Ecb prepares to deliver its latest policy decision. Jamie dimon found a pessimistic about the future of europe. The eurozone may not survive. That is a very complex thing. That is a pessimistic view of europe. Pessimistic,term yes. Unless they change. Francine good morning. This is bloomberg surveillance. Im Francine Lacqua in davos or the World Economic forum. We are in today three. Tomorrow, we are live from the forum. A whole host of interviews coming up later today on piereillance including carlo padoan and Goldman Sachs ceo Lloyd Blankfein. Lets get straight to the bloomberg first word news. Heres sebastian salek. Sebastian the chair of the u. S. Federal reserve said the u. S. Economy is close to the Central Banks objective of full employment and stable prices. Janet yellen also said she is confident it will continue to improve and it makes sense to gradually reduce Monetary Policy support. As of last month, i am most of my colleagues, the other members of the fed or in washington, and the president s of the 12 regional Federal Reserve banks, were expecting to increase our federal funds rate until a few times a year by the end of 2019 it is close to our estimate of its longer run neutral rate of 3 . Sebastian Deutsche Bank told some employees yesterday that job cuts will continue even after it slashed bonuses for senior staff according to a person with knowledge of the discussion. Another person said in some parts of the investment bank, managers have been asked to identify the bottom 20 of performers. A spokesperson declined to comment. Goldman sachs may cut its london staff in half while transferring some to other locations as it prepares for brexit. That is according to a german newspaper citing unidentified people in the financial industry. The record the report comes a day after a ceo told bloomberg operations may move to paris. A spokeswoman for Goldman Sachs said it hadnt made any decisions. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Francine thank you so much. We get theresa mays dental speech this hour. Before that, u. K. Chancellor Philip Hammond has said hes confident that sterling will find an appropriate level as britain progresses with its plan to exit the European Union. He added that he wants to transition into brexit. What the Prime Minister talked about on tuesday is the need to move forward quickly after we served the notice to scope out what the instate is going to look like, get agreement on Practical Solutions for the relationship between britain and the rest of the European Union, but recognizing that will take some time to implement. Until we get into the detailed talks, we cant say how much time. There will be systems to be put in place. Is this is will need time to make the transition. The clear message that we are giving, and i think this works for britain and europe, edges, no sudden change. Businesses in davos, london, new york, trying to figure out what the ideal situation would be. The Prime Minister was saying she wants a better deal. What does that look like . Recognize that on both sides, there are political imperatives. From the u. K. Side, we can no longer accept freedom of movement. From the european side, they have a position about the indivisibility of the four freedoms in the internal market. We have to work within the parameters defined by the reality of politics to find a trading relationship, a security relationship, cooperation in a broad range of areas, that allows the patterns of business that we already have, the supply chains that operate across europe, to continue to operate with minimum disruption. That is good for britain but also good for our partners. Francine negotiations can be very short. If you have two sides with opposite views and no one is ready to give in, they can be done in six months. I suspect they wont be. We should be able to agree, i think, quite easily on the principles. Working through the detail will take longer. I hope that we will be able to get, between britain and the europeanget, between britain ane European Union, quite early on in this process, a sense of where we are going. I hope we will be able to communicate that to the wider world. The whole process has created uncertainty. That has not been in anybodys interest. The sooner we can give businesses and consumers certainty, the better it will be for the european economy as a whole. Francine thank you so much to the u. K. Chancellor for joining us earlier. Welcome the ceo of sir bank, herman gref. Thank you for joining us here on bloomberg. What is the bloomberg like in davos . Theres a lot of talk about russian sanctions being lifted from the u. S. , possibly a you sanctions being lifted as a followup. Herman a lot of discussions involve the russianu. S. Relations, and according to last year, i think it is more hopes that it is a new president ial administration, we can do more productive relations with the u. S. And russia. That they can get more stability and can resolve our historical problems. Francine how do you view it at the moment . Is it more likely the sanctions will be revealed or are you preparing for extra penalties because of some of the investigations into russian hacks of the dnc . It is a bigink agenda for the new administration. I cant predict how it can be going on, but i think what we can discuss here, now weve had must do, and i think we all we can to realize this chance. On the businesses from the u. S. , europe, russia, they are all united in this position. Us sanctions dont give stability. Francine sberbank has had quite an increase in terms of the market cap. What is your forecast for this year . Can it become the largest Russian Company by market value . I cant discuss these type of goals. We dont have such goals to be the Biggest Company by market cap. Francine are you confident about 2017 . Herman it depends. I cant predict the market situation. Be very2017 will successful year. 2016 was a very good year for sberbank and the banking sector. It is much better than 2015. Our expectations for 2017 is much better, more optimistic than 2016. I think that was a very difficult period of time. 2015, because of changes in the oil price and currency rate and the geopolitical tension, now we can adapted to there new situation. To leave such a difficult situation, but now i we are more stable. Francine how many bank licenses do you think russia needs . The Russian Central Bank has been repealing a lot of them. Will it continue advancing at this right . Do you spend time thinking about these things . Herman i think yes, if you ask me what is my opinion about Russian Central Bank, i can say that they have done very good job. It is a difficult it is difficult for the whole bank system, but we must clean. The banking sector, the financial sector. Be it may be takes two more years, but after that, we can get more stable situation in banking sector, more competitive organization, because now we see a lot of acquisitions in the banking sector. It is hard for us, it is tough, but i think it is the right policy. Francine youve met donald trump. There is debate, which i would like to put the record straight. Was it at a Miss Universe contest, was it not, and what were your impressions of the man who will become the 45th president of the United States . It was nothing with ms. Universe. It was a very good conversation about his nose issues. About this miss issues. Business issues. We discussed a lot of different Business Issues and we discussed about the future. I can say that it was a very productive discussion. We were very impressed about maybe two things. High collaborative habits. It was a very interesting discussion. View,out his professional not about real estate business, but we spoke about financial , and my teaming and i were very impressed. Francine thank you so much for your time. Ceo of sberbank, herman gref. Coming up, we have a great interview for you. Theresa may is due to give her speech in davos, then she will be coming over to our set. That is 4 30 p. M. U. K. Time. Dont miss the interview with the u. K. Prime minister. Stay with us for that. This is bloomberg. Francine were live in davos with the World Economic forum. It is also ecb decision day. Central bank watchers will be focused not for the first time on Mario Draghis language. Lets get to matt miller in frankfurt. What can we expect from mario draghi . A more hawkish tone, perhaps . Matt perhaps, especially after her viewlen confirmed on u. S. Growth and the u. S. Economy is a little more solid than a lot of people would have thought. We saw expectations for a fed increase in may rise up to about 50 on the wirp function on bloomberg and we have a lot more people saying they think may be janet yellen is in the three raises this year camp. That would increase the divergence between the fed and the ecb and maybe you see mario draghi get a little bit more hawkish. Also as a result of the pickup in inflation that weve seen across the european across the eurozone, that could start to worry mario draghi. He could try and jawbone it down a little bit. Francine when is the next actual move expected . According to our survey of economists, there isnt an actual move expected for the ecb until september. That is a long way off. At the last meeting, mario draghi was clear in that he wanted the market to know, or to feel his presence in the markets until that time. Elongated hishe intervention in the markets until 2017 even though he brought it down to about 60 billion euros a month. He said he wants to remain flexible. If you take him at his word, youve got to think hes going to still be paying close attention and in markets until the end of 2017. Right now they want to take more of a wait and see approach and leave the impression from the last meeting intact. Francine thank you so much, matt miller covering the ecb closely for us today. We have a great exclusive interview with the german finance minister and ecb critic, wolfgang schaeuble, at 1 15 u. K. Time. We will cover the ecb announcement at 12 45 u. K. Time, and Mario Draghis press conference in full 45 minutes later. This is what were expecting. Theresa may due to give her death of speech imminently. Joining us is bloombergs exit editor, simon kennedy. Thank you for joining us in the freezing cold. We spoke to a number of ceos from the banking world. We spoke to Philip Hammond. We spoke to the e. U. Side as well. What do Business Leaders want to hear from theresa may . Simon i guess they want to hear a bit more of what she said on tuesday, that shes going to try to look after british businesses based abroad based in london, thanks among them, that shes got a plan to maintain their current level of trade with the e. U. She cant grant that herself. That is something for the negotiations and financiers. Just as she is cementing her plans, they are building theres , to move people out of london. Francine you have to have a pecking order of things you need to be sure you get guarantees for or not. What do we understand about Financial Services . Simon Philip Hammond talking about the importance of finance to the economy, the importance of the government. The government has actually signaled it is going to be one of many businesses we try to look after. Francine simon kennedy, our brexit editor. The Prime Minister just going on stage. Starting her big dallas speech live. Lets listen in. Ms. May thank you, professor, for that introduction. Thank you for inviting me to speak at the World Economic forum this morning. That is,n organization as it says in the very first line of your mission statement, committed to improving the state of the world. Those of us who meet here are all, by instinct and outlook, optimists who believe in the power of public and private cooperation to make the world of tomorrow better than the world of today. And we are all united in our belief that that world will be built on the foundation of free trade, partnership, and globalization. Yet beyond the confines of this hall, those forces for good that we so often take for granted are being called into question. The forces of liberalism, free trade, and, those forces for good globalization that have had and continue to have such an overwhelmingly positive , that haveur world harnessed unprecedented levels thatalth and opportunity, have lifted millions out of poverty around the world, that have bought brought nations closer together, broken down barriers, and improved standards of living and consumer choice, forces that underpin the rulesbased International System that is key to global prosperity are somehow at risk of being undermined. Morninge meet here this , across europe, parties of the far left and the far right are seeking to exploit this opportunity, gathering support andeeding off an underlying keenly felt since among some people, often those on modest to low incomes, living in relatively rich countries around the last, that these forces are. Ot working for them and those parties who embrace the politics of division and despair, who offer easy answers, who cling to understand peoples problems and always know what and who to blame, feed off Something Else too. Thatense among the public mainstream political and Business Leaders have failed to comprehend their legitimate concerns for too long. Out morning, i want to set a manifesto for change that responds to these concerns and shows that the politics of the mainstream can deliver the change people need. I want to show how, by taking a that harnesses the good of what works and changes what does not, we can maintain indeed, we can build support for the rulesbased International System. And i want to explain how, as we do so, the United Kingdom, a country that has so often been at the forefront of economic and social change, will step up to a new leadership role as the strongest and most forceful