what will it become . Market overgrowing money printed someone else other than the government, quite unusual. I would think bitcoin has no big future. Andrey no other cryptocurrency . Francine i am not andrey no other cryptocurrency . Andrey no. Francine what are you most looking forward to in davos. Does 2018 feel different . Andrey we are more focusing now on high technology, industrial revolution. Francine is this something talked about quite a lot in russia . Toome to move me movement. Andrey not in russia. Maybe russian men behave bad, i dont know. Francine you will have to come to our london studio and talk about that. Vtbey kostin, the ceo of bank. Toowill talk about the me movement, but mostly banking. Guy Francine Lacqua with the vtb bank. Francine was mentioning the treasury sector, mr. Minutia and finished a briefing that has had a market effect. Indicated he feels the lower dollar is a positive for the United States because of the impact it will have on trade. This is the bloomberg dollar index and you see the impact that briefing had. A step lower as a result of mr. Minutia ands comments mnuchins comments. We are now trading 123. 43 advance towardwe the ecb meeting tomorrow. It will be interesting to see what mario draghi has to say about the rise of the single currency. The rate of change is critical but accelerate could be a problem to the central bank. Stay with us, the davos conversation continues. Team. , surveillance it is a Beautiful Day in the swiss outs. This is bloomberg. Has grown to lost control. In bringing european unity to davos. Protection is concerns swirl. Good morning and welcome to bloomberg surveillance. I am Francine Lacqua
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