Loss overall to the quarter. The stock is trading higher in the market, up over 1 as you can see there. Heart,me karen it will who covers g4s. Ge for us. So it comes back to power. Margin, 2. 8h a 3 percent, which was totally surprising. Sales were down 15 , really bad. Voters are down 25 , so this will continue. The order of magnitude is worse in terms of profitability. David when you we knew they were struggling with power. Is this worse than what the market expected . , 6 operatingy 5 margin was expected and we got 2. 8 , so not awful, but not going in the right direction. And that is the big ugly, nobody knows how bad it is going to get, and it is the biggest business for ge. So what does this tell us about plans going forward, spinning things off, consolidating . Does this bad performance point in a new direction . Karen i think they have already laid off 18 of the people. They will need to do more on the cost cut side there. Were worried about a goodwill writeoff. I do not think that is coming yet, so it is just more restructuring, maybe some more business is on the side they can sell, but the core is really weak. Did that badly, how well did health and aviation do . Onen i am focusing people these good businesses, because we are mired in negativity right now. On flat, 25 margins revenues. I do not know why it is flat, we will find out but health care 22 margins, and running in the high teens. There is good stuff happening in those businesses, and they generate half the earnings at this point. They are important and, in a way, being dismissed. People are seeing may have good stuff. So they are putting a new board in place, and a lot of expect mr. Hen we flannery to have a plan over what to do with g . Ge . Inen the annual meeting is april, so that will happen pretty soon. I am sure he is laying out the groundwork now and will need approval. Analysisat does the tell us about these good businesses as compared to the total value of ge right now . Is it worth more broken up or together . Karen i think it is worth more broken up. The work i have done on some of the parts, i get low 20s, and that is with the right off in finances, which they had to take. David and i want to talk about the big charge they took. It was partly tax, apparently . That charge for insurance that we knew about. Karen a big piece with the insurance charge, which they preannounced. There were some adjustments because of tax reform, and that was another . 40. They had not quantified that, so we will need more clarity on the call. I would say the other thing on the tax rate is they kept their numbers for next year, but the tax rate will go up a lot. I am interested to see what is doing better for us. David but they have been so tax resistance in the past. So much devoted to not paying tax. Over to the to head World Economic forum in davos, where Erik Schatzker is standing by with Michael Gorman michael corbin, citigroup ceo. Erik . Erik lets set the table. Thanks. Are at a record high, growth is accelerating not just in the united date , the Economic Cycle looks like it could run for a few more years before the next down term downturn are the good times back . Michael lets start with growth synchronized growth. This is the first synchronized growth we have seen in well over a decade. Here,eally nice surprises surprises out of europe. Who would have thought a year ago, europe would be growing where it is japan . The optimism in japan. What is now talk about tapering begins to look and feel like out of these some postpartisan conversations in terms of the not too distant future, japan starts some renormalization. Those are very positive surprises. If you look around the world, it is not just be developed world, but the emerging world as well. A great statistic i do not know if you saw it in the recent imf report, they track 176 countries. Of those, 150 of those countries in 2017 saw export growth yearoveryear. It is not just a u. S. , europe, china, india story, it is much broader, and it feels much better. Erik do you think that could be the next big surprise the bank of japan starting to shrink the Balance Sheet . Michael i think it is a ways away, maybe years. But it is all relative. 1. 5 growth in japan feels pretty good. Board there in october, and i have been going to japan since the 80s, and i would say the optimism that is there, they are looking out, they are engaged, they are involved in mma, and that tone is quite positive. So i think that renormalization is somewhere out there. The appetite for risk returning to the Financial Services industry . Michael the way we think about risk is different than we did in the past. If you look at our institution we are a very Different Institution today than we were. We are not in insurance, we are not an asset manager, but what we are is a bank. Around the country, segments, and the products that we cover, i think we have a terrific risk appetite. If you look at loan growth, we grew loans 5 last year. When you are a bank of our size and are growing loans at a pace faster than gdp, that is a good thing. So we have plenty of capital, plenty of liquidity. We have a good imbalance risk appetite, so we are very much open for business. Dok what are you going to with the proceeds if you will of tax reform . Jpmorgan announced an ambitious plan to open 400 branches, raise wages, something i think you , butbeen doing a lot of also spent more Money Lending to lower and middle income borrowers. What is citigroups plan . To watchour plan is and partner with our customers and clients in terms of what they want to do. We have plenty of capacity, and tax reform only enhances our there in to be lockstep, serving our customers and our clients needs. We have to see how this takes are somewayuts unprecedented in terms of the territorial tax system, so we think that our u. S. Companies operating in the u. S. Around the world will do a complete relook at how they come to work and what they do, and as they do that, we will be right there to support them. Erik but independently, you have not formulated plans to expand certain businesses, enter new businesses, do anything then you have been doing up until now . Very clear have been in terms of our focus and our areas of growth, and those have now probably only been enhanced, and we are prepared to put the resources out there to grow them even faster. Erik does that mean you feel like now might be the time to become more ambitious with the Growth Strategy . As everybody knows, so many years of the post crisis period were years of retrenchment for citigroup. That is not where it is now, but today is different than two years from now. Where you want to be two years from now . Michael we have talked in the past and talked about 2017. We just finished what we think was a very important quarter and a strong finish to the year for the company, and it was a year of growth. Several years ago, we were talking about cleaning up the company. We have taken the Rearview Mirror off and are out the windscreen in terms of where we are taking the company. If you look at the company in terms of what we talked about in the fourth quarter, six percent growth in asia, 8 growth in mexico, growth across all the regions. 10 growth in Private Banking and tradery solutions. So it is the ability to accelerate those more. Erik citigroup is the most international of american banks, probably of any bank in the world. Steven mnuchin was speaking here earlier in davos, as you may know, and he said a weak u. S. Dollar is good for america. Do you agree . I think it depends on why. When you think about the dollar today, it has weekend. It has baffled some people. There are two likely scenarios out there. One thing that we talked about at the outset in terms of the surprisingly stronger europe, the stronger rest of the world has now moved Central Banks into a position where they can start to normalize and raise rates. Just like we saw in 2014, a robust move in the dollar as the fed started that. We could say it is a bit of a correction, but if that is what what it is about, that is fine. The other potential thesis is there is fear, and it is a precursor to potential trade wars, and it is causing people to shy away from the dollar. What isis causing the dollar underperformance, that is also an option. Erik couldnt they be trying to job on the incoming fed chair jay powell . Saying a weak dollar is good for america, and that might be it is susceptible to any of this. With that does not take into account the inflationary pressures building into the u. S. Economy. Michael i do not know his motives for saying what he said, but if the dollar remains competitive for the right reasoning, and makes the u. S. More competitive. Erik do you worry about inflation . Michael you always have to worry about it. Qe, and that is a never done before science fair project around massive amounts of liquidity. Erik and you do not mean elementary thinking. Michael it has never been done, it has never been done on this scale, and we do not know what paper really feels like there is a camp that says asset prices go up, take money out, asset prices come down. We think our Central Banks will cycle,itted to the long are invested in qe, and will not and that liquidity out causes ruptured in the market, but we have to watch it play forward. People would argue, and rightfully so, that one of the risks in there is not just the fed, but other Central Banks get behind the curve in terms of raising rates and containing inflation, and inflation gets away from us. Erik that is exactly what we were just talking about. You think that is a risk . Michael he and others ray, Mohamed Elerian they have talked about the deleveraging that the banks achieved in the post crisis period. Do you have confidence they will achieve a beautiful tapering. Michael i do, and one is because if you look at the markets today, there is a lot of liquidity out there. So as Central Banks taper, we have seen the money coming in supplanting the Central Bank Liquidity in the market. If you look at the Savings Rates erik i mean the role of the Balance Sheet. And 2018,etween 2017 1 . 