advocate for business, free markets, and free trade anywhere in the world. For that is the unique opportunity that britain now has. Morning as au this Prime Minister of a country that faces the future with confidence. For a little over six months ago, millions of my fellow citizens upset the odds by voting with determination and quiet resolve to leave the European Union and embrace the world. Let us not underestimate the magnitude of that decision. It means britain must face up to a period of momentous change. It means we must go through a tough negotiation and forging new role for ourselves in the world. It means accepting that the road ahead will be uncertain at times , but believing that it leads towards a Brighter Future for our countrys children and grandchildren too. While it would have been easy for the british people to shy away from taking such a path, they fixed their eyes on that Brighter Future and chose a bold and ambitious course instead. They chose to build a truly Global Britain. I know that this and the other reasons britain took such a decision is not always wellunderstood internationally, particularly among our friends and allies in europe. Some of our European Partners feel weve turned our back on what and i know many fear our decision means for the future of the e. U. Itself. But as i sit in my speech earlier this week, our decision to leave the European Union was no rejection of our friends in europe, with whom we share common interests and values, and so much else. It was no attempt to become more distant from them or to cease the cooperation that has helped keep our continent secure and strong. Nor was it an attempt to undermine the European Union itself. It remains overwhelmingly and compellingly in britains interest that the e. U. As an organization should succeed. Interest that the e. U. As anit was simply a vote to re, as we see it, our parliamentary democracy and national selfdetermination. A vote to take control and make decisions for ourselves. And, crucially, to become even more global and internationalist in action and in spirit too. That is who we are as a nation. Britains history and culture is profoundly internationalist. A european country and proud of our shared european heritage, but we are also a country that has always looked beyond europe, into the wider world. That is why we are among the most racially diverse countries in europe, one of the most multicultural members of the European Union, and why whether we are talking about india, pakistan, bangladesh, america, australia, canada, africa, asia, or those closer to home in europe, so many of us have Close Friends in relatives from across the world. And it is why we are by instinct a great on a Global Trading nation that seeks to trade with countries not just in europe, but beyond europe too. Plan ihe heart of the set out earlier this week is a determination to pursue a bold and ambitious Free Trade Agreement between the u. K. And the European Union. But more than that, we seek the freedom to strike new trade deals with old friends and new allies right around the world as well. That weve already started discussions on future trade ties with countries like australia, new zealand, and includingle countries china, brazil, and the gulf states have expressed their interest in striking trade deals with us. It is about embracing genuine free trade, because that is the basis of our prosperity, but also the best way to cement the multilateral or ships and cooperation that help to build a better world. The challenges we face, like terrorism, climate change, and modern slavery, dont stop at national borders. Nor do they stop at the borders of continents. The challenges and opportunities before us require us to look outwards in a spirit of cooperation and partnership. That is why, as i said in my speech on tuesday, i want the u. K. To emerge from this period of change as a truly Global Britain. The best friend and neighbor to our European Partners, but a country that reaches beyond the borders of europe too, a country that gets out into the world to build relationships with old friends and new allies alike. That is exactly what were going to do. Countryo be a confident that is in control of its own destiny once again, and it is because of that that we will be in a position to act in this global role, because a country in control of its own destiny is more, not less able to play a full role in underpinning and strengthening the multilateral rulesbased system. A Global Britain is no less british because we are a hub for foreign investment. Our biggest manufacturer is indian and you still cant get more british than a jaguar or land rover. Britain is no less british because it is home to people from around the world. We derive so much of our strength from our diversity. We are a multiracial, multiethnic, multifaced democracy, and we are proud of it. And britain is no less british because weve led the way in multilateral organizations like the u. N. , nato, imf, and the world bank over many years. Of these bodies magnifies all their members ability to advance the common good of peace, prosperity, and security. I believe strongly in a rulesbased global order. The establishment of the institution that gave a fix to it in the mid20th century was a for much ofdation the growing peace and prosperity the world has enjoyed since. And the tragic history of the first half of the last century reminds us of the cost of those institutions absence. The litany of follies of that time our mistakes that we should never forget and never repeat. So we must uphold the institutions that enable the nations of the world to Work Together. And we must continue to promote International Cooperation wherever we can. One example of that is modern slavery. A scourge of our world which we can only defeat if we Work Together. Changing attitudes, rooting out such aberrant rectus is, and prosecuting the prosecutors prosecuting the perpetrators. That is why ive convened a Highlevel Panel discussion to continue our coordinated effort to save those many lives which are tragically being stolen. International cooperation is vital, but we must never forget that our first responsibility as government is to serve the people. And it is my firm belief that , internationalnt institutions, businesses, and individuals, need to do more to respond to the concerns of those who feel that the modern world has left them behind. Embarkedtain, we have on an Ambitious Program of economic and social reform that aims to ensure that as we build this Global Britain, we are able to take people with us. A program that aims to show how a strong britain abroad can be a better britain at home. Of greaterk globalization can make people fearful. For many, it means their jobs being outsourced and wages undercut. It means having to sit back as they watch their communities change around them. And in their minds, it means watching as those who prosper seem to play by a different set of rules. While for many, life remains a struggle as they get by, but dont necessarily get on. And these tensions and differences are increasingly exposed and exploited through the expansion of new technologies and the growth of social media. But if we are to make the case for free markets, free trade, and globalization, as we must, those of us who believe in them must face up to and respond to the concerns people have, and we must Work Together to shape new policies and approaches that demonstrate their capacity to deliver for all of the people in our respective countries. I believe this challenge demands a new approach from government. And it requires a new approach from business too. For government, it means not and, as theg back prevailing orthodoxy in many countries has argued, not just getting out of the way, not just leaving businesses to get on with the job and assuming the problems will fix themselves. It means stepping up to a new active role that backs businesses and ensures more people in all corners of the country share in the benefits of its success. And for business, it means doing even more to spread those benefits to more people. It means playing by the same rules with everyone else when it comes to tax and behavior. Because in the u. K. , trust in amongss runs at just 35 those in the lowest income brackets. And it means putting aside shortterm considerations and investing in people and communities for the longterm. These are all things that i know the vast majority of businesses do already, not just by creating and supporting the next generation. Businesses large and small are the backbone of our economy, and enterprise is the engine of our prosperity. That is why britain is and will always be open for business, open to investment in our companies, infrastructure, universities, and after burners, open to those who want to buy our goods and services, and open to talent and opportunities in the arts, technology, finance, to manufacturing. But at the same time as promoting this openness, we must heed the underlying feeling that there are some Companies Come a particularly those with a global reach, who are playing by a different set of rules to ordinary working people. Business toial for demonstrate leadership, to show that in this globalized world, everyone is playing by the same rules, and the benefits of economic success are there for all our citizens. Crucialk is absolutely if we are to maintain public consent for a globalized economy and the businesses that operate within it. That is why i have talked a great deal about our country delivering Higher Standards of corporate governance, to help make the u. K. The best place to invest of any major economy. That means several things. It means businesses paying their tax, recognizing their obligations and duties to their employees and supply chains, and trading in the right way. Companies genuinely investing in and becoming part of the communities and nations in which by theerate, and abiding responsibilities that implies. And all of us taking steps toward addressing executive pay and accountability to shareholders. And that is why i welcome the World Economic forums compact for responsive and responsible leadership, that businesses are being asked to sign up to at this conference. It is this change, setting clear rules for businesses to operate by, while embracing the liberalism and free trade that enable them to thrive, which will allow us to conserve the ultimate good that is a globalized economy. I have no doubt about the vital not just ins plays, the Economic Life of a nation, but in society too, but to respond to that sense of anxiety people feel, i believe we, business and government working together, need to do even more to make the case. That is why, in britain, we are developing a new, modern industrial strategy. Hasterm industrial strategy full and into something approaching disrepute in recent years but i believe such a strategy that addresses the longstanding and structural weaknesses in our economy is essential if we are to promote the benefits of free markets and free trade as we wish. Our strategy is not about propping up Failing Industries are picking winners, but creating the conditions where winners can emerge and grow. It is about backing those winners all the way, to encourage them to invest in the longterm future of britain. And about delivering jobs and Economic Growth to every community and corner of the country. We cant leave all this to International Market forces increase just rely on in overall prosperity. We have to be practical and proactive. We have to step up and take control to ensure that free trade and globalization work for everyone. At the same time, we have embarked on an ambitious agenda of social reform that embraces the same principles, active, engaged government that steps up and works for everyone. Because if you are someone whos just managing, just getting by, you dont need a government that will get out of the way. Government active that Will Champion the things that matter to you. Governments have traditionally been good at identifying, if not always addressing, the problems and challenges faced by the least advantaged in our societies. However, the mission ive laid out for the government i lead, to make britain a country that works for everyone, goes further. It is to build something that i have called the shared society, one that doesnt just value our individual rights, but focuses rather more on the responsibilities we have to one another, that respects the bonds that people share, the bonds of family, community, citizenship, and strong institutions. That recognizes the obligations we have as citizens, obligations that make our society work. It is these bonds and obligations that make our Society Strong and answer our basic human need for definition and identity. And i am absolutely clear that it is the job of government to encourage and nurture relationships, networks, and institutions that provide that definition, and to correct the injustice and unfairness that divides us wherever it is found. Today, the responsibilities we have to one another have been forgotten as the cult of individualism has taken hold, and globalization and the democratization of communication has encouraged people to look beyond their own communities and immediate networks in the name of joining a broader global community. To say this is not to argue against globalization, nor the benefits it brings. Media torn travel and new products in our shops and new opportunities to export goods for millions of customers around the world. To just as we need to act address the deeply felt sense of economic inequality that has emergeds, we also need to recognize the way in which a more global and individualistic world can loosen the times that bind our society together, leaving some people feeling locked out and left