Of seriousi warns dangers ahead. Theting operations to confidence as the brexit deadline nears. Jeremy corbyn calls for a vote that could trigger a referendum rerun. 12 billion ofs outflows in the Fourth Quarter as the ceo tells bloomberg the wealth to manage Wealth Management division failed to impress. A very good morning, it is up on seven here in london. Welcome to the program. Policy chiefs and Business Leaders are dissenting on davos for the firstday of the World Economic forum, we will be live at the meeting all of this week. Francine lacqua fully in attendance is standing by for us now with a look at what is coming up. Good morning to you. Franzen it is really warm, really tropical. A nice and sweet 15. We have a slew of csuite guests. Chief ofnihan, the bank of america. We will see what they worry about, what their outlook is and we will talk about brexit trade and the u. S. Shutdown. We will be joined by the director of the London School of economics and former Deputy Governor of the bank of england and we will speak to her and all of our guests about the devils question of the day, our governments the biggest obstacle to Global Growth . Banks, looking forward to all of that and your coverage throughout the next days, i hope it warms up a little bit at least where youre sitting. We are less than half an hour away from the start of european trading. It does not look like it will warm up here in terms of the equity markets. We had red arrows across the board in asia and now we have red arrows across the board in terms of futures. U. S. Futures are also down and as we said, people are running for the perceived safety of safe haven assets like the japanese yen and the u. S. Dollar. Also treasuries. Take a look at my threeday u. S. Treasury chart, you will see a flat spot yesterday when we had Martin Luther king day so the u. S. Was closed for trading. They will open at cap to pushings piling in and yields down. They are not at such a low level, below 2. 75 . But it does indicate more of a risk off feeling in todays trade. Do you see that reflected in the gmm as well . Anna absolutely, investors getting out of equities into treasuries and out of emerging market fx into the yen and in some cases into the dollar. Not surprising when you consider we are a day after we saw the imf downgrade Global Growth and focus on europe. Into thatting conversation. This is the weakness we are seeing in asia and some of those asian emergingmarket currencies. Currencyng on the story, we see some weakness in the pound. The brexit conversation lingers. The pound is weaker, theresa mays plan b looks like plan a. And a ticking clock in the background. We will talk about the Global Growth story and the brexit story with many of our guest in davos, leaders from the world of politics and business dissenting on this was town as the Economic Forum conference kicks off. President macron and theresa may have canceled their trips to this will saps the swiss alps as trouble at home keeps them grounded. Francine lacqua is in davos and she is there with a guest. Francine we are here and we are delighted to be speaking to our you for joining us. Here we talk about globalization, urbanization, about the challenges of industrialization 4. 0. This is the question of the day, our governments the real obstacle to growth worldwide . It is i would not say governments, governments can be part of the solution. The obstacle to solving these problems as politics and we need better politics to get, we need political leaders to get people to focus on the longterm issues. And to be willing to make some of the shortterm sacrifices that are necessary to address them. Francine one of the first interviews i had with you was 18 months ago when we discussed one of your white papers, it was about productivity, getting back the displaced ones into society. Has anything changed in the last 18 months . My guest worry, so far, very little has changed, people have talked about the problems, there is a lot more diagnosis, we understand the issues better but there has been very little action and that is the biggest risk for 2019. Francine why . And people in charge are not focusing on the longerterm since they have so many issues to deal with. Guest because politicians are not focusing on the longerterm, neither are businesses. They are not investing in their workers skills. A lot of that is this chronic ism that we lament but do little about. Leadershipre we need in politics and in business to deal with those issues. Francine what kind of society will the u. K. Key u. K. Be once brexit is resolved . The moment it is the it is divided. I think we need a process of healing whereby people remind themselves what holds the society together. And think about how to make it more fair for everyone. And i think without that, it will be dangerous. Talking as weere were walking on set that people feel unsettled and if there was something defining 2019, it is howfeeling of unsettling, does that translate into how we live our daily lives and world close growth . Minouche there is some risks that we are familiar with, Business Cycle