5 trillion of new savings will enter the system. Just Savings Rates. You think there are buffers against that, and what we have seen i think jay powells confirmation just reaffirms the path that chair yellen had laid out in terms of being mindful of that. Erik i do not want to remind you how long you have been in the banking industry, but if you think over the course of your career and evaluating conditions in which you are operating today, how good are they relative to other periods you have seen . Michael from an economic perspective, it is as good as we have seen. We have synchronized growth, broadbased participation in this but what is different time is we cannot just look at the world the same way we did historically. We have not just the economics, we have the politics, and i would describe the politics in the world today as being as complicated as they have been. And we have the social pressures. Strong, ande are as the social forces, for great theyns, are as strong as have been. You cannot look at the world through an economic lens. You have to take those and put them together to think about where the world is today. Is a worldall, it that feels pretty good, especially from where we have been. Erik mike, great to see you. David, you know where he is, michael corbin, ceo of citigroup here with us in davos in switzerland. David michael said we really have synchronized mobile growth and should be a little concerned about inflation, but they also talked about some remarks that treasury secretary Steve Mnuchin made in davos about the dollar, which is weakening today. Here is what he said. Obviously, a weaker dollar is good for us as it relates to trade and opportunities, but longer, the strength of the dollar is a reflection of the strength of the u. S. Economy, and the fact that it is and will continue to be the primary currency in terms of the reserve currency. Oining us now is Michael Mckee talk to us about the dollar, because it is weakening again today, as it was doing earlier this year and last year. What is going on . Michael there has been a rule of thong for treasury secretary for quite some time. If someone asks you if the dress makes me look fat, even if it does, you do not say yes. If they treasury secretary,s on the currency, it can take off and currency traders can take it to levels you do not want to see. That is what happened in 1994, way back when japan was the main trading threat, and this chart whenowing what happened Lloyd Bentsen said the dollar should be weaker against the yen, and as you can see, the dollar went down and the u. S. Trade deficit against japan widen significantly. Eu been came in and said and changed the view of it. But people do not want inflation to rise or Interest Rates to rise to fight inflation. Notd Steve Mnuchin is helping the dollar right now, but it is not clear if he is the cause of this either. Part of the question is what is the cause . If there is a lot of investment in the united dates in the dollar gets stronger, i have a quote from the president to tweeted a few minutes ago. Trends investment from companies all over the world,move up the prompter, please taxssive regulations and cuts making up a powerhouse again. Long way to go. Jobs, jobs, jobs. If it was pouring in, would you see a weaker dollar . Michael that is the question that is bedeviling a lot of people right now. This is another charge the blue line is the 10 year yield, doing what you would expect. If the economy is getting stronger and money is coming into the country, why is the dollar index that is the omberg dollar index falling . It should be going in the other direction, and no one has a really good reason for that at this point except that currencies tend to trade with momentum. And right now, the dollars momentum is down. It could be good for the economy, because, as Steve Mnuchin pointed out, it is good for our exports. But the thing that was talked about was does that mean a raisin inflation, and does the fed have to raise rates quickly . Erik they were talking about the effect on Monetary Policy. These are worsening financial loosening financial conditions, and next week is Janet Yellens last meeting. They have more leeway to raise rates. Michael as far as anyone is yellen boardhe is not going to do anything. Powell was confirmed last night, so he will take over. Will they raise rates faster notuse of the conditions tightening, the fed is not having an effect on the market . The president of the new york fed said he is leaving, but we might have to move faster because financial conditions are not tightening. A similar situation might be confronting mario draghi tomorrow, because the stronger euro has a suppressing effect on inflation potentially. Goalel and if your main and only mandate is to raise inflation, that is not helping you. Plus, the euro zone is very dependent on trade, so it does not help to have that. There is something called the j curve that suggests it is a delayed effect. We will be waiting for that. David many thanks to mike mckee. We want to go back to davos, where we are joined by Erik Schatzker. Erik . Erik good to see you, good morning good afternoon, excuse me. On your way into davos, you published a linkedin post about what you called the market economy a vision for how maybe all or almost all goods and services are going to be bought and sold in the future. For those who have not read it, tell me more . When we looked at the way the markets work today and Financial Services, one of the great things about Financial Services is on an instantaneous basis, you have a buyer and a seller determining the right price for an instrument. Erik lots of buyers and sellers. Adena and there are a lot of folks who do that in the consumer world, but we are finding more and more industries and sectors looking at how can we create more of a price discovery mechanism for their goods and services . So it can be anything that can come up for auction or have continuous pricing like shortterm insurance or add futures are outside of the space that could benefit from giving the supplier and the seller some power over price. Erik why is this important to the ceo of nasdaq . We do ise thing provide this technology to the entire Capital Markets industry. We are a provider of our softwares, it is used in 90 other markets around the world, and we continue to find new pockets of opportunity to use that technology out wide the confines of the capital market. But we are seeing inbounds demand for these services today, and i am looking at it as more of a trend. If we can create a platform that is cloud enabled and global in nature, more industries could give the power to the consumer or the buyer to provide some level of balance in price. Erik how long until this market economy project, if you will, becomes a Growth Business for nasdaq . Adena this is already our fastestgrowing business in a nasdaq. Erik but that is principally for other exchanges. Im talking about the nonexchanges. Adena we look at things in periods of decades, and how can we bring it back to the next three years . So what do we need to do to position ourselves for the next decade. When we look to the market economy concept, we saw it as something over the next decade, what will be brought into this more balanced approach to pricing . Erik is what makes this appealing to you the data . Increasingly, data is the most valuable component of the marketplace. Is not just for nasdaq, obviously, you sell the data you generate. Data are important to amazon as well, and amazon does Different Things with it. Enables these markets to exist. Before, a lot of this information was captured by a consumer, really the seller, and held there. Today, a lot of information is available for the buyer to be able to determine what am i willing to pay, what should i be willing to pay for services out there. Markets toables the exist, and the data that comes off the market itself becomes valuable in terms of providing an indicator for the next cycle. , and a very valuable asset that is how the markets work today. Our data business is one of our largest businesses in nasdaq. Erik in some of the consumer economy, some of that data resides with the merchant acquirers. The credit card unit of j. P. Morgan chase arthur actual competitors in that respect . Are they actual competitors in that respect . Adena i think that the large Credit Card Companies are extremely great they are huge transaction processors. What we provide is more of exist betweenhat the buyers and the sellers. Erik if we are talking about potential competitions, we should talk about cryptocurrencies. How long will it be before nasdaq has its own Bitcoin Futures product . Adena we have been working with the industry and a great partner to look at whether or not it is the right thing for us to do. I think we are still evaluating that. We have been talking with the industry to say is this something we have two Bitcoin Futures out there, so is there a different construct we have come up with, with that be of interest to you . You want to use it differently than how it is being used today. Secondly, we have to self certify as a Futures Exchange for this. If we use our nfx license to do that, and do that from a Risk Management perspective, we are fully prepared. Erik any preliminary inclusions . Does it seem appealing, regardless about what you think is a crypto currency as a cryptocurrency of a medium of exchange . View is that Digital Currencies and cryptocurrencies will have a role in the global economy. The only question as well they is well they mature to a state is will they mature to a state where they can do that . A matter of whether we can create a construct that is unique enough and different from what is already there . Would you think about providing or building a futures contract for something other than bitcoin, like ehtether or ripple . Adena we have two exchanges through our nordic markets, and one is in a theory of ethereu cryptocurrency etm. , ceo ofena friedman nasdaq. Great to see you. You erik. Nke here for a preview what the president is likely to say is kevin cirilli, our chief washington correspondent. Ae president gave a bit of preview, saying we will tell them we are open for business and you should invest here. What will he tell them . Kevin rollins president is trying to put forward a strategy of America First, coming at a time when the president signed executive orders on washing solar panels, raising tariffs by as much as 50 . That sparked criticism from aboutl Business Leaders that strategy. President trump