behind. I am determined to make sure that Center Ground mainstream politics can respond to the concerns people have today. Im determined to stand up for free markets, free trade, and globalization, but also to show how these forces can work for everyone. Turn to the, i words of the 18th century philosopher, edmund burke, who said, a state without the means of some change is without the means of its own conservation. That great conservative principle, change in order to conserve, is more important than ever in todays complex geopolitical environment, and i feel it is of huge relevance to those of us here in davos this week. And it is the principle that guides me as i lead britain through this period of change. As we build a new, bold, confident, Global Britain and shape a new era of globalization. Hat genuinely works for all as we harness the forces of globalization, so that the system works for everyone, and so maintain public support for that system for generations to come. I want that to be the legacy of our time. To use this moment to provide responsive, responsible leadership that will bring the benefits of free trade to every corner of the world, that will lift millions more out of towards prosperity, and that will deliver security, prosperity, and belonging for all of our people. Thank you. [applause] francine lets get straight to our brexit editor, simon kennedy, listening to Prime Minister may talking to World Leaders and a lot of ceos gathered in davos. What did you make of that speech . She talked about inequality but it was almost a pitch for business. She said, we are leaving the e. U. , but we are here for the rest of the world. Simon she says britain is in closed for business. It wants to do a lot of trade deals. The second part, i thought was interesting, in the past shes talked of citizens of nowhere. Dont find a ruthless International Elite anywhere if you dont find them in davos. Youve got to understand that people feel disenfranchised. The World Economic forum has been about this. Her message there was that banks and businesses need to adapt to that or theres going to be this rising populism. Francine will businesses be on board . Simon there will at least be lip service. A lot of discussions here, the one with bloomberg and ray dalio and christine lagarde, talking about the need to take on this populism, jamie dimon saying if europe doesnt deal with this, the euro area could splinter, so yes i think they are on board. Francine this is really, theres a huge symbolism in theresa may coming to davos a couple days after she spoke to her nation about her negotiating tactics, or what she will and wont do and what she prioritizes. She is trying to put criticism to rest that the u. K. Government is not prepared and that they dont know what they want. Simon i think she does it to spread the message shes a bit of an unknown quantity in davos. She was a home secretary for a long time. Shes a bit of an unknown quantity. She gets to see all the banks, the businesses, the World Leaders, and she can make that point that britain is going to do brexit and what it is going to look like. It is not really in her hands. Francine she also mentioned that free trade and globalization are being questioned. That we know because of the election of donald trump in part but also because of brexit. Do we know where she stands on this . Francine shes been a bit wobbly. Deking october and november, she came a bit antibusiness. This talk of International Elite, how global elites didnt play by the same rules, and certainly some questions on immigration that annoyed businesses, cb i also saying shes moved the world because of what shes saying about the Single Market, so businesses are a bit skeptical despite the fact that she talks about investment being important and britain business. Stillof Business Leaders remain somewhat skeptical. Francine simon kennedy, thank you so much. Our brexit editor covering everything brexit, which is about 60 of our coverage in dallas. Dont miss her interview with the u. K. Prime minister. This is bloomberg. Plenty more coming up from the World Economic forum. Back to thelcome World Economic forum 2017. Im Francine Lacqua in davos. Lets bring you some news that dropped this hour. Saudi arabias central bank has said there is no need for more liquidity boosting measures for the countrys banks after plunging oil prices put pressure on the economy. In davos, the money agency governor spoke exclusively to bloomberg. Liquidity,alk about liquidity last year was squeezed a bit. Like february to september, there was a negative growth rate in the stock of money. There was a drop, a significant drop, in the window. We had to intervene. June and september, as we speak, the cyber dropped to 200 basis points, and the reverse increased substantially from the within 40 billion to more than 100 billion as we speak. The liquidity situation, we are comfortable with, and i dont think we need to intervene anymore. Francine that was the saudi arabia Money Authority governor speaking to us exclusively from the World Economic forum in davos. Lets get straight to the Bloomberg Business flash. Heres sebastian salek. Barclays ceo just bailey says banks need clarity about the u. K. s exit from the European Union. She spoke to bloomberg about the complications brexit could create. It is very difficult to move a Financial Center like london to another location. I dont think governments are going to preclude a company from managing its liquidity in the most beneficial place. Right now that is most likely london. Sebastian saffron has agreed to buy zodiac aerospace. Is a 25 premium to yesterdays Closing Price. The deal will unite two of the countrys Biggest Aerospace groups. A court in south korea has turned down a prosecutors arrest a samsung executive for alleged perjury, bribery, and embezzlement. He said there wasnt enough evidence to keep him in jail. The allegations are linked to a Corruption Scandal that led to the impeachment of president park. Samsung has denied it returned Financial Aid in return for favors. Cut a shares have slumped as the airbag maker leaned toward a mediator in japan to shield them from bankruptcy. The company has opposed such moves, saying it would disrupt their supply of replacement parts. Francine thank you. May,st heard from theresa and early other u. K. Chancellor said hes confident that sterling will find an appropriate level. He also added that he wants to transition into brexit. What the Prime Minister talked about on tuesday is the need to move forward quickly after we served the notice to scope out what the end state is going to look like, get agreement on a practical solution for the end state, for the relationship between britain and the rest of the European Union, but recognizing that will take some time to implement. Until we get into the details talks, we cant say how much time. There will be systems to be put in place. Businesses will need time to make the transition. The clear message that we are giving, and i think this works for britain and europe, no cliff edges. Plenty of time to adjust. Businesses that we speak to trying to figure out exactly what the ideal solution would be. The Prime Minister said she wants a better deal. What does that better deal look like . Onwe have to recognize that both sides, there are political imperatives. From the u. K. Side, we can no longer accept freedom of movement. From the european side, they have a position about the indivisibility of the four freedoms in the internal market. We have to work within the parameters defined by the reality of politics to find a trading relationship, a security relationship, cooperation in a broad range of areas, that allows the patterns of business that we already have, the supply chains that operate across europe, to continue to operate with minimum disruption. It is good for britain. Francine negotiations could be very short. If you have two sites that have opposite views and no one is ready to give in, they could be done in six months. Negotiations could be short, but i suspect they wont be. We should be able to agree quite easily on principles, but working through the detail will take longer. I hope that we will be able to get, between britain and the European Union, when early on in this process, a sense of where we are going. I hope we will be able to communicate that to the world. The whole process has created uncertainty. That has not been in anybodys interest. The sooner we can give businesses and consumers certainty, the better it will be for the european economy as a whole. Francine bloomberg surveillance continues in the next hour. That was Philip Hammond talking to us about how he sees the transition deal playing out. May. So heard from theresa may very interesting pitch. Shes coming up, saying she wants a Fairer Society for the u. K. , but shes basically trying to pitch business, telling World Leaders and ceos that what she wants is to form stronger relationships, stronger trade deals, with the rest of the world. We also spoke to Philip Hammond about the drop in pound and what that means as a signal for the economy. Look for that on social and on our website. Tom keene joins me in davos. We have another two hours of surveillance. We will bring you a host of guests, including the economy minister of russia and italy. Francine the u. K. Prime minister tells the World Economic forum that the u. K. Is facing moment this change and the road ahead will be uncertain as the u. K. Chancellor tells us there will be no managing expectation, Barclays Joe Staley emphasizes the concerns of business saying a twoyear push is not helpful for anyone and says it will take a long time to get full parity over brexit. After a hawkish tone from janet yellen yesterday, central bank watchers turned their attention to todays ecb meetings, speculation over the future of Mario Draghis stimulus mounts with rising inflation. This is bloomberg surveillance. Day three of the World Economic forum, Francine Buchwald with tom keene. Francine lacqua with tom keene. Brexit left right and center with the speech from theresa may. Tom three or four angles but i like what you say about theresa may and uncertainty, that is the theme of davos, measure and gauge different uncertainties and mr. Draghi and maybe a less important story, he has clarity on what ecb will do with the Balance Sheet and what ecb will do with the challenge nations including italy. Francine a little bit of complacency when you speak to some of the people in davos, i do not know if they feel they do not have the power to change anything or just waiting to see how events unfold this year. Lets get to the bloomberg first word news. Taylor theresa may has outlined her vision of a postbrexit u. K. , a champion of globalization and free trade. She spoke today at the World Economic forum and says the task will not be easy. Theresa may moment this change. Momentous change, we must go through tough negotiations and forge a new role for ourselves and the world. It means accepting the road and that will be uncertain at times road ahead will be uncertain at times but will lead to a Brighter Future for our countrys children and grandchildren. Taylor she said they could not exploit workers and avoid taxes. An avalanche and central italy has buried a fourstar hotel, i know 30 people are missing. A rescuer says there are some fatalities at the hotel. You are looking at a live shot, the hotel is in a region where earthquakes struck yesterday. And south korea, not enough evidence to keep a sense some jail, he isoyee in poised to take control of south koreas most powerful company. Donald trumps Transition Team has rejected calls for its nominee for white house to cheap to withdrawal, Senate Democratic leader Charles Schumer says that nick move any should not be confirmed after failing to pay more than 50,000 in payroll taxes for a household employee, he is a congressman from south carolina. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. This is bloomberg. Tom thank you. Bonds, currencies, commodities, a quiet moment today, i want to plow through this, more of the politics and the inauguration tomorrow. Eurodollar 106. 62 and oil not part of the story. To dr. Talk later juergen about the broader view and moments of uncertainty in davos. What gets my attention on the screen this morning is mexican peso printing a 22 earlier this pesong, 21. 94 on mexican is decidedly weak, that is the top data point this morning. Francine janet yellen spoke yesterday, this is what the markets are trying to judge just and trying to address whether five higher inflation means Mario Draghis measures are a little bit out of sync. This is the picture for pound, 1. 2 313. Tom lets do it together, derfully funny date, francine i need new glasses. Tom should i put on the sunglasses . Francine not allowed. One man does not need to do this because he has perfect vision. Maysget more on theresa speech with simon kennedy. Are we wiser about how she will convince World Leaders to leave brexit, she needs to find growth elsewhere, new trade deals, how will she convince the davos people that the u. K. Is open for business . They will try to get momentum sayingthe idea, liam fox there is 12 countries already about discussions possible future trade facts and the hope is that this will create momentum and others will come forward and do trade deals will be signed. Francine it reminds me when she says brexit is brexit but we will make a success of it. Are we closer to thinking that it will be a success as long as negotiations are not so ugly . Xo, it hadpound fallen since the referendum but up on evidence that haps theresa may is fleshing out her plan, what she outlined on tuesday is britains plan, we do not know what the 27 nations of europe who have been united in their approach to brexit is what they think, they will not say until she formally files and when they say that, the kaleidoscope could change. 