risks, Interest Rates going up and down, a country having a balanced crisis or a physical problem, those are familiar risks and the markets know how to do with those risks. And the world is not rattled by them. What is difficult at this juncture is that we have all those uncertainties but we do of thew if the old rules game applied. If we had another financial crisis, would we be able to coordinate International Economic responses . With the wto be able to resolve a major trade dispute . Would regulators across the world be able to coordinate in the case of a crisis . We are not sure if of those things and the structural and tectonic uncertainty is what is making this particular moment difficult. Jobcine does it make the of the Central Banks more difficult . It makes all policymakers lives more difficult. Decisionsto be making without being sure that the old structures that were therefore solving International Problems will work as well as they did in the past. Francine will happen in five or 10 years, do we go back to what we had or is this the new normal . Minouche over the next five years, we will have to make a set of decisions and that is either to reform the current brettones we have, the woods system, the current trade system, and everyone would agree that there are quite a few reforms that need to happen or we need to get a new system, a much more fragmented system, one which might be more regionalized and more fragmented. And less coherent. If we do not reform the current one to respond to some of the current criticisms, we risk going in that direction. Francine whose job is it to reform . A lot of western economies fall into the hands of realism one by one. What does that mean for fragmentation, are we going to have more nationalism around the world . Minouche the rise of populism comes from two things, the growth of economic insecurity, about being concerned their economic futures and the futures of their children and whether their children will be poorer than them. The second driver, issues of identity. Who belongs, how does society hold together and that often translate into concerns about issues like immigration and nationalism. I think unless we deal with those two issues, economic insecurity and identity, we will have a more fragmented world. A big part of that agenda is national and it is or National Policymakers to do with inequality, social mobility, creating jobs. Francine is that why we have exit . Minouche yes, brexit had a lot to do with those issues, economic insecurity and issues of identity. Politicians have to have the occult conversations about identity. It is a company did subject but all nations are imagined communities and we need our leaders to help us imagine what is our community. Francine thank you very much. Will hand it back to you we will have more from davos throughout the morning. Matt thank you very much, very interesting interview and someone i think a lot of people are going to be studying under her are watching bloomberg tv right now. We speak to a slew of industry names at davos as well as eric fry bald, the ceo of saudi kaser, the ceo of siemens. Dont miss that in our walltowall coverage. Now we are going to annabel and hong kong. Annabel the imf has cut its forecast for the Global Economy. In its second downgraded two months, the lender predicts 2019 will see the weakest pace of world growth in three years. Recentf the back of volatility in financial markets. Speaking at the World Economic forum in davos, Christine Lagarde warned the Downside Risks are rising. Christine even as the economy continues to move ahead as i said, it is facing significant significantly higher risks, some of them are related to policy. And this risk these risks are increasingly intertwined. President xi is stressing the need to maintain political stability amid in uncertain outlook and a trade war. The u. S. Is said to be the seeking to extradite the ceo of huawei. He was arrested on allegations related to the violation of iran sanctions. The u. K. Labour party is proposing a vote in parliament on how to vote and no deal brexit. One of those choices will be a new referendum. The times reports that up to 40 minutes of the u. K. Government could resign next week if conservative mps are banned from voting for a plan to stop a no deal brexit. It comes as to key markets announced they will move part of their Trading Operations from london to amsterdam. One trades around 15 billion a day which and another shifts most of its Equities Trading out of the u. K. There a massive downside to investing in the u. K. , an analyst said. It is almost impossible to rationally invest unless you are looking at distressed. There is masses of downside which is not quantifiable. You do not know. And the upside is limited. Annabel global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt. Anna thank you. Seeing more opportunity in italy than the u. K. Coming up next on the European Market open, we will hear from have more interviews. Bloomberg radio is available to davon your mobile or your Digital Radio in the london area. This is bloomberg. Matt welcome back to Bloomberg