also suggesting yesterday in those comments that the talks on a nafta negotiations are going well. Thatrhaps that is a signal things are turning a corner in the final stage of nafta talks. Either way, the president , when he goes to davos and offers that America First roger strategy, we should note Steven Mnuchin making the comments about a weak dollar. Also, the audience who will receive President Trump has been very critical of this protectionist strategy that they think will hurt global businesses and globalization efforts. David it strikes me that the president is coming over a couple of days after Prime Minister trudeau of canada made countriesement left out of the Transpacific Partnership will get together and do it anyway. That is what is interesting about this. The president and the administrations steps they have taken, and we see this through a broader trend as well. They had encouraged other leaders to come together and do things on their own. Most notably, with the Environmental Protection standards and the president removing the United States from an International Climate agreement. You have seen that type of back and forth going on. Either way, this also comes at a time at which trade is really shaping up to be a key focus, international trade, the key focus of this and restrictions second year in office. David will it be all about trade when he addresses this group in davos, or will it be about things like cybersecurity and fighting terrorism, things audiences would be more amenable to hear . Probably something about cybersecurity, particularly at a time when several institutions have been impacted on the issue of cyber. It will be interesting to see not just what the big takeaway is on the issue of America First strategy, but also what some of these points he will make are going to be. This is days before the second state of the union address. Following that, the president will head to the republican retreat next week. This comes at a time at which the American People will be hearing a lot from their president in major addresses. Our negotiations going over daca and keeping the government running . Kevin i spoke with Mick Mulvaney yesterday. He said there will not be a Government Shutdown on february 8. We have been talking to a lot of democrats in the past 48 hours frustrated with Senate Minority leader Chuck Schumer for that negotiation, and they do not trust republicans to have to address the dreamer issue by that deadline. This is only the beginning of a very tense next month here in washington. It does seem like a big step back. They got together for a deal and then the majority leader comes out and says by the way, i will pull that back. It seems like both sides are going back to their specter positions. Respective positions. Kevin they say no wall means no deal. We will see how this plays out. David and the administration is saying we need a lot of money for this wall. We talked to Mick Mulvaney, mark swartz, and they said they want 33 billion and do not want to authorize, we want it appropriated. And minority leader Chuck Schumer says no deal if there is a wall. Very fascinating development, and whether they will be able to keep that government open come february 8. Anid we are also seeing outline of it in for Structure Plan around the state of the union. Do we have an idea of what that looks like . Kevin a little bit. I have been speaking with some sources who were hoping to get more details from the leaked memo. Of course, the and for Structure Plan they merged earlier this week, but they feel the the administration feels they will provide funding for this infraStructure Plan. That is a nonstarter for some democrats, who feel that as a result of bringing in the private sector on that that they will be essentially providing risk for Public Institutions through the private sector. David kevin cirilli, thank you. A lot to look forward to. We will head back to davos, switzerland, where we hear John Mickelthwait sitdown with james gorman. He is Morgan Stanleys chairman and ceo. There is literally a hole in the ozone layer that is more damaging to your skin. John thank you, i am here with james gorman, ceo of Morgan Stanley for almost 10 years. Have taken Morgan Stanley to this position at the top of wall street. Of Recovery Period and expansion. What comes next . Ames thank you, we have had great team. We have a group that has been together for the whole run, which everything on wall street, that team cohesion, is a credit to my colleagues. But it is only halfway done. Out our targett of 10 or more, in fact, 10. 30 . Sinces the first time pretty financial crisis we could come close to that. We have a lot of work to do, and we can go through to the businesses in some detail, but the firm is very much improving here. John the environment back then was very, very different. Right now, a lot of your peers with day the big thing they have to do now is regulation and government. Do you feel that at all . James it is a very interesting period. If you talk any decades in the last five, i do not think you have had this global synchronized growth. We are not just taking about the u. S. , we have growth in japan for the first time in two decades. Europe has bounced back from the financial crisis. For our industry, we have a trifecta of positives that are in various stages of happening. The Corporate Tax cuts for those been domiciled as a massive change in the earnings performance of these companies that has happened. Rising Interest Rates, which are happening, and the potential for some readjustments to the regulations that took place, most of them very tense of all, beginning tos happen. This trifecta against the backdrop of very strong secret eyes Economic Growth is positive for the banking sector. For once, the weather for investment banks is looking good. Take me through the Wealth Management side. Is that the core of what Morgan Stanley is now . Is that the absolute part of what you made . James Morgan Stanley was formed in the basis of the great depression, and in our first year, we were number one in global underwriting. Heart of the firm, the core dna of the firm has always been a banking business. Within that m a corporate advisory, equity Capital Markets , over time we have all been to trading businesses and now, as the number one franchise in the world. This came about originally would we merged in 1997, but it only reached full fruition with the transaction with smithbarney and the changes taking place in the 10 years cents. At a core, we are a Global Investment bank. We happen to have the number one or two wealth manager in the world attached to a Global Investment bank. John how do you see that wealth most of the talk about global Wealth Management and. Is that your view . There is a lot of wealth in the u. S. And be developed countries. Of our funds in the u. S. Asia is an opportunity for us. The u. S. Is where we have done better business, and it has been growing. The way we have been able to broaden the Wealth Management from managing wealth to managing clients package for our , that is where the expansion is coming for the next several years. John do you worry we have seen as long era of easy money, money has been everywhere, and has been a fantastic time to be an investor that not might stop what you describe is the perfect weather for this environment. That will cause real problems like a return to inflation or other things. James i am sure we have some ,eturned to inflation especially on the wage side. I will worry much more when Interest Rates are normal. People are worried about the number of increases that might happen this year i am not. I think it is healthy. The fed needs to have that Monetary Policy weapon, if you will, for further economic challenging conditions, which we will undoubtedly face at some point. This point, i am less worried about Monetary Policy and more worried about the more natural stance, which is starting in the moving to europe and eventually to japan than i am about the markets that are very exuberant. Markets at record highs, and as you know these things do not go in a straight line. John you run the biggest equities shop on wall street, as you said. Do you think that is possibly overbought, that prices are very, very high . Imagine i was one of your clients. Markets are expensive, but they are not ridiculous. There are some sectors, and if you look at the socalled faang stocks they are trading at very havemultiples, but they actually marry growth. The way you value equities is look at the net present value of future earnings, and apply whatever market multiple there is today. Futures are growing, and the tax cuts will amplify that growth. On the backdrop of global Economic Growth, earnings growth, improved taxes net earnings growth, the same multiple you will see the s p reaching highs. John do you see any investors on the outside, like bitcoin, as being too risky, or part of the modern paraphernalia . It before andsaid i will say it again. I think bitcoin is not going away. It is not a fad, but the aggregate market cap of bitcoin globally is twice of Morgan Stanley today. , an so they could buy you majority stake. [laughter] we arelisten, we think an important institution, but we press thatrve the bitcoin is getting every day, and bitcoin is punching above its weight. It is a filling a need at the moment, but it is not something that is fundamentally changing the Global Landscape for the average investor. I wouldnt buys to not be investing in those kinds of speculative instruments. Ifid, thisave m huge project in europe. Do you think that will put someone out into different parts of the equities business . Good question. A in some ways, the stronger firms with the equities franchises and stronger research will come out to positive. Eutral it is wellknown that the vast majority of players in the Global Equities markets do not make money. It is highly concentrated, and we have a share of 20 of the market. Researchave a global franchise to support that. If you are operating of shares with Incomplete Research coverage, geographically or sector wise, and have the pressure of mifid, i think that will help as well. I think there is going to be further training of the industry. I think it is inevitable. John another thing up in the air is European Bank mergers. People are finally