247, canre in this the United Kingdom negotiate bilateral trade treatys right now on trade . Simon they are a member of the eu and customs union, they cannot do this. Tom she cannot deal with canada . Simon you get free trade with the rest of europe, terra free trade, no customs checks or bureaucracies at borders and in return you get that brussels and the rest of the eu will negotiate on your behalf, the idea being that together they can negotiate that are deals has been thrown into question of late. Francine can you flesh out a blueprint . Foxntics but when it liam says we have 12 trade deals waiting to happen, is it 90 certain they will come through . Simon because the trade audits. You have he calls them trade audits. Breach theo not rules of the eu and irritated the eu, they talking to australia, china, america, that will not go down well at all. Tom they have to be talking to them, right . Simon take cannot formally negotiate. They cannot formally negotiate. Tom how do they respond to what we have seen tuesday . Simon he praised theresa may for clarity. No negotiation without ,otification, no cherry picking you cannot have a better deal with europe than you have now. The underlying reason is because they do not others to follow written out the door, desk britain out the door. Donald trump saying that britain split is a wider problem for europe they need to get a handle on. Francine what we tried to press Philip Hammond, what number in the priority list are Financial Services went theresa may goes to negotiate to brussels . Simon a trillion dollar question. They have not had much luck from ,owning street, Philip Hammond they understand the importance that they have been very clear in saying that banks are one business they are looking after, they want a trade deal for everyone. The europeans are looking for fault lines, something to attack, the city of london is a crown jewel of the british argumentperhaps some for theresa may to downplay it. They should be careful about locking britain out, your ability to raise money or trade with britain and that is the get will she is making. A Political Correspondent writing this week that she is playing hardball and the results , she could get a great deal or end up with no deal and that is the get will she is doing. Francine good negotiation tactic as long as you are confident you can get a better deal. Coming up later on Bloomberg Television and radio, editor and sits John Mickelthwait down with the u. K. Prime minister theresa may, he will be pressing for more details on Financial Services, that is 4 30 p. M. In london and 11 30 a. M. In new york. This is bloomberg. The British Public left voted to leave the European Union, the structures and institutions but they did not hope to make us poorer at future generations to have fewer jobs and less prosperity and less growth. Lets see the longterm impact of brexit. My own view is it will not create an economic shock, whether we lose 10 or 15 basis points of Economic Growth for a time, that is something that will have a price. Francine that was just daily speaking to us earlier. Y speaking to is earlier, there was a clear says that even though he has a lot to lose because he is part of Financial Services, he wants to support the Prime Minister because they lend and it seems the u. K. Businesses, there is no alternative to brexit, are rallying around the Prime Minister to give this a chance. Tom it is the same way every year but the thing different this year is a reaffirmation of costcutting. Every single conversation ends costs, it have to cut is not news but the reaffirmation is in davos. Francine hsbc and ubs, we interviewed there to ceos and they said they are ready to move jobs out of london. Lets get to the bloombergs nest there business flash. Takata shares of crashed. Theyre looking for a buyer after triggering the biggest safety recall in automotive history. A deal will unite two of the Biggest Aerospace groups in france, aircraft engine maker saffron has agreed to buy a supplier for more than 10 billion which represents a 25 premium to their Closing Price on wednesday, zodiac shares have fallen 22 over the last two years. A report that Goldman Sachs may cut is london staff in have to 3000 workers because of brexit according to a german newspaper who says goldman may move up to 1000 employees to frankfurt and some stuff would go to warsaw, a spokesperson says goldman has not made decisions. That is your Bloomberg Business flash. The u. K. I spoke with chancellor Philip Hammond to discuss the trajectory for the u. K. With brexit uncertainty and here is what he said. What the Prime Minister talked about tuesday is the need to move forward quickly after we what notice to scope out the end the state will look like, get agreements on a practical solution or the end of the relationship between britain and the rest of the European Union and recognizing that that will take some time to implement here in until we get into the detail talks, we cannot say how much talks, we have to be pragmatic, there has to be systems in place and businesses will need time to make the transition. The clear message we are given and i think this works for britain and europe, no cliff edges, no sudden change for business, plenty of time to adjust. Francine businesses we hear about in london, new york, find idealat exactly the solution would be, the Prime Minister said she wanted that are deal, what does that look like . We have to recognize that on both sides there are political imperatives, from the u. K. Side we can no luck or except reading of movement. Of movement and from the european side, they have a position about the indivisibility of the four freedoms in the internal market. We have to work within the parameters defined by the reality of politics to find a trading relationship, a security relationship, cooperation in a broad range of areas that allows the cottons of business that we already have, the supply chains that go across europe to operate with minimum disruption, that is good for britain and European Union partners. Francine negotiation could be short if you have two sites that have opposite views and no one will give in, they could be done in six months. I suspect they will not be short, we should be able to agree quite easily on the principles but working through the detail will take longer. I hope that we will be able to get between britain and the European Union, quite early on in the process, a sense of where we are going and i hope we can to mitigate that to the wider world because the whole process has created uncertainty. Been inertainty has not anybodys interest and as soon as we can give businesses and consumers a bit more certainty, the better it will be plenty european economy as a whole including britain. Francine i was grateful to have a long time with the chancellor, his first interview of the day, he was cautious but clear and thinking and at this point because article 50 has not been trickled and negotiations have not started it is confident and that will be the messaging from the government. Tom he was talking to the london audience and not the davos audience. Francine i think it was 5050, i had more minutes with them. Tom we had a wonderful moment , Danny Juergen is one of the worlds foremost authorities on hydrocarbons and far more his classic book on the state of 20th century capitalism urged him to write a new book, talking about the commanding heights of our modern capitalism. The new capitalism in america of president drop. David lipton President Trump. This ispton wonderful to have both of you with us. I am sure you read commanding you dragears ago if that moment when you and jeff were in russia and you drive it forward, what is the stability of the world, dr. Lipton, now versus what you and jeff sachs new miniature mulcher us russia tumultuous russia . It captured the moment but now we see globalization having progressed well beyond where it was as the soviet union was falling apart and we see the technological change hurtling us rapidly into a future we can not quite see and humans have a certain capacity for adapting to change and that will be tested. I am not sure there are single commanding heights now, we will live in a xi jinping made a speech that made clear china is taking a new stronger role in advocating for globalization and we are in tom with the new addition of commanding heights, you will have to have a chapter on donald trump, how do you interpret the new certitude of the administration . They know what they are doing, within your work about humility. It is a little early to sum up the First Administration of donald trump. [laughter] few hours away from that but it is part of what david referred to, there is an accepted playbook for what globalization would be coming out of the 1990s and where we are today. It seems it is an issue you hear from a lot of the companies, what is the new playbook . What are the rules . Will it be more of a National Focus . When we were doing the video of commanding heights, the question was who was the best person to play globalization and we got bill clinton did a fantastic job. Wonder , for the david lipton first time in seven years, the its World Economic outlook without downgrading the world economy, something to be applauded but do you worry that populism and the rise of populism will impact at some point that trend . David it is good news that Industrial Production has turned up broadly around the world. We see growth rising. Globalization is being questioned a lot but it is mostly in the advanced part of the world. In the u. S. And in europe on the rest of the world as xi jinping made clear needs interconnected this, it is their future, if they will have rising Living Standards and catch up with advanced economies. There needs to be some kind of understanding between the advanced economies and the emerging and developing economies and i think that is what President Trump is saying, he has many ways of putting it but the question is can globalization still work for everybody . Francine how can donald trump make globalization work for his country and to unify the country because he is been so critical of this movement . The u. S. Is very divided as we saw in the election. What we are hearing and have heard here is he is talking about the Playing Field, the restrictions on u. S. Companies operating elsewhere will work in both ways. There is an emphasis on seeing investment in the u. S. And the whole world of supply chains which is an underpinning of globalization is not what is being challenged and that is confusing for people who are making investment decisions. Tom a washington consensus data, a salient system falling suggesting a postamerican world . Where are we . These are big concepts. Tom but we have 20 seconds. The persistence of nationstates, that is what we are seeing in europe, i do not think that part will go away and the interconnections are profound in terms of what technology does. I think there is more to gain with International Cooperation from ever before, there can be a discussion on whether the Playing Field has become tilted but that does not mean retreating from interconnectedness so everyone can gain the emerging markets are americas future export markets. American interconnectedness when we heard wilbur ross clearly run the trade dialogue for the Donald Trump Administration suggests an adversarial trade relations with china. What is the outcome of that rhetoric . The imf is dedicated to finding solutions through cooperation so that conflict does not undermine the interconnectedness. I get that the Incoming Administration wants to beliefsne the rules and that they have adversely affected the way they have played out, adversely affected the United States, it is important that the dissatisfaction in the United States is addressed but it is very important that a cooperative approach is maintained. Francine how is it not a seismic shift, if we reflect a second, we talked about this with ian bremmer, you have the leader of the free world wanting to be more protectionist and you have the largest communist country in the world coming to davos to talk about globalization, a world upside down. A role reversal and what is important to separate out the concerns that the advanced , themy population have dissatisfaction they have and find ways to address this without undermining the future and the future is one of interconnectedness and mutual game gain. Jobs is the agenda for many countries and how do you balance jobs, remarkable to have the leader of china the spokesperson , speeches you see from western leaders. Tom you are the only one in the valley who has read the he was the only one in the valley who read a tale of two cities. You are Technology First on hydrocarbons, explain your study of global and u. S. Productivity at what the new technologies is technology my friend or enemy . That is one of the things that has changed the position of the United States, the used to import 60 of the soil and now putting 5 , a change in americas position in the world 25 , a change in americas position in the world. We are seeing u. S. Production go up at much lower prices, it has recognized here that the new role of the United States, a big three in oil, saudi arabia, russia, the United States. Tom thank you so much. David lived in with the International Monetary fund. A most interesting 48 hours in washington, the inauguration tomorrow and before that, the secretary of the Treasury Steven Mnuchin faces the Senate Finance committee this morning and we will you see this at 10 00 a. M. In new york at 3 00 p. M. In london. From davos, day three, stay with us, this is bloomberg. Francine we are live