Markets, this is the european open. We are 13 minutes away from the start of cash Equities Trading. If you take a look at futures, it looks like we will get more of the same of what asia had red acrossand that is the board. Cap futures and dax futures both off. 5 of 1 on concern about u. S. China trade discussions as the statencern about of the chinese economy. Almost net outflows of 13 billion in the Fourth Quarter, withdrawal totals most 8 billion at the banks key global Wealth Management business. The ceo says the outflows are more about Market Sentiment than the bank itself. He spoke with Francine Lacqua earlier this morning endeavors. Has am pleased that q4 delivered a resilient result despite the Challenging Market translate into a bitter cocktail in the quarter. That is too early to talk about First Quarter. If you remember last year at this point, it was a year for environment around the beginning of the year in 18 and the prospect for the full year 18. It is too early to make a judgment about q1 but also for the entire year. Is happening in december particularly in the Fourth Quarter in general as has dented Investor Confidence but that remains at the eye level. Francine do you expect more difficult markets to continue . Early to is way too call. The outlook for the quarter or for the year. In the last seven years and last year we saw so many movements and changes, sudden changes of sentiment and outlook to make statements about how the quarter is going to look like. After three weeks in january it is way too early. Francine talk to me about not outflows and Asset Management. How big was that and will that continue . I look at the two segments they are quite a quitet, have different trajectory. In Wealth Management particularly when i look at our overall results, of course, they are not up to our ambitions and our expectations, when you look region by region we still have almost a 5 increase on a year and year year on year basis. Adversethe risk sentiment by clients, they basically took out their leverage, and that was one of the main factors. If we look at the u. S. , we have net outflows but if i look at assets, we have been performing better than all our peers in the Fourth Quarter. It looks like this is something that happened in the market, we are the only firm reporting new money in the u. S. Market. Competitiveur position has not changed. It is reflective of the sentiment that we saw in q4, that is leveraged into more people going into cash. Ceo that was the ubss speaking to Francine Lacqua. Later this morning we speak with the chairman of ubs, axel weber. Live from the Economic Forum in davos. Matt we are just about seven minutes to go until the start of trading, six minutes and change till the start of trade. Lets get your stocks to watch around the newsroom. Were looking at shell, and ubs and focusing on tomtom. A downgrade, is that right . That is right, they are down goading downgrading shell. Either over investing or over disturbing. Keep an eye on that stock at the open. Shell at the watch open. Also what do you expect from the stock . The news ison ubs, not good, the outflows in the Fourth Quarter from the wealth and Asset Management units total 13 billion, a major setback for ubs which has been the client to turn around the decline in stock it has been betting on its Wealth Management unit. , they said they were disappointed in the performance of the unit and they hope for a turnaround. Now because the markets have been so volatile. Matt we will be watching that as well. Willve news that tom tom sell over a billion dollars worth of stuff, what is the story . This is something they hinted at in september, they have been coping with a lot of competition. Everyone is using their smartphone to look at navigation. Been suffering because of that. This deal allows them to focus on their location technology, helping them cope with the gains the other Technology Giants are making. Matt thanks very much. Thanks for joining us. You can get the latest stocks stories from our Equities Team by typing first go on your bloomberg and fire the mobile app, the open in four minutes time four minutes time. This is bloomberg. Place, the xfinity xfi gateway. And its strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. Well almost anything. Leave no room behind with xfi pods. Simple. Easy. Awesome. Click or visit a retail store today. Anna good morning, less than a minute until cash trading. We are back with a full complement of markets around the world. United states back in the mix which could lead to higher volume. Generally we are seeing moves into safer havens. A little strength in the dollar. He euro is a little softer what is going on in the ecb and what communication messages they may get. Hit, downgrade of Global Growth estimates. With regards to intellectual property, and the broader trade agreement. The pound is looking weaker as plan b is looking like plan a from theresa may. We are expecting to focus on the negative headlines around global trade, the inability to make progress on intellectual property. We are without guidance from the United States. The u. S. Out of action yesterday, back today. Later. Look for changes of trade thist tuesday morning, the ftse 100 is down. We are waiting for the other markets to open. We have a bit of earnings news, ubs and the reaction there. Of wealtha result management. What are you seeing in the second picture, matt . All industryost groups falling, Consumer Staples with a healthy amount of green. From theook strong green slice there, but it is 3, barelybout. 