talking about this consolidation. Perhaps the idea firms like yourself, all the main ones this is an unusual industry. There have not been takeovers. You see that coming back, even if you do not see yourself as a participant . Difficult, have been but they have happened. Deutsche bank performed one many years ago, Credit Suisse merged. , buying 22 recently of Morgan Stanley, but you are right. Culturally, organizationally, and from sheer size about what regulators think is appropriate, highly unlikely be murders between these core institutions in the next several years. There is no particular compelling case for it. I do not think the market needs bigger Balance Sheets. No, i think it is highly unlikely. Their be regional or country mergers . I think so. But what point of the government still owns pieces of Financial Institutions start telling them . This might be the final moment where we can say the financial crisis is over, when the government unloads those stakes. John is there a chance of a european champion emerging out of that . Investment banking at the moment feels particularly led by the americans. Is there a possibility that something could court made in europe . James i think it is unlikely, honestly. There are strong Investment Bankers in europe today. Number of with a them, and a lot of them respect those institutions, but i do not think the regulators will be anxious to see those institutions merged to make larger Balance Sheets. I do not think it is probable. John another thing you talked about is automation. Do you think in Wealth Management and Investment Banking you are relatively safe from that . Which way do you see that going . James to the core question of automation, i was asked about how much i focused on competitors, and i said obviously, you are in the same industry and have some focused, but it is not what we get out of bed worrying about. I said i worry about ai, automation, cyber risk, digital all of these new technologies that are coming to the market at the same time are transforming the way business is getting done. We look at each of our businesses and asked the core with highly complex global transactions, it is very hard to automate that and build an expert system about how to advise the board. Obviously, the electronic trading and equities has long been going on, and increasingly, fixed income. With Wealth Management, the evolution of the Digital Space is not new. Ab. Ameritrade, e trade, they have been providing advice for 2. 5 decades. But this will continue to provide firms like us with the ability to provide human capability and the best in class technical capability. Ann i wonder if that is area, going forward, there will be a room that is smaller because you have more work being done by computers. James i asked one of the senior traders on the equities side, and he did not think there will be fewer people, but the skill mix would change. There would be the computer scientists who work on the algorithms to enable and help our clients trade more efficiently, more effectively. The mix will change. Job does that change your as well . Did you ever see technology being a part of your job is much . James certainly not. In, our market cap during the crisis had fallen below 10 billion. We recently breach 100 billion. We had a litany of challenges in a world where the regulatory changes taking place were historic. Fixingus is very much on the franchise and shoring it up toput it shoring it up put it in a position to broke. We have seen the threats to that growth not just to competitors, but to technologies. To the share of management mind on technology now of Senior Management has tripled in the last three years. John what would be a fair test . 10 years ago, if i asked you what you wanted to do, you would say i want to fix the franchise, and i think you have done that. In five years, what would be a legitimate thing to come back and say you have done this . James proof that the Business Models work in good cycles and bad. I think we will do a little less withwhen the market is up our competitors. So the consistency of performance durable earnings and consistency over a multiyear. Od. Multiyear peri we will retain the number one franchise and equities, and number one or two franchises in Investment Banking. It is on management not to screw it up. The problem with these kinds of environments as you can get ahead of yourself and doing things outside of your wheelhouse. Ourselvesciplining and built things it over a hard decade. Our employees deserve Strong Performance for the next decade. John i look forward to discussing it with you in another five years. James gorman of Morgan Stanley, thank you very much. David that was John Mickelthwait, bloomberg editor in chief. Coming up, nafta negotiations continue in montreal. Where the talks stand right now. And if you cannot watch us on tv, listen to us on the radio. Bloomberg surveillance can be heard in new york, boston, the bay area, washington, dc, and all across the united eight on sirius xm radio. Live from new york, this is bloomberg. Taylor im here in the hewlettpackard enterprise greenroom. Coming up, we will speak to jamie dimon, jpmorgan chairman and ceo. David this is bloomberg daybreak, im david westin. Lets get a quick check on the markets with taylor riggs. Taylor the biggest story of the day as the weaker dollar index off about an intensive 1 after Steve Mnuchin said that a weaker after about 7 10 of 1 Steve Mnuchin said that a weaker dollar is good for trade. And still risk on, s p futures up around 2. 1 , even after making records yesterday david . Yesterday. David trade negotiators have extended their time in montreal to continue nafta talks. We welcome Michael Mckee. Find . O you expect to michael cold weather, and maybe called attitudes. Attitudes. The u. S. Trade promotion authority, which are made both them enables them to negotiate a treaty without congress, also expires on july 1. This will be a key event. The trade negotiators for various countries are all in davos, and they will have some informal talks. Maybe they can accomplish something. But the worker bees continue to labor away in montreal over what they can get done. Into do you read anything that the minister has not yet asked congress to extend that authority . The president has an april 1 deadline to do that, so he still has some time. We are not sure how the president feels about these things, given the comments from his administration officials. Even today, wilbur ross talking about trade wars. Thed the reports are that president is not happy with him because he is not moving fast enough. They have some tough decisions coming up on steel and aluminum, and ross saying the rest of the world has been picking on us, it is time to fight back. Mckee, thank you for being back with us. Nafta and trade negotiations are some of the topics i got to talk with cocacola Ceo James Quincey about. Globalsit down with decisionmaker decisionmakers in Global Politics and business to view things through their eyes. Lets return to davos, where erik is sitting down with. K shall we get right into it . Corporate tax cuts are supposed to be spearing drive investments. What are you hearing from your clients . Ken many of them have lowered their tax base by putting profits around the world, but they are pretty neutral. The average middlemarket company is getting a huge, huge benefit out of this tax bill. Big so we will not see investment plans, big hiring plans from some of the large multinationals . Or m a, even . Might still, because their clients, their Customer Base is made up with either consumers when i say the middle market, i am talking about heaven billion or 8 million businesses 7 million or 8 million businesses around america. Hard it was to do . It happened overnight, and in a way that surprised people as to how aggressive it was. I think nobody was planning for 21 , people were thinking 25 . I think the Big Companies will be the beta fish year hes beneficiaries of the stimulus. Erik so our company is now planning to do deals that they before, planning to do or are they planning to pay more now they have more resources at their disposal . Ken i think m a has become a strategic function in these companies. Business ae been in long time. It used to be there were rules of thumb you bought companies at seven or eight times what you put down and sold them at nine or 10. The risk of falling behind and not having the right asset set is those rules of thumb are no longer what is driving anything. What is driving things are strategy am i in the right position to win for the next 20 years . Erik but money has something to do with it. Will this cash that has suddenly become available to Corporate America drive companies to play pay higher . Ken most companies have access to the credit line erik they had to borrow it, though. Ken whatever you look to purchase, 15 of their cost base is gone. The capitalized value of most on the cash flow basis is substantially higher, and you can reinvest in product, people. If you were to purchase one of those assets, you have a lot more flexibly to grow the business and invest in products you want. So i think it will be fundamentally about strategic priorities, and secondly, the availability of more cash flow to justify it. Erik do you think we will see a new m a record set this year . Ken i dont know, i dont think of it that way. I have a set of clients, will we are, which the gold that they want . Will we accomplish the goals that they want . I think we will see a lot of people think about is this an opportune time to put my company in a better position . Yes, i think we will see a lot of activity and a lot of thinking, and we will see if that results in enough transactions. Erik what about your own plans . How many people do you think you will higher this year . Ken we are actively looking. The general trend in m a is up, and this is the best year ever. It has been a pretty good five years. Continues. E trend we probably higher last year, we hired, counting junior and people,eople, 80100 somewhere in that direction. We look to expand our headcount again by 10 , 12 . Erik are you making extra efforts . Are you finding it any easier to bring women into those banking roles . We do a great job of bringing women in. Our entering workforce is somewhere around 5050. We do not do as good a job as retaining them through the lifecycle and becoming a managing director. We have a number of women in leadership roles at our firm, and multiples are responsible for success at our firm. Erik you said you were not stick around until 65 is the ceo. It is it is it possible a woman could take over at the next ceo . Ken it is certainly possible. I will be here at 65 i hope i but i will not be the ceo. The whole point of that is to send a message to young people do your best and strive, because i will not block your way. Erik ken, thank you so much. It was great seeing you. David, a very vivacious ken moelis, who i am quite sure will still be here at 65. David erik, thank you. From new york, this is bloomberg. David catching a falling knife. Quarter. A hit for the standing by for the forecast. Live from davos, we hear from Jpmorgan Chase jamie dimon. And the dollar continues to weaken. Secretary mnuchin says that is a good thing. Welcome to bloomberg daybreak on this wednesday, genuine 24th. I am david westin. Alix steel is off today. Lets get the markets from taylor riggs. Taylor the bloomberg dollar thex is off about. 