at the World Economic forum in davos. Talkingthe chairwoman about europe and about the future of europe, minding the basics which a lot of people forget, europe was built 22 piece, initially a pretty has political project to make sure countries were no longer absorb in europe, she is talking about brexit, they have a huge presence in the u. K. And says they are still committed to the u. K. , one of the biggest domestic banks in the u. K. In terms of retail banking. Day of full coverage into tomorrow. Opec and russia scheduled to meet this we get to gaze the progress of their oil supply deal, the opec secretarygeneral gave us his view on the current price of crude oil. The rebalancing of this market will insure the margins of the equilibrium price. We are far away from the equilibrium price. The new joining us is russian economy minister, great to have you, we have one million questions on russia and the economy and on your currency exchange. Lets start with the price of oil because we just heard from the opec secretarygeneral, how important is it for you that levels remain at this level and do not collapse because of shale producers, what can you do to make sure this is the case . If you look at the russian oil fields, the costs are much lower, the ruskin russian high oiltuation prices helped but does not matter that much for other oil exporters. Francine because the price of oil has gone up and the budget was based on the cost of 40 per barrel, you have extra money, what do you plan to do with the money . Made by theion president yesterday not to spend additional money coming from the oil sector, the government will save it. Decreasing the deficit. There is sensitivitys here , tell us about the quality of the Foreign Exchange reserves of your nation, and general there has been a depletion, 100 oil down and down, what is the character of your reserves and where do you want them one year from now . Russia stop using that in late 2014. In 2015nce of payments adjusted to a low Oil Price Environment and last year when the oil price was up 40 we cut. Tom there was a stir the other day as president elect trump spoke of a weaker dollar in america, whatever the conditions, we need a strong dollar policy, you know about this from your work. Is there a policy in russia of a strong ruble policy . Or weak, strong marketdriven,. We need to have low impact of the volatility of oil prices on the longterm Exchange Rate which is important. Francine if you look at the ruble which fell in 2014, selling falling in 2015 and increased russias competitiveness and we heard from your colleagues in the cabinet saying the ruble is going up will hurt that competitiveness, do you agree . The main thing that impacts competitiveness is the isestment activities predictability in the environment which the companys operating. Down, increases or goes volatility margins francine that must be high you how youurrency deal with currency why do you not agree . Do you agree with your cabinet . You say the ruble has an effect but less of an impact than the predictive ability of the oil price. We need to have a stable environment which is why the government is not rushing to use the extra oil revenue. Using this savings on the government, we can have some kind of stabilization of operation on the market to boost the longterm. Tom you would like to see sanctions go away. A new dialogue between russia, some suggest President Trump will turn to russia at the expense of china, have you calculated what it would mean for Economic Growth in russia if you were to see an elimination of those sanctions . We have already adjusted to the sanction environment, what is true is there is action for growth in russia. It will be beneficial for all parties to eliminate these. Tom you have adjusted to sanctions where you do not care about the sanctions . We are not dependent on the International Financial policy, the balance of payments is heading we can finance all the finances of the economy by domestic, we do not need external financing and sanctions do not impact us that much. Francine tom is a huge fan of mathematics, would sanction relief directly impact the ruble . Of course because they might be stronger inflows going into the economies because of the opportunities if you look at the past couple of years, russian domestic bonds were the best globally and those not investing Francine Francine have you modeled about how much sanction relief, the sanctions are lifted , we do not know whether that is the case, but if they are lifted right now, how much presented fluctuation do we see in the ruble . Not much because what might change is the structural impulse, if you look at the past year, there was not much becat change is the structural impulse, if you look at the past year, there was huge flow into the Government Bond market. We see increasing. One final question, delicate, i will phrase this carefully come you came into office as the economy minister under a cloud, not you, mr. Hason has been putin been in power for years, as you see the inner offices of the kremlin, is there a new government, a new tone under Vladimir Putin or business as usual as we have seen over the last five or six years . A commitment to change the economy to make it better in terms of growth and prosperity of the people there people. Francine very diplomatic. Tom he is experienced in practice. Five more last questions. [laughter] businessman and business women, at the top of their complaints this Interest Rates and the fact they are too high. If you look at the pulse of the economy, the key story is Economic Uncertainty and not low Interest Rates. Francine what can you do to post boost growth . Inflation targets and responsible fiscal situations, these will bring stability and what we see late last year and the beginning of this year is the growth picking up and the growth might lift the price of the markets in russia. Mnuchin will testify today to become the treasury secretary, what do you need from the Donald Trump Administration . Inside need is russia not outside russia. Francine i want to focus on inside russia. Privatizationat which was the big story coming out of russia in december with , people say it will never be sold, that was not the case, does its for you in doing more privatization and what is next . We will continue, we will greater increase our stakes the next company on soft consort, a shipping company. Francine was it a success . Of course. Francine other companies. Longerterm plan and we will working on assets and determining the right time. Soft consortt is and we will do that step by step. Francine do you worry about inflation . I do not model i were the, tom keene does, inflation in russia has been a concern for many years. I worry more about Inflation Inflation expectations, we sure a sharp decline in the inflation rate we saw a sharp decline in the inflation rate but the main problem is Inflation Expectations. The government and the Central Banks will be working together. Tom the domestic cry limit, how do you establish an anchor or belief in disinflation . Time is needed. Francine what is the one message i imagine you are meeting with fellow ministers of the economy from World Leaders, what is your main message, what do people misunderstand about russia and its economy . Expectations that we were doing bad in terms of Economic Performance but the main story is that we may surprise and those who do not invest in russia will be sorry about that later. Francine thank you, very simply a put and effective, the russian economy minister. On the next hour on Bloomberg Television and radio, we sit atn with Lloyd Blankfein 6 10 a. M. In new york and 11 10 a. M. In london and and his with the finance minister of germany and after that we speak exquisitely or first to the u. K. Prime minister, she is theresa may, all that coming up. This is bloomberg. Growth in the United States is good for everybody, it drives mobile growth, people worry about. Whether it is health or environment or education, starting to give gifts, a lot of good dialogue between our foundation and their foundation about what has worked and what has not worked. Francine that was bill gates on philanthropic relations with china, what happens with bill gates, you get on bloomberg tv, the sunshine is blighted and he put on sunglasses but we are not allowed. Tom we are not allowed . Minor downstairs. To. Ine are downstairs Taylor Netflix cap its first by signing up its Record Number of new customers, the company added more than 7 million customers in the fourth quarter, more than 5 million of those were outside the u. S. Shares of netflix now trading at an alltime high, the Company Expanded to 130 countries one year ago. The wolves largest natural gas producer reported thirdquarter profits that fell 58 , missing estimates, the Russian Company was hurt by european prices that bottomed out last fall and gas supply about one third of European Union natural gas. An airlines fell the most in three months, the asian Biggest International airline came out with a business reason that fell short on details, they have been struggling to provide profits with the airline looking for ways to cut costs but its planned did not get into specifics of cutting capacity or jobs. That is your Bloomberg Business flash. Tom . Francine. Francine 24 hours away from the and operation of donald trump and thoughts about the next commander in chief of the United States from davos today. , thespecial relationship u. K. With the United States of america and looking forward to fostering that. We are in a campaign that hopefully when we win the election we do not govern as we campaign. The issue with donald trump vomit you discuss it here, it might be good for the u. S. Economy but what does it mean internationally . The u. S. Swings but you lose on the european roundabouts. No one knows how to predict the next tweet. He is managing or his policies through tweet and that has some merit because he is bringing the issue urgently and people are immediately concerned , we have to deal with that immediately and something quite interesting. We have to distinguish between what has been tweeted and the moves in the market. We are focusing on developing new medicines. Tom some of the voices of chief executive officers of the World Economic forum meeting, i see the conversation amend over the last three or four days to this strange thing of uncertainty. A perfect introduction to the next guest, peter or zach has had a storied career out of the London School of economics and brookings, original work on a lack of savings within america. Of theh director of omb white house and now at lazard. Firsts it like, your davos. Allowed toare not wear sunglasses, what do you think . I have mostly in doing bilateral meetings. Is soalmost like there much uncertainty about what will happen that many people are ignoring it for now and yet we need to continue to move forward. Tom your backdrop is prodigious mathematics, explain to our global audience that under uncertainty, there is no mathematics, no ability to set up a probability distribution in the flailing away i see is almost a rate of change of uncertainty, almost uncertainty on top of uncertainty. How do you get out of this trap . A lot of this will result itself over time result itself over the time, moving from Campaign Promises to legislation on health care and taxes where there will be more clarity, the results of the election in holland and france and germany. The world will become a bit more clear and we will see how the new president elect operates once in office. Beyond just legislation. Part of this is just, we are at a moment now and it is almost like the race has not started, everyone is around the starting line wondering how it will go but soon enough we will be running. Francine the soon to be president of the United States, what do we know about his policies, if you are a ceo, you cannot wait, even if it is five or six months, you need to act sooner. Not just his policies but what will happen, there is the congress also. On health care, it is important to focus on the congress, everyone is focusing on what will happen with repeal obama care but replace will require 60 votes which means you need eight democrats, not just what donald trump wants but what democrats would support. Idea,ublished this amendment of radical change to the Affordable Care act, doug ohman door sat with us and said there was a naivety about this among republicans, how do you advise congressional republicans, republican senators to adapt and adjust to health care with this new president . We will see this happen in realtime. I anticipate that we will have more devolution to the state and that will become the reform. Of communitytours rating, so your Insurance Premium does not mean how sick you are, that will require some stick, a mandate or continuous coverage requirement and that requires subsidies, that is not rocket science, the basic holding blocks are not that different, you may move them around but that will not change under any plausible scenario. I think what will happen is you will see more flexibility at the state level and ultimately that is what will be called the reform. Francine as an italian at a lot of europeans look to the United States and your political system as a benchmark of things that were going right, what kinds of checks and balances do you have for this president . How much appetite is there from the gop to support him until the end . In defense issue by issue, tax front, a divide between House Republicans on the president elect on the border tax adjustments so you impose a Corporate Income tax on imports and not on exports. It will very issue by issue and i think one of the Big Questions is over time, how does that relationship youve all because now they are communicating