7 of comments from Steve Mnuchin, saying a weaker dollar is good for american strength. The dollaryen lower by about. 7 . , now a 109. 5. B vix is still higher by about. 2 . David . David thanks so much. We are continuing to follow general election. General electric. E welcome carol nubile heart. Welcome back. What are the headlines for you . Carol a couple of things. Worse than expected, health care was better than expected. Cash flow is also better than expected. There is some good news. If you look through the numbers. David if power down because of the market, a sickly going against the tide, or is it up because of the market, or is it the way you are running the business . Karen the market is very weak. Bottom line, there were some operational problems at ge power. Margin that has been sliding. They are having operating problems, which they are working on. It is both. Have they gone with a need to do in order to have it take effect down the road . Karen there could be further changes. 18 a lot of people playoff. They have not really done any brick and mortar, so there could be more. On health care, health care is flannery turned around. He had run it for about a year and a half before he became ceo, got the growth rate a little better, got the margin better. David the way things work, it is probably not a coincidence. Karen yes. David that means it is a good thing. Karen lets hope he sees good things elsewhere. David not sales but spinoffs, at some point, they need to look at it because it is just not working. Karen i think there are ways to working with power, they could probably sell over time. I am sure they are looking at it in a very deep way. It could go very quickly, and that will give them more money. What about baker hughes . They could sell that. What kind of discount what they take . Karen they have a twoyear agreement that they cannot sell it before july 19. They would have to take a discount. I am assuming 10 , 20 pure the market is getting better. That will help them. They are in trouble. Cash . . Do they need the karen they could use the cash. They are overleveraged. They have a pension problem. I think that is part of the concern for people is the liquidity. Andhey could take some cash cushion that a little bit, it could make people breathe easier. David what kind of pressure are they feeling on thursday . Karen the ongoing businesses are fine. They have to find a 15 billion increase, which people are not counting on. That is another draw on cash, which they really did not need at this point. David thank you so much, karen, karen ubelhart, Bloomberg Intelligence expert on industrials, including general election. With the ecb meeting tomorrow and the fed next week, we have heard from a range of people at things may already be in a bear market at bonds. We heard from Michael Corbett at citi. James gorman says it is a problem in the marketplace. Joining us now is Michael Mckee. You know Central Banks. First of all, the ecb is tomorrow. Michael the ecb will be interesting because the markets to have some kind of interest here in terms of your. The question is when does the ecb stop its qe purchases, the tapering that is underway . They have cut from 60 billion euros to 30 billion euros. Do they go past september to the end of the year, or do they end in september . Mayhi has suggested they drag it out. The archive and of debate for the market. Hawks having the dove debates for the markets. David two years ago, mario draghi did not say they were really worried. They just talked about volatility, watching volatility can currency. Do we expect that to return to the theme of thing it into to the euro . Michael he may have asked, but the rule is policymakers tonala getting involved in currency markets. Jobs are little bit different if your currency is too strong, but we will see if he feels that is the case yet. The whole question of whether they will do anything or not is going to transfix the market until about 8 30, until he starts speaking, and if the forecast is nothing, changes no policy, then it will go away for the time being. David but he has some colleagues there that have been sort of talking it down lately, so you know, we were going too fast. Michael you like to have your dirtygo out and do the work for you. They do not want the euro to get to strong because it has implications for low inflation. David what is the fed facing, as we look at Janet Yellens last meeting now as chair . Michael probably what kind of cake do they give her at a going away lunch, because the fed is not going to do anything at this meeting. The markets are not prepared for it. She is probably going to sneak out the door without doing a lot. Then it becomes jay powells chance, and the question is what do they do in march . Everyone will look at the statement with any kind of hint as to whether going next. David do we have any evidence jay powell will materially differs from what has been going on under janet yellen . Michael no evidence at all under this point. Economic conditions change, but if nothing can chang changes ine economy, we still see on a clinic where it is an inflation where it is, there will be no change. If inflation picks up a lot, unemployment goes down quickly, and suggests inflation will move, you might see him and his colleagues push for faster. David this has been a long range mystery now. Thatere any new evidence inflation is actually starting to kick in . There is a little bit of evidence. We did you incorporate in the cpi, which we will get monday, which is what the fed follows. Does that mean it is a trend or just a onemonth lift . That is the question. When Commodity Prices start to go up, the dollar is weak or, so are we going to see some inflation . And now with the tax bill, we have got to guesstimate the effects on inflation. David exactly. We now have the tax cuts, they are able. They were not before. Michael they have actually started to take it into account. At the december meeting, they adjusted their forecast. But they are really only adding. 2 growth to their forecast. They do not think this is a big inflationcreating event. Also with on employment as low as it is, even if companies do ramp up hiring a little bit, you do not get the immediate effect on inflation. We are starting to see a little creep in,e inflation especially in areas where unemployment is ray low very low. So far, it has not moved to the point where the fed is worried about a real acceleration. David come back to the comment on james gorman. I am worried about the markets, assets potentially being overvalued. How much will jay powell be concerned with that issue . Michael they are growing more concerned. It is obviously some and he is going to have to watch. Some worry that asset prices get too high, they drop, and then that hurts confidence in the United States. If you lose money in the stock market, jay powell does not care, but is it causes people to pull back on spending, that is a problem for the fed. David you have followed the fed for so many years. What do they look at to determine whether assets are overvalued, overbought . Michael how do you figure out what a bubble is . From Alan Greenspan through janet yellen, we really cannot say we are smarter than the markets. But sometimes if it walks like a a duck,alks like i they have a good idea and say this is a bubble level, but they make start to get worried. David it is not easy. Ok, thank you so much to mike mckee. Where go back to davos Erik Schatzker is sitting down with jamie dimon, jpmorgan chairman and chief executive officer. Viewerswant to welcome and listeners worldwide to become a station in douglas, switzerland with jamie dimon. Jamie happy to be here. Ask are you as bulled up everyone else here in davos . Jamie i ambled up that policymakers are making good decisions come of United States about taxes, proper Regulatory Reform. Talking about infrastructure, that are job in a better job in education, those things help society. Global synchronized growth makes me happy. It has been 10 dry years, but the fact is one day it will be, but yeah, i am quite optimistic. Erik so good about policies, the economy, how about markets . Jamie the markets reflect that. If you postulate we will have a good economy for a couple of years, that will justify. If you postulate a recession tomorrow, then it may be too high. It looks to me it does look like we needed for the next year, it is pretty good. I do not see the potholes when you reverse it. But geopolitics aside. It is nothing like the leverage in the system we had in 2006, 2007. Back then we had a lot of short term mortgages. They are gone. Aret more lbls overleveraged that is not true. Hedge funds are much more leveraged then they are today. That just unwound very quickly in 2008, 2009. Erik you may anticipate my next question. I was going to ask you whether there was any reason to believe that this part of a cycle, 2018, 20 19, maybe, are going to be the next 2006, 2007 . The euphoria before the crash. Jamie i dont think so. You need that accessible leverage, and we have seen what happened in 2008, 2009. We all wonder if we will have a recession. When that happens. Prices go down. It is a more normal thing. That is not what i am wishing for, but it will happen. Erik it is inevitable. Jamie it is inevitable, and as a business, you should prepare for those kinds of things. Love the weather today. It is gorgeous. In a couple of days, it will snow, like, 40 inches here. We built the company regardless good i know there are cycles. Were going to build that regardless of the cycle. We will have more bankers regards of cycle regardless of cycle. Erik i want to talk to you about the branches and a second. First, the bond market is beginning to grow a bit anxious about inflation. Are you . Jamie yeah. I think that is legitimate. Inflation will probably go up. I believe we will sit here a year from now erik growth accelerates. Jamie exactly. Growing 3. 