in part by twitter which is not a way to communicate with the legislative branch. Budgets, expertise on trillion dollar things we talk about, the thick books you write , the big plugin is Economic Growth, if we get imf Economic Growth lifting, some for some form of Global Growth recovery and better gdp in the United States, how much of a problem does that solve and how many headaches go away with the simple solution of Economic Growth . A lot of problems are attenuated or eliminated with Economic Growth but how do you drive that . It is not that hard, still an accomplishment that not that hard to drive growth temporarily but are you doing it in a sustainable weight is the real question and the sustainability, the phrasing is the sugar high of additional growth in shortterm it not being sustainable is a salient risk. Francine thank you for joining us. We have been speaking to many guests for their views on brexit. The clear message we are giving and i think this works for britain and europe, no cliff edges, no son change for business, plenty of time to adjust. It is ugly, it is damaging for both sides. We need to find a way, not simple, it will not be easy. It is a need. There is uncertainty which no one likes but i do believe the system will come out more rational and there will be some movements, we will use other offices at times to book certain trade but i do not believe it is fundamentally going to challenge the importance of london as a Financial Center for europe. Tom very good. Here we are at the World Economic forum. I am watching mexican peso which it a 22 print today, donald talking about a need for a weak dollar at with our neighbor to the south, an annual visit, a special visit, Michael Porter has the ability to change the dialogue in davos with one article, i have seen him do it once, twice, three times over my many visits, from Harvard Business school and one of our leading figures on the linkage between management and the people. Wonderful to have you back, we have never seen this uncertainty , how do you define uncertainty within the leadership of the chief executive officers have to deliver in the next year . Tom, there was always uncertainty at some level, where we are feeling more uncertainty giving dust given the donald trump given the donald trump situation, i think a lot of the uncertainty is about things that ultimately are not going to be structural. When you talk about leaders, you try to understand what are the underlying Structural Dynamics in your business, in your sector, in your company, and what is really hard in uncertainty is you want to hedge against uncertainty, your instinct is to hedge but we have learned that hedging almost never works. The is to do on what will really give you an advantage or will really allow you to compete, whatever happens. Francine as long as you do not show up in a donald trump tweet you are fine . Tweets nowld trump most visible to large people are employment, location of investment, jobs, frankly i think his view of this topic is very simplistic. We want foreign investment, we Want Companies to establish operations abroad because it allows them to gain market share and be bigger and stronger. Ideally, with something what companies have to do is show they are for america and there is a variety of ways to be for america and one of them is to take care of employees that are that they already have. Example to move for refocus on the career path for retail employees, that to me is a much more important step for america than whether they invest money here or there. Somehow donald trump has distracted a lot of companies from what really ultimately matters and what will be important to those companies is whim. Days political whim. Francine what is the political whim people are talking about in davos . Not only donald trump but china wanting to play a bigger role and brexit needing to negotiate, what is the biggest risk in the next 12 months . The biggest risk for business is that these two issues or three issues you mentioned are hesitancy toa invest and make commitments. That frankly is a crushing problem because the disease of business the last five or 10 years has been a low rates in investment, not investing in r d and new technology and new equipment. The scary thing about this period is that it will extend, it will lengthen the process of holding back and worrying, lets see what happens before we make any choices. Ultimately, the companies able to make choices now and do real things to affect the real competitive advantage and their business, they will win. Tom you are a great student in the history of business and the corporations, 10 days ago bill gross made worldwide headlines talking about 1920s and italian industrial policy, yesterday francine and i witnessed on this the 1920slk about and 1930s and mussolini and fiddler than ive ever heard and hitlers that i have ever heard combined, is there an effect of the zero sum of donald trump that harkens american back to the 1920s italy . I will not go all the way to 1920s italy but i will say governmenttopdown, control, we determine what business should do mindset that they have. What i cannot tell is whether it is just bluster for attention or whether it is deeply held beliefs. I think there is such a lack of inrity and sophistication the way he talks about business and trade, and the way he talks about many topics. What we have translated something fundamental to the progress of our economy into tweets. And that has been long part of the political process that he has a polar case in the political system but it is unsettling to people. I think the biggest concern i have now is not that we cannot restore some better performance in america but everybody is so unsettled that they will not make the steps necessary to do that. Francine thank you. 1920s to the there are parallels with silvio berlusconi. Tom that is interesting. Francine coming up on Bloomberg Television and radio, we sit down with the Goldman Sachs ceo Lloyd Blankfein, 6 10 in new york and 11 10 a. M. In london, this is bloomberg. Tom Prime Minister may speaks to the elite, and douglas. The u. K. Is open for business. What happens in london . They will keep their jobs. Blankfein on riskadjusted trading and a riskadjusted trump. Yous amid the uncertainty see so much, this week on the undecided. Good morning, this is bloomberg surveillance from the meeting of the World Economic forum in davos. One to from speech, day a really interesting conversation yesterday to the importance of the Prime Ministers appearance. Francine it is also all about execution. Im looking over to the conversation with Lloyd Blankfein. It is all to do with execution. Tom lets go right back to new york city. A busy day. Taylor british turkey british minister theresa may has outlined her vision. She spoke today at the World Economic forum in davos. She says the task will not be easy. Britain must face up to a period of momentous change. We must go through a tough negotiation and forge a new role for ourselves in the world. It means accepting that the world ahead will be uncertain at ites, but believing that leads to a Better Future for our children and grandchildren. Taylor may warned the audience that they cannot continue Business Strategies of exploiting workers and avoiding taxes. At least 30 people are missing. Quoted a new agency rescuer saying there are some fatalities at the hotel. Is in the region where earthquake struck, yesterday. Earthquakes struck, yesterday. This is bloomberg. Francine we are delighted to be joined by italys finance minister. We have been talking about europe, brexit, the banks, all week long. Thank you so much for joining us on bloomberg. It is the banks and how to matter how much money we put into them, no matter how much we find out about state aid, there were questions from investors in the markets. When will that end . It is ending, because there are a few crisis spots that are being dealt with. Also a important recap up operation. For socalled small banks, this is a closed deal and monte dei paschi has been addressed with a new instrument put on the stage by the government with public money and full compliance with eu regulation. Monte dei paschi is a viable bank. It is being addressed with a precautionary cap instrument. This is beginning to turn around has begin to decline, they are benefiting from the solidification over the past year. I am confident that higher growth coming down, the system will cure itself. Francine how much do you worry about Inflation Expectations in europe and the fact that mario draghi is in a very difficult spot . He wants to continue this stimulus. What does withdrawing the stimulus mean for italy . This is a problem for us. Having said that, this will eventually lift up Interest Rates over the longer term. We are managing our debt quite effectively, people of the treasury are doing a very good job, so this is not going to impact the debt service in the mediumterm. Tom the diversions between german inflation and italian inflation, that 20 years is extraordinary. Difference, the separation, and we see whether it is german inflation going up as a proxy for europe or italy still mired in deflation, are you near a Tipping Point on that divergence . Pier this is one manifestation of the fact that we need more convergence in europe. The fact that german inflation is higher than italian inflation paradoxically helps because it shows competitiveness in favor of italy against germany, who does not need it, anyway because they are running a huge currentaccount surplus. Francine you were strong in talking about the rise of populism and the fact that italy will continue with reforms, no matter what. How do you deal with brexit . If brexit negotiations are messy, is there a concern that italian growth, even more . Pier i hope it is not messy. I hope what the u. K. Wants is clearly spelled out. Just some uncertainty and confusion about what they want with the eu. The driver of growth in europe has historically been more integration and this will continue to be the case. It is up to the u. K. To decide what their growth will be. Francine thank you so much. Pier carlo padoan. Our strong preference is that britain should remain in the mainstream of european economies. That means we need to be able to trade with our nearest neighbors in europe. As long as we can get a pragmatic and sensible outcome which works for britain and works for the eu, britain will remain in the economic mainstream. People look at whats happening to other currencies and other markets around the world with confidence that the markets do work in that sterling will find its appropriate level. Did vote to leave the European Union and the institutions. What it did not do was go to generationser and have fewer jobs and less prosperity and less growth. Francine so much to talk about. Brexit, donald trump, but does it mean if you are a drugmaker . Much what does it mean if you are a drugmaker . Thank you so much for joining us. Mean for drugmakers in 2017 . The debate over drug prices in the u. S. Is not a new debate. There is a sincere and intense innovating and delivering maximum technologies which can make a difference for patients. We try to demonstrate and explain the value. Need to Work Together with everyone in the Health System to get more transparent systems serve on understands what the costs of these medicines are. Different parts of the u. S. Government pay incredibly low prices. It is different across the entire spectrum. Together to get to a sustainable position because what Everyone Wants his innovation, and make sure we have innovation, there has to be reward. Like to see is Greater Transparency in the pricing system. A report came out from berkeley which showed Branded Pharmaceutical Companies only receive about 3 of the list price but the u. S. Supply system is so complicated the reality is there are lots of different parts. When you Greater Transparency focused on what we are trying to stimulate, which is innovation to treat cancer and alzheimers and these diseases. We should not forget what the industry has done. Life expectancy if we were born 100 years ago, we expected to live about 40 years. Tom flemings,w 1928, penicillin in the british library. Weise we forgot the microbiology and the eric holcomb a years ago. How do you get the trust back that you had when we were kids . We have to keep innovating. When you look in gs k, we have 25 new medicines coming in. Tom but how do you get the trust of the public . We have to demonstrate our pricing is reasonable and affordable and work hard on access. Not just in the developing world, every country, including the United States. Francine the pound falling made to a beneficiary of exit, but does it hurt innovation . It doesnt. The only issue of concern is what is the we are a Significant International player with a big presence in britain. The pound has been a significant benefit for us. Francine thank you so much, andrew witty, ceo of gs k. It was great to hear from a drugmaker on the benefits of what brexit means. Or au had a smaller pound fallen pound, you become more competitive and it clearly does not hurt innovation. If you look at Financial Services, it is a very different situation. Lets get to our editor in chief and Lloyd Blankfein. Thank you very much. Thank you for talking to bloomberg. Brexit. Gin with you have now heard from theresa may, she was to be out of Single Market. Yours said you wanted to wait and see. You always said you wanted to wait and see. Inoculatinge always the devil ino see the details. I dont think we will need two years to make whatever adjustments may make, we make, so we are watching. We will obviously have to comply and follow it, but i understand completely at this point, why at this point, she would start with a clean sheet of paper and work from there. It, most think about negotiators dont start by saying all i dont want to be part of a Single Market. Lloyd if you are in the development business, it is much easier to start with a greenfield that it is to take an to thelding, conform foundation and the heights of the floors and refurbish it. You end up with a better product if you start over, but it can be more expensive. As you pointed out, this would not have been a position we prefer to be in, but we adapt to reality. What you said,at her position as i have to prioritize curbing immigration. You are a global bank. The Single Market is how you sell, across europe. It is almost a antigoldman strategy. Lloyd it is not. Vote is primarily a vote on immigration, so she as a politician, i think that would have to be her declared we are at the end of the day, you are correct that the financial industry is so important to the economy, it will speak for itself and that will become important and britain will have to take those issues into account. Dominant, it wont be doing that to please our industry or Goldman Sachs, it is in the best interest of the british people and the british economy to be accommodative towards important industries. There are other priorities and not every decision political decision is as important, but its not always as positive and that is what was driving this decision, was not economics, it was control of borders, issues of sovereignty. That is her set of priorities. People bidding to try to persuade you to move someplace, to where people are. Has one switch intrigued you . Lloyd i dont know if it will be 1, 1 or one that we go to, but in my earlier business life, Service Trading floors, sales businesses, Investment Bankers located in paris, frankfurt, frankfurt, milan. It was not the safest way to run our business. Technology is expensive if people are distributed. We know how to operate in that fashion, we have done it before. Which fed would be movable . It depends on how things work out, it depends on a treaty that is not even in draft. Do you think there is a possibility a strong gainer in this would be new york . Lloyd it is already a bit of a gainer. If we were operating our business as a way to maximize our global potential, we were trying to get as much into the u. K. As we could, so the business needed to be done in the u. K. , it was always done. If a business could be done in the u. K. , we started to migrate it because the time zone of europe, not just the u. K. , but the time zone of the europe of europe is the best time zone. You wake up with japan and you go to bed at the close of new york. That is the best place. If youd live in new york, it is hard to watch asia. We were on track to move more than our club global activities, mobile technology, all those things made more sense to operate out of europe and u. K. Now we are slowing on that that decision because we want to preserve our option of 20, not because we value optionally, but because we dont tell you doing value twice we dont doing things twice. Britain let the European Union, they really have not changed, the rest of europe has yet to push through the reforms that you would like to see and may indeed be going backwards do you backwards. Do you worry about that . Lloyd of course. I worry about europe with u. K. Outside of it. Europe is a cocktail and if you take out that ingredient, it weight it changes the and the orientation and i think that the british approach to business, to finance and markets is similar and britain has been doing a lot a long time, longer than the u. S. You might say that the u. S. Is a follower of the british model. What about le pen . If she comes into france, would that cause you substantial worries . Our culture is one of moderation because moderation is stability. If you represent an extreme point of view, then you have a dramatic different result in her medic changes. When one government falls and takes over from another government, but if things are more central oriented, there is much more stability as things transit from one government to another. There is always enthusiasm, reality, disappointment. Cycle to operate in a much nower brand. Thereu a supporter seems to be a lot of support in wall street for him. Ive barely take a position in u. S. Politics. I barely take a position in u. S. Politics. With brexit and trump, everyone was saying how the markets will go dont will go down. The markets have done fine. Did people get trump and brexit wrong . Lloyd i thought they would be a shock and jarring because it was so different than what the pundits were calling for, but i never thought the markets would go down. The were talking about markets. There are markets, the economy and the real. The markets are trading more favorably, anyway. If you look at the policies that trump has committed himself to, they are quite stimulative and market supportive. You look at spending on infrastructure, a lower tax rate, removing some of the regulation and buildup. Those are all quite stimulative and stimulative against the status quo, but far more stimulative than what people expected have the democrats won the election. Trade seems to be the one area where a popea of maybe having with china on trade. You, if will tell trumps antitrade, i am at odds with him. At the same time, what his rhetoric and the spokesman around him, and again, he is not a careful politician. It is hard to get nuance in 140 characters. Consistentc seems with i want to negotiate these trade deals and make them fair or more favorable to the u. S. Interest. Just as every politician will pursue his national interest. I dont fall find fault find fault with that. You would make that case to the chinese, as well . You would say this is a man you have to deal with . Lloyd i think so. There is a court of legitimacy. If you extrapolate to an extreme, further than what he it hascan find been cast in a way where shes ping has endorsed freetrade and trump is not. Currency,adjust its but it is adjusting its currency against the u. S. Dollar. The u. S. Dollar has a point of view about how the chinese currency should trade. I think the push back that is happening now is a normal giveandtake between two politicians and statesmen looking up for their national interest. I dont find anything inconsistent with that. To how much china can take on this if donald trump comes out with a aggressive position on trade. Lloyd what does that mean . People want free trade. They took the stance on taiwan. Lloyd people have negotiating positions. I think the world will be poorer and divide a smaller pie if there is not free trade backandforth. Each country has an interpretation of what free actually means. People find things the seven pages and are pursuing natural and National Interests and that is fair, to me. I see all of this as negotiations toward it and goal of getting a better deal. For their country getting a better deal for the country. Is there one particular negotiation you would like to see regulation you would like to see being change . Lloyd people being interpreted for regulation or against regulation, i just think in the trauma following the financial crisis, people wanted to make sure at all cost we never got into that situation again. If you can guarantee we will get in that situation again, ever, putting belt and suspenders and reducing productivity of the United States to the return of a Treasury Bill and a wants that and that is not good for jobs or production. It is not a shock to me that the pendulum with pendulum would swing bar in one direction and then come back. To go back and open these rules because everyone was afraid that once you have opened it up, it would be another freeforall and nobody would knew how it would come back. I think we will open it up and it is a long time afterwards and after the great depression, which was 1929, there was a 1933,ties change act of iod of and over a long per time, we legislated very quickly and we have an opportunity to religiously. Is it a liquidity thing that hurts you . Lloyd a ton of stuff. It came along and somebody said what should we do . Should we regulate capital . Should we regulate the kind of activities that people do . You take Something Like the boko rule and that purports to regulate the state of mind of a traitor sitting at a desk. Of a trader sitting at a desk. The rule says we want to be market makers, but we dont want people to take positions if it is proprietary. Taking adual trader position at a desk, a market is the total of activities of trad ers sitting at desks. That is what forms a market. What is the state relative state of mind in that . Like to see that rule go, if you would like to see that rule go, if possible. Bias of thei rule. How do you ascertain that state of mind . Extraordinary amount of recordkeeping. Benefit of cost using your technology and your systems to keep those kinds of records versus deploying those . Esources to manage the rifts how much have your regulatory costs go gone up . Lloyd substantially. You are happy with the idea of cap lloyd you should regulate the people in every industry. We are Investment Bankers, we talk to everybody about the industry. Youshould regulate if want to have much of an orioles, you want people to be nimble, you cant forecast all the possibilities in the future. You want to protect society against the consequences of peoples poor judgment. Who would anticipate the world we are in now, what phones we are going to use, virtual reality, all the ways in which things are going to develop. Sureyou should do is make you are protecting society against conferences. If you are worried, hold more capital. You have given a number of that they might hold back trump on trade and push him more on deregulation . Lloyd their background at Goldman Sachs is relevant because they have seen a lot of stuff and they have a lot of industries and know a lot about finance. Goldman sachs, an important advisor across many boards in many countries. Predecessors went into the government. Like the house of lords in britain. Lloyd it is not quite have the honorific. In terms of what you see in the direction in which the world is going, in terms of automation and finance, that is what the english people keep coming back to. There is a much bigger way of losing jobs than globalization, which is what most people are on about. Lloyd this is not our first brunch with the industrial revolution. We were coming up with Technology Platforms and is prices, making trade web, ago, these were all names all the time, and i think in our history and every other industry in the shortterm, Technology Costs jobs. Value is created, across the board. If you had taxis circling idly and then you come up with a method of making it more efficient so they are never idle, theyre showing up places and they are always carrying a passenger, see you need fewer circulating, that means fewer jobs in the value of the company that creates that opportunity that value is being created because that efficiency and away is coming out of labor and is going over to capital. The investors in the company are enjoying the benefit of Value Creation is coming out of having to pay lower cost for fewer jobs. Then you think of new services and new things to do, and those create more jobs in the future. Software take of away jobs or create more jobs because he created new fields . There is always a disruption and inefficiency as the transition is occurring. Do you see that in finance . You have invested huge amounts in technology. Is it going to be an area where you look forward and imagine fewer people . Lloyd as a result of the efficiency and the low cost being able to assess credit in ways that you could not have done now, using algorithms to have confidence, we are able to we dont have to build in as much protection. We are able to go into countries where it would not have been profitable, before. That creates more jobs in more places, for more people. Everyone of these actions, you could say will cost a job that thosee displacing, but efficiencies allow you to operate and do things you previously could not have done, and places you would have not have dreamed of doing. You look around the world, you have been looking for things to may become out of china, maybe new forces. Do you see it from places like china . Lloyd Chinese Companies do very well in china and we find ourselves competing with inside we do substantial activity in china. We would like to do more, of course we would like to do our activity in china as a joint venture with chinese when we think of investing in china, we would like to invest and own dollars to come out of that investment. Towe dont, we have incorporate that into our judgment of how much activity we will do, there. It is a two edge sword. We might do it, but in order to be highcaliber, you have to really do the activity. For the quandaries we have going into a new market is you would like to have locals that if you represent the highest caliber in of thetivity, the locals redundant before, they will not have cultivated a generation of people who are good at that stuff. Inevitably, people are going to learn that craft and get sharp in other places and in the first early generations of activity in a country, you will have a lot of expats. As local people get more opportunity, you develop local talent. You would not want your sympathies with having a lot of or sympathies are with local players, but you will not have thousands of local people doing m a if there is not m a in that country. Thank you very much, for talking to bloomberg. A stunning conversation by our editor at bloomberg with Goldman Sachs chairman, ceo, Lloyd Blankfein. A couple of interesting points, but what struck me was the abruptness of what do you do with something as symbolic as the volka