5 or even 4 , that is a good thing. People are worried about it, right . They price into the 10 year bonds, into tips, into the future. Andou have low inflation low growth, that is the best scenario. Erik there is another worry that the policymakers are a little too attached to the phillips curve, and because of that, they will take the punch bowl a little too quickly. Jamie i am not worried about that. You have strong global growth. They are very slowly taking the punch bowl away. Think themy, i Financial Security in america is worth 100 trillion, so they can easily accommodate that. The ecb will do it. As long as there is very strong growth, they can reverse it. Change their minds. They will not sit there and continue to do the same thing and not take a different policy action. And we will see. We should all be prepared for it. You have to remember, the fed and Central Banks do not always have the entry of operating nine times for nine reasons. Volcker raised Interest Rates 200 basis points on a sunday night. He did not have the luxury. He had to do something dramatic to raise inflation back then. Erik you think this fed will be a little more dynamic. Jamie i think so. I think they have no choice. High inflation, of course, they are trying to look out and plant. They are kind of like a large ship. They cannot turn everyday. They want to make sure their policy course erik is one of vacancy. You may know that secretary told a bunch of reporters here in davos that a weak dollars good for american trade. What is your view . Jamie usually when a treasury of secretary says weak dollar, they mean a strong economy. It is a good thing. All things being equal, reducing the strength of the dollar, the dollar going down helps the trade deficit. Someone said it would go down another 10 , which is not a tremendous move. Try deficit would go away. I think he is referring to slightly beneficial from trade deficits. The lets talk about branches. Jpmorgan announced a Huge Investment yesterday and 400 branches, hiring more people, paying more than 25,000 of your employees higher wages. Jamie they are starting jobs and they get pension and they get medical. It is a good starting job. Hopefully they can climb up from there. Erik and you will be issuing more credit to people in a lower and middle grass. What is the thinking middle class good what is the thinking behind that . Jamie we have been anxious to do that for a long time regarding new cities. City, we go in and we have credit cards and mortgages and lmi and charities. We have the full face of helpgan and the city to people community. It is billions of dollars of capital to support those branches, etc. And lmi lending, it is not going to subprime, just making more moregages affordable. We think it is good for america. It is safe. We will try to do our share to grow. Community development think of a portable housing, we had entrepreneurs of color, think about. We do all the things to help grow communities, and we think it is safe and good for us and good for the country. Erik when you say there are notable cities where jpmorgan or chase perhaps more appropriately if not, and its going to become are we talking about d. C. , philadelphia, boston . Jamie we mentioned those three possibilities, and we have not disclosed exactly where yet, but we are in 60 of the top. Our Consumer Bank is in 30 of the top msas. So we have a good product and a good service to say why not there. It is hard to go in a new city. You have established competitors. But we are going to. We have a lot to offer. We will bring a lot to consumers and Small Businesses and charities in those towns. Erik what about expansion in corporate and Investment Banking . Inie we did not an ounce this thing, but if you look at what we have been doing consistently over the years, we added kind of corporate bankers. Eventually, countries overseas, we stopped, we could not get prices, regulatory issues. We arentually, countries not income of both in africa, we wanted to expand. When we go there, we serve the country, we serve only u. S. Motion nationals multinationals going in. We do want to do that you will see that. You will be hearing about some of that going down the road. Erik can we hear about the most notable country or not active in that you would like to be . Jamie we are active, but we are not on the ground erik in that respect. Sen. Hatch ghana jamie ghana. Kenya. Erik that is where you will be. There are some skeptics that will say what you announced, what at t, wells fargo, walmart are important initiatives in and of themselves, but the reason they are getting some of the tension and the reason of these like yours are making some of the attention and the Reason Companies like yours are making waves is to get the attention of the white house. Sen. Hatch i love a senate. Jamie i love a cynic. We went from a competitor 20th oh, they came down, we stayed, we have been trying capital overseas. I do not understand have a concept of an uncompetitive system. The real benefit is not what we announced today. It is great for a company to say you know what, we have got this, lets do something to they it is far more important to do it down the road. Make plans here, acquire here, develop skills here. You can do to overseas where it is so much more profitable. I think it is a great thing to see ongoing benefits. I applaud those companies. I understand the cynics. Erik it has a lot to do, as you point out, with Corporate Tax cuts. A also has to do with different regulatory environment, the potential for more regulatory change. If we consider that for a moment and what you have done, what would you have done as an alternative had we had a different president . . Here would you be now . Jamie jamie look, we have had tons of regulations. We are not asking to go back to what we had with more regulations. I think another president could have gotten a tax point on, i do not know, but the policy is competitive taxes, regulatory performance, infrastructure, work skills, those are the things that will drive america for 20 years. Whoever is president , i am hoping they are focused. I am also proimmigration. I think there are a lot of people who are timid about immigration, but doing it right would be progrowth. Daca having a full immigration bill, attracting the best and the brightest in the world. A degree, issue a green card, like they do in canada. They open up their companies in canada so they can hire these people, and we cant. That is silly for americans to do that. Erik immigration is one issue where it sounds to me like you do not agree with the president , you do not agree with much of what was made out of his administration. Where, jamie, do you find yourself most an agreement with President Trump, and where do you find yourself, aside from immigration, most in disagreement with him . Jamie competitive taxes, Regulatory Reform are good. The so the chairman of we are proimmigration. Borderis against proper control. I think the path to citizenship, legal status for people who have been here, who have been lawabiding citizens for a long time, and trade. Trade is very complicated. There are legitimate issues raised in the administration. And by the administration before they need to be resolved. The one with china is far more important than with mexico. We are lucky to have mexico as a neighbor. They are a wonderful neighbor. We have not had a war between mexico and the United States since 1848. I only point that out because american citizens forget the issues we had with china, vietnam over the same period of time. Help the country, but modernizing is a good thing to do, and focus on a real Strategic Dialogue with china that gets two more reciprocity, more fairness. And these are things, by the way, that they need too. Erik do you feel an obligation, a sense of responsibility, to speak out about these issues in the hopes that you will change the president s mind and the minds of those around him . Jamie we absolutely get involved in policy issues around the world, and we want to make sure people know what the issues are. Some of these issues are decided solely by the president , so of course, you want the president to knows of he has the knowledge of that before he makes a decision. Erik . On twitter . Jamie i do not tweet. I am talking about detailed policy decisions here. The president and his team are quite experienced, ok . There are a lot of Companies Making sure they know at least what we think. Erik on the economic front, what has been a Big Policy Initiative you want to see out of the trump administration. Jamie well, they will decide, it obviously we will try to react to that. But i think theyll front right now is going to be trade and have to and then trade and nafta and then trade in china. I do not know how they want to orchestrate that. That is a more political decision than economic for us. Erik one more decision for you on tax cuts. I want to explore a Conference Call the other day in more detail. Some of the benefits jpmorgan will see from the tax cuts is going to be competed away. In what markets and what products, if you will, do you expect to see that . Jamie jamie this is a complicated subject. Hypothetically, higher returns, no, people competed away. So returns come down. They spend money on capital, they pay more, they invest more, they give customers a better deal, but it is not the same for every business. It is hard to imagine why a Trucker Company is going to cut morerice, but they may see benefits stay with them for a while. If you and i were pricing a product in the market today, that price is going to be set immediately. In the banking business, we have a full spectrum of both. Erik what is most likely to repress quickly . Jamie i would say soul products. If you are doing just a leverage loan, it might be quite different. Erik it is more involved. Jamie because then your competitors price against you, pricing is different, and so on. Erik i was thinking earlier about as a matter fact, something that you said here at the World Economic forum back in 2011 different environment, but the chief concern on your mind at that point was go government deficits. You said we need to fix that, we need to face the fact that governments seem addicted to jeff is it. This tax bill is adding 1 trillion to the deficit. Does that need to be fixed, too . Jamie back then we were talking about a simpsons bowl, deal with a simpsons bowl kind of deal with obama. The gdpet debt is deal is almost 20 billion. That it goes like this, and in the strong 10years out, 85 of gdp to 150 . All of that is based on medical. We need to fix it. It is a longerterm problem, we have time, but my god, the sooner we get at it, the better. , it will add to growth, the way it is predicting now, it will make up the 1 trillion, which is what secretary mnuchin always that. Erik it will have a dynamic effect, if you will. Jamie i think he said 23 growth. The tax collected will go up by the same 200 you will lose on a static base by looking at what happens. Erik your company does business all over the world. s collectident silist, antiimmigration call it quasiisolationist, antiimmigration, does it interfere . Jamie i do not think so, and i do not agree with all the wording you put in there. I think the president has raise important issues. I think trading partners will look at those issues. I think they will negotiate in interest for both partners. Looking at the trade, some of the benefits we are getting out of trade already done, and going around the world, we advise to other countries. We tried to do right where we do business. And the otherpany firms that make of the largest banks in america emerged from the post crisis period stronger, more profitable, better capitalized, pretty much than any other group bank in the world. How long is it going to take, do you figure, before the europeans and the chinese start to do something about that . Jamie i am so that into all sides here. They started in a different position. I think in europe, they have been constantly changing ,egulations in both countries where they did not do it fast in the United States, america had a better recovery story, but we started in a better point. It is now time to stop doing this, let people deal with it, finance the economy. Have some growth, and then over time, if they want to recalibrate or bring it together, because there are huge differences. They need to be put together. Has added four more rules and regulations than europe in terms of capital liquidity. Erik europeans want to be more competitive in global banking. Do they need a bigger bank . Do they need a merger . Jamie i think so, yeah. One of the issues is one of the great benefits of a bank that is diversified is something is going to go wrong somewhere. Diversity can help you balance that. One city, went down, you have a one town, you have a harder time during a recession. It hurts towns, it hurts individuals. A Common Market allows huge economy scale, diversification, and you are talking about it. You see now, with the rules in place, can European Banking rules erik you will see a new bank emerge. Within their countries or across . Jamie both. Mean and eventually bigger timeframe. We have a helicopter ride above us, making things a little bit difficult to talk. I will let it pass. You are asked a question about recession. [laughs] erik there he is. Jamie, you asked a question about recession now and then, and you say i will be here for another five years. You are 61. You will be ceo for another five years . Jamie still true. Here is the important thing. The board and i erik say that again. Ande the board and i hopefully some of my direct reports run the company today. We have an unbelievable team. And we have another layer down. Erik i talked to rate alley of this morning. He has written a book about the culture io thisd to ray dalk morning. He has written a book about the culture of bridgewater and what it became. Would you write a book . Jamie book. I have read his i have done it a lot, in my chairmans letters, that is the principles, guidelines, examples, things like that. Would i ever write a book . Maybe i would your it threatened to write a book one day, i gave a tentative outline. Erik jamie dimon, thank you so much. Jamie dimon company is the chairman and ceo of j. P. Morgan chase. Thanks to Bloomberg Radio listeners and viewers worldwide. You, eriknk schatzker, talking to jamie dimon and a helicopter at the same time. A couple of high points. He, like james gorman, like Michael Corbett, and the size synchronized growth. Ametimes you have to accept recession fear his bank is certainly prepared to deal with attorney also talked to eric about what they are doing with employees and investing in employees and new branches around the world, maybe boston, philadelphia, d. C. He also said they are interested in growing on the ground Investment Banking and other countries where they are not on the ground now, specifically gone and kenya. Find ghana and kenya. Deficit, he is not concerned about the tax cuts, he says maybe theyll get paid for, but much more longterm entitlements and what huge problem that could before the country. Now we want to bring in allison williams, Bloomberg Intelligences Senior Analyst for u. S. Banks. Things, ande particularly jpmorgan. What stood out to you in this interview . Allison a couple of things. Yhey talked about rate alle terms ofook, in principle, continuity, terms of values of the firm, and even though jamie dimon has not written a book and perhaps has not laid this out, that is something that is important that he has done throughout the organization. Consistency of leadership is something we have seen at jpmorgan and also Goldman Sachs in terms of building a culture so that the leader of the helpization can really tilde a bench beneath the leader and sort of halve the hole aganization act within certain set of values. The second thing sort of incremental that i thought was interesting is they are talking about the need for National Champions in other countries to have a global presence, and that is something that jpmorgan talked about in terms of when we look at some of the regulations, jpmorgan has faced some of the most onerous regulation because they are put forth in such a big Global Investment banking presence. What he has argued is what about the benefit of diversity, and the benefit of diversity in terms of predicting an organization and performing through a difficult environment, so i thought was interesting is you had gorman recently on the Conference Call talking about the fact that there are many National Champions a come to the u. S. Market, try to build a presence, and are not successful in retreat. We have the one everyone is watching, Deutsche Bank, and most people would Say Deutsche Bank has had a fair amount of success over the years, although recently, obviously it has been tougher. I think that is something people will be watching with Deutsche Bank to report next week. They have tried to regain share in their businesses, but i think it is tough to do that in a difficult environment, so a year ago at this time, they were just sort of recovering from some legal issues. They have tried to rebuild businesses, but at the same time, facing competitions. I think it is interesting, jamie pointing out that it could benefit the Global Industry as a whole to have global champions, sort of global firms, not just in the u. S. , either, but more diversification globally. David jamie is not only the head of jpmorgan, but he is also the head of the business roundtable. Has some divergence. He was pretty strong about the dreamers, saying we need to figure out a way to do this, although as part of a comprehensive plan, we should have border security. But he talked about trade, particularly with china more than mexico. Alison guess. Yes. The comments as a benefit to mexico as a trading partner. I thought it was interesting and talking about emerging markets that he wants to enter and the importance of china, but of course, the big thing that was discussed, actually, with jamie, and that isrm something he spoke about in his annual report last year, and we saw yesterday in putting his money where his mouth is, talking about this 20 billion, a lot of which is really just incremental investment. Building branches and making loans, and that is what we have heard some of the other banks talking about, which we will hear from those companies. I think at the end of the day, that is sort of what people like jamie and other leaders hope for in terms of tax reform providing more of an indirect economic stimulus over the longterm. Lison, thank you so much, Alison Williams with Bloomberg Intelligence joining us. Coming up, what is the Worlds Largest ipo . Amin nasser will talk about the companys plan with Francine Lacqua at davos. That is coming up next. You can join tom keene and Jonathan Ferro on from 7 00 to 9 00 and pimm fox from 9 00 to 10 00 on radio, bloomberg surveillance cocoa and you can hear it in new york, boston, the bay area, all over the United States. Live from new york, this is bloomberg. Taylor this is bloomberg daybreak. I am taylor riggs live in the green room. We have more live from davos. David this is bloomberg daybreak. I am david westin. We turn to taylor riggs. Taylor today, off about. 8 , pushing against stronger relative to the dollar, going back to the strongest since may, september. I have not heard in the equity markets, though future set to open up another record,. 