rule. That will be one of the moments of trust between mainstream america and what blankfeins wall street and Lloyd Blankfeins wall street. You think of the dichotomy and the difference between wall street and the eu, a lot of these Business Models where banks and the eu are being tested, and this could just be a further blow. Any number of banks focused on washington and the inauguration, tomorrow. That gets us to our first word first word news with taylor riggs. Theresa may spoke of the World Economic forum, saying britain remains committed to free trade and said the brexit but was not a rejection of what she called our friends in europe. And remains overwhelmingly and compellingly in Britains National interest that the eu as an organization should succeed. Was safely a vote to restore as we see it, our parliamentary democracy and a vote to take control and make decisions for ourselves. Also urged governments to take account of those left behind by globalization. Opec and russia meet this week to measure progress. Prices rose 20 in the month after the cartel agree to cut output. Since then, they have fallen 5 . Traders are waiting for proof. Said to fear that having donald trump as president will not be such a great deal after all. Say the backlash over russian hacking has forced trump dictate trumps cabinet picks to take a harder line than anticipated. This is bloomberg. Staying with the president elect and the next u. S. President , we got the views of jpmorgans ceo on donald trump. It helps drive Global Growth. Bit. E worried a little tom one of the key moments seems dont question about it, trade policy. All that will be of secured, tomorrow by a hand on the bible. A lot of pomp and circumstance. Megan murphy, editor of Bloomberg Businessweek. It is always a special moment in america and nobody knows what to expect, tomorrow. Will it be a conventional speech . It is hard to imagine how it will playoff. We will have hillary and bill clinton in that audience, Michelle Obama and president barack obama. We have to remember how personal the selection was. A cast of characters we have never seen in this type of thing and finance,tudying everyone goes back to march 4, 1933, hoover over to fdr. All hell broke loose and they had to shut down a bunch of all night they worked for that evening to try to save the American Banking system. We dont have that crisis, what will be the crisis monday morning when this administration gets to work . Ofthey are already in a bit a crisis situation, just getting their nominees through. Trouble come in with a cabinet that is not full because so many peoples Financial Disclosures are being looked at. What will be interesting is in these first 100 days, what did they push for, the hardest . You speak to a bunch of executives in davos really looking at him jump starting jobs and put forward policy that will make immediate change like pulling obamacare back. How much resistance is he going to get . Where are democrats going to stop . He has a republican house, republican senate, he can push through more than a lot of people a lot more than people think. Isnt it repatriation, funding for infrastructure or building a wall . Is it repatriation, funding for infrastructure or building a wall . Expect him to get stuff done. Some kind of domestic and International Tax reform. To be ation is going big thing to look at and infrastructure is something they really want to jumpstart. That is a more difficult thing because that increases deficit spending and we will see some hawks come out and try to block that. We have a comprehensive agenda on bringing jobs back to america. We have seen what corporations have done in saying they will bring jobs back, jobs they were already going to put in america. Francine what does it mean for Foreign Policy . President elect , protectionism measures or at least policies and then you have the leader of the biggest communist country in the world showing up and down us telling us we need to be committed to globalization. One of the more surreal moments i have seen was xi saying that. We are going to have to see one message that has come through clearly from theresa may is that we dont want these trade wars. Yet we may have a trade war. Francine who said that . I have not heard one iota from the secretary of commerce or from the president elect that they want anything but a trade war of some flavor. Amended,that be january 21 . What you will see is businesses pushing forward and explaining to this administration of the problems of that would be. Tariffs, a border tax, driving down on multistate trade deals and how that would decimate his picture. He is a guy who always talked about taking growth to above 4 . It is difficult to do that if you are waging trade skirmishes with different countries. Business leaders have to get on the forefront and economic leaders to speak to him about how damaging that could be. Francine this could be a starting negotiating position. Do we give him the benefit of the doubt . Do we want to be in a situation where china is dictating the parameters of global relation to its on trade . Are we going to advocate that space abdicate that space . I dont think we want to be in a vacuum or other countries are dictating that policy. Tom i am stunned at the poll ratings. Since 1933 president how will he respond when this media, that media and a third media dutch him under a four per 40 rating nine him under a nudge him under a 40 poll rating . Policy righthis tweets in response the poll numbers. Francine Prime Minister may dictate by appearances of larry the cat. He will have to forge a consistency of policy and trust with the people. Do you seeus tom evidence of that . I sure dont, yet. He has brought some very smart people into his a administration. Hes got advisors like jamie dimon who are looking at this. He is going to have to look to his advisers to make that consistency a framework so there is some productive ability and american pop francine thank you so much, megan murphy. , bloombergater today editorinchief sits down for a conversation with you keep minister u. K. Prime minister theresa may. We are also speaking to a chinese securities regulator, coming up next. This is going to take a long time to get full clarity that the banks and corporations and people want to have. She talked about transition periods and phasing in. I believe a twoyear cliff is not helpful for anybody. Francine dallas barclays ceo that was barclays ceo. Brexit and you have to talk about the impact it has on Financial Services and what we still have not figured out when it comes to brexit and i spoke to the chancellor was where do they prioritize securities and also Financial Services . They will be talking more about that when we talk to the Prime Minister of the u. K. , right here. Lets talk china. I am excited to bring in the chinese United Securities commissioner. Thank you so much for coming on. Last year, we had a fantastic panel on china. The leaders were concerned about china. Na has gone through a very a pretty stable 2016. What is the biggest risk for this year . I think it is in the financial sector. We have had some pretty expansionary Monetary Policy over the last few years. T accumulates year, we have decided that Monetary Policy should be more neutral. And neutral. Some of these risks could be exposed. That is the biggest risk to the chinese economy. Francine if these risks are exposed in the financial, and banks, how much volatility, where exactly what it play out and what can the authorities of the government do to mitigate these risks . Our government is usually very quick in responding to any risk in the financial sector. A good example is that in december, a Money Market Mutual Fund was having a liquidity squeeze. It could not sell its assets quick enough. ,he central bank came in injecting liquidity in the market so that fund could sell its assets. That is just an example. We have our own way to deal with risk, and the whole market response is usually pretty quick to prevent that panic from expanding into the system. Your duties in china, you studied at sanford at stanford. There is no program like stanford for saying we have to clear markets. We have to get this fixed, takes it now. Explain to us within the unique chinese system, with the government of beijing and the communist party. How will china clear markets in the next one year, five years . The Chinese Market economy is undergoing reforms, opening up, it is being gradually perfected. Time, and tom that is the chinese tradition, to extend the time. Can you afford to extend out the e, given the trouble am a trilema of financial challenges you have, now . And iis our approach, think that approach still works we have 6. 5 that growth and if you do not jeopardize that growth, by ,rying to clear up the markets then the problem becomes smaller in relation to the overall economy. Way has always been to deal with risk as it rises to make sure that risk is not jeopardize growth and after a few years, we will come back to defeat that risk. Francine what kind of developments will we see in chinese financial markets, or the way you view and control risk . Financial markets, how do you see the latest developments . You talked about Commodity Trading and opening it up. Will that happen, this year . Year, there is certain accumulations in the financial sectors and we will deal with them, that we continue to open up as well. We still need a lot more Higher QualityService Providers in our system. Question,is an unfair because i know you not speak for the government. We have a Given Administration tomorrow in the United States, and invite and economic who we, Peter Navarro can certainly say is china phobic. Wilbur ross with his strong language, yesterday. What should be the response of china to these early sets of rhetoric that we see from the Trump Administration n . I only speak for myself. The Incoming Administration in , it faces atates different set of constraints. If it wants to create jobs, particularly in a manufacturing in manufacturing jobs, it has to open up. Where are the markets . It is in china. Once they are in power, they will see china has the biggest market for them. Tom does john taylor look good as the next chairman of the Federal Reserve . I have no comment. Tom very good. Francine we would like to invite you to talk macroeconomics and a little bit more about the relation between china and europe. Thank you so much, China Securities regulator commissions vicechairman. With goldman spoke sachs ceo and chairman, Lloyd Blankfein about trump and brexit. If you look to the policies that trump has committed himself to, they are quite stimulative and market supportive. You will get spending on infrastructure, a lower tax rate , removing some of the regulations and buildup and overlapping regulations. Those are all quite stimulative and stimulative against the status quo, but far more stimulative than what people were expecting, had the democrats won the election. Vote and i am not a votecularly i take that as primarily a vote on immigration. She as a politician, i think that has to be her declared are you ready. At the end of the day, as you are correct, that the Financial Service industry is so important to the british economy, it will speak for itself. Mr. Blankfein speaking with us. Look for that across all of bloomberg media. Right now, our single best chart is on the exceptionalism of Goldman Sachs. This is a chart like we saw with jpmorgan and too big to fail banking. Lows, long ago and far away, there has been a dynamic of excellence. More about Goldman Sachs and these linkages to the other american and european banks like our erik schatzker. We dragged him on set, far too early. What is the Goldman Sachs distinction . What are they going wire they not going from Morgan Stanley or eric it does not mean they are smarter than jpmorgan or Morgan Stanley. Tom james morgan would disagree. Eric sure he would. For reasons that are not entirely clear, there is bias on mr. Trumps part on goldman dna trumps part on goldman dna. It mightve been coincidental with steve mnuchin. Seen, erikouldve schatzker was at our World Headquarters pacing back and forth with no one to talk to, because they are all going to the white house. Francine a lot of the bankers are dealing with brexit. The u. S. Seems to be the natural place for they are going to have bigger profits because of the investment bank, Interest Rates going up. Eric u. S. Bankers have a deep concern over the future of europe. We heard that you just heard that from lloyd. Jamie dimon said the same thing. It is a nonzero mobility, and significantly greater than zero. I think that is what is coming through, strongest. There is enthusiasm for what the Trump Administration might do and the impact that will have tom there is enthusiasm. Eric equity, less debt capital markets. Ipos, m a. Tom we have to leave it there. Erik schatzker, thank you for your continued reported in davos. Only one statistic you need to know. To 22, peso breaks out 21. 99 level on the peso. Prime minister may boosting sterling with her trip to davos. , an important conversation, we speak with the Prime Minister of the United Kingdom. We are thrilled you are with us. We are here, tomorrow, an extra day of davos coverage. This is bloomberg. Jonathan from new york city for our viewers worldwide come out welcome to worldwide, welcome to bloomberg daybreak. Awayarkets 24 hours from aan inauguration. Heading for the potential biggest weekend losses since the election. Weaker a marginally dollar. Treasury stable. 243, your yield. Alix here is what you need to know at this hour. May under pressure. Goldman sachs of cut its london staff by 60 on brexit. Investors await the Rate Decision at 7 45 a. M. Eastern followed by Mario Draghis conference. How do