3 . The next board, all of this talk of a weaker dollar is pushing gold higher, now its highest since midseptember. I am watching bonds after we heard from bridgewaters ray dalio. Are climbing come and look at what that is doing to the 210 spread now, wider to 58 basis points, david. David thank you so much. Earlier today, saudi aramcos m s are amin nasser spoke with bloomberg. Amin stronger in the second half of 2018, and my Transaction Team is currently waiting for the decision from the shareholders. There is work that needs to be exchange,e stock definitely in saudi arabia, which we are here for, but we are open in saudi arabia, so as a company, we are ready, hopefully we will be listed by the second half of 2018, but we are on the second venue. Francine to you think that the government is in agreement . . What kind of things are they looking at . Amin we also have an issue with this decision. Is a majoro contributor to the gdp of saudi arabia. So a lot of information with that, the Government Committees have been looking at listing saudi aramco different, exchange decisions. Each need to be evaluated. Ultimately, needing to come up with a decision on pros and cons in each venue. Way,is metaphoric, by the considering the size of saudi aramco. Francine so this could be postponed to 2019 . Amin we dont know. It is all depending on how soon we would hear about the second we arebut currently, ready for the second half of this canvided that continue to list what we were told by the government. Francine i am trying to understand this between internationally or is it a choice between listening internationally or only listing internationally or only domestically . Amin internationally realistically. Internationally, we want to list internationally, and that is where the consideration is happening. In thea lot of work Stock Exchange in london, new york, tokyo, hong kong Stock Exchange, and each one has its advantages. There is a lot of information that passed through the committee, looking at all of that information. This will hopefully come in due course. Francine this is not a global listing. This was filed as an internationalist and. Listing. Nationala why . Amin the committee is still evaluating the option of listening in kingdom and listing in kingdom and internationally. Francine are there advantages to negotiating the Stock Exchanges . No i, am not negotiating with Stock Exchanges. A lot of work was done by a us in terms ofultant the Stock Exchange information. But a lot of the information gets back to the committee, the Government Committee that we are looking at. It is a lot of information, a lot of use. All of that needs to be looked at, and the decision will come in due course. Francine when you are listing the pros and cons of different exchanges come if is delayed on the international stage, do you think it will be a form of investors investing inside of saudi aramco . Amin a lot of things will happen. A lot ofco entities will be interested in aramco. A lot of information that will be shared to our prospectus. With all of that information, we know how confident, how strong is saudi aramco. We know of the performance, Environmental Performance of the company, the safety, the technology. So we are not concerned about the impact on saudi aramco because we are confident that the companys performance will garner a lot of attention. Francine so you do not worry about perception . Not worried,are perception, some of it is happening now because the information is not shared, but during the roadshow, we explain it is a lot of information that will be shared with the community, which is not available for them now. There is Information Available that you can get about saudi aramco. A lot of people know saudi aramco through the liability, protection, but they do not know a lot of information about our performance when it comes to cost, when it comes to the environment, when it comes to safety, technology. Our strategye over the long term and what we have been doing, these things are important for somebody to make a decision. Francine you plan to release the figures for 2017, or will that only begun on the roadshow . Amin it will be done on a roadshow, when the decision is made about the second venue. We will be updating information. Francine so in other words, no. Amin in other words, we are not obligated to do that. Francine but youre not saying. Amin we are sharing it with shareholders, only. We are doing it for performance, and we are doing it not listed. But we are doing it to unveil that information for the investors to look at saudi aramco in a quarterly basis rather than the whole year. Francine the year looks good . Amin the performance of the cost,y in terms of environment, and safety, and we do a lot of benchmark, by the listedth other companies. So we have the benchmark that we can use. And that will be shared in terms of information. Francine mr. Nasser, talking about the timeline, as soon as the government decides, if they decide on listing internationally, how fast can you do the roadshow and be on the market . Amin we need a couple of months to do a roadshow and share the prospectus and all of that. Global parameters, banks, those working with us, and that will take a couple of months of deliberation, because knowing where you are going to exchanges, new york, hong kong. Freeze, we need to do a different type. Francine what will the dividend look like . Do we need dividends . Amin it will be good. We cannot say that. That will also be shared during the prospectus in terms of francine i know you cannot say much at the moment, but will you be on the higher end of your competitors . Amin we cannot share that. [laughter] francine i completely understand. What is the most frequent question you get, apart from where the ipo is and where you will list . All the ipo comes from different interviews, so the ipo is really the focus area. The list is a normal question. Francine how much is thinking about the ipo taking her time compared to actually running saudi aramco . Amin a short percent of our time in terms of preparation, i , more than 20 of the and now is our preparation discussion with various stakeholders, advisers, or the government. And preparing documents and all of that. It just takes much more time. Announced earlier this year what contains potentially new Board Members and a larger board. Have you identified Board Directors . Amin yes. This is something for the shareholders and the chairman of the board and all of that. Willsure in due course we also they will be announcing that. As i said, that is also an indication that this thing is happening. We are performing a joint company, february 1, 2018. Wealso an indication used to be a limited liability company. Now we are a joint stock we had not that done. We are serious about the government. Francine are you closer to the chairman . Amin who . Francine do you want to be chairman . Amin our chairman is the minister of energy, currently. All of that is a decision that will be taken by the government. Rently, our chairman francine mr. Nasser, talk to me about a but about the income tax. For aramco, it went from 35 . Royalty changed to 18 . What happens to royalty . Amin royalty, for the time being, has stayed at 20 . Iteration be some that will happen when the prices changes in the markets, but all of the details of the shares will be in the prospectus. We cannot discuss it at this stage. [laughs] amin but a lot of intermission, as i say, in terms of how much we can share at this stage. But it will come in due course. Francine is there a prospectus already ready to go . Amin we are putting it together. We have a draft. David that was saudi aramcos Ceo Amin Nasser speaking with our Francine Lacqua. I want to bring you up to speed on two points. First of all, german chancellor Angela Merkel speaking right now in doubles. She is saying in davos. She is saying the eurozone cannot bear the risk of individual countries. Electricseneral john flannery, the chief executive officer, he is on an Earnings Call saying they have. O move quickly to adjust they will stay ge well into the future. Talking about selling or disposing. Cash is big. Frankly, they did a pretty good report on cash. You can see the stock is actually up your live from new york, this is bloomberg. David ford is out with its earnings of afternoon at 4 15. Car man. Ch is our what are we looking for . David w we are expecting earnings to go down. Surprisingut more than that, commodity pricing, steel and aluminum have gone up am a to the tune of 1. 6 billion next year. That is affecting shares leading up to todays earnings. It is sort of interesting, to, because other automakers have not said so much about this affecting their earnings, so it will be interesting to see what else in there will be hitting profits to come. David a lot of pressure is on Profit Margins already. Whawhere theyre going to come up with the money and keep the Profit Margins up . David w they are still generating plenty of cash, so they can still invest in autonomous nichols and electric cars. That generates a lot of money. For four to come in terms of profit ability, even if commodities and exchange rates, that is not the whole story here. They rely on the f150 and the u. S. Market on a lot of profits. They do not have a big lead in china like gm does. They do not have a big luxury brand like the germans do. Those are profit pockets that they just dont have. They will come under pressure this year. David david, quickly, you just mentioned china and gm. Gm got out of europe essentially. Do they have to make a decision about geography . David w there is increased chatter that they have to make big, tough decisions like gm did and maybe get som out of some of these areas that have losses. South america has not been a great profit pool for automakers, either. Ld Forward Start to look . Could ford start to look . Yes. David always great to talk cars with you. David welch is our bureau chief out in detroit. We will get a chance to talk with the cfo afford, bakshi, ford, bob shenk, tonight bob shanks tonight. We will also speak with cocacolas Ceo James Quincey. Jonathan from new york city, im Jonathan Ferro. This is the countdown to the open. Jonathan laying the groundwork for President Trumps arrival in davos. The weak dollar policy, the treasury secretary endorsing dollar trading near a threeyear low. Bankers might be warning of complacency. 30 minutes away from the opening bell. Futures firmer. We could add some weight to that at the open. In the fx market dollar weaker against everything on the year and the session. 5 dollar getting up to ahead of Mario Draghis news conference. Yearold up to new highs on the 10 year
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