0 treading water. Financials and energy losing water. Crude falls, and the show downgrade shell downgrade. Financials and materials leading the index down. , when theytry groups are down, the stoxx 600 or the it will fall heavy as well. What are you seeing on the move screen . Brokenhis is stoxx 600 down by the biggest gainers and losers. Seeing a peripherals business, the stock is up by 3. 8 , the biggest gainer on the stoxx 600. , air france trading higher. We see a continuation if it moves higher. Lets look at the downside. Specialty chemicals down by 11. 4 . We see considerable weakness in the bell share price. Ubs down by 4 . Matt big drops in equity indexes. Just as we saw in asia and u. S. For new yorkated as well. In switzerland, the World Economic forum is underway in davos. Francine lacqua is there with a guest for us. Joining us now is roland rudd. Francine i am delighted to be joined by roland rudd. We will get to brexit in a second. What is the number one thing in davos that people are talking about. Roland it is linked to the thing on populism, last year you had president trump, president marcon, theresa may, and all three are not here. Trump because of the shutdown and his fight over the wall which has to do with populism. The crown dealing macron dealing with protesters, and he cannot be here. Theresa may is in the thick of brexit talks. The same issue that is facing all these countries. Francine what will happen with brexit . Roland what is concerning is the possibility of a hard brexit. I would rather see a public vote. We know things we do not know three years ago. It seems like to organize it, how many months the unique . Roland the whole thing could be done in two and a half months. We knowbviously what remain is, what stay in the eu is. And you have a doable form of brexit, and that is up to the brexiteers in parliament to decide what form of brexit they want to put on the ballot. What you cannot do is have fantasy brexit. You see the problems with fantasy brexit, you cannot deliver it and that is the problem theresa may has now. Francine what is the question now, do you want a no deal brexit, do you want to remain, or do you want a certain type of brexit . Roland it is not for to say, because i do not want any form. You have to have theresa mays deal. This norwayve eea, option, or you could have wto terms which would be a disaster. It is up to parliament to make that decision. Francine what are the chances of a second referendum . Roland i think it is about 50 . Francine i was saying 15 . You think 50 . Labour absolutely, the party is going through its motion right now, they said the public vote, and that is what a number of senior people on the labour front is trying to push. It depends on how many tourists deported it is doable. The market does not believe we will see a no deal brexit. Do they have it wrong . Roland i do not think they have priced in enough of that possibility, it is a real possibility. Theresa mays statement, she could have ruled it out or asked for extension to article 52. What a lot of people are upset about is that she is running down the clock on purpose to say, either you support my deal or there will be no deal. Francine it would be the consequences of no deal would not be a choice. Roland you can vote on the amendment to let that be tabled and ensure there is no deal. It is taken off the cards to make sure that Parliament Says we will not have a no deal brexit. At the moment, the government is not doing that. Francine how would that go down . Roland i think people understand we are running out of time to sort this out. I think they would be supportive of an extension. I am not saying recoding it, but we could do that if we are unequivocal about staying. You have an extension, you need Member States of the eu to say yes, we want to extend. What is the likelihood of that . Roland the key thing, if we this noing to manage deal brexit, europe would be right to say no. If we are extending because we will have a general election, or another public vote in terms of a peoples vote, they would definitely say yes. Francine is theresa may the right Prime Minister at this moment . Only be thewill right Prime Minister if she can reach across the party divide and think about the 48 as well as the 52 , and in doing so, try to do something to heal this process by putting it back to the people. There do not seem to be any fruitful negotiations. Is ad her plan b reiteration of plan a, and that will not work, it went down to the biggest defeat ever. Francine what if she gets concessions . Roland i just think that will be enough to get the deal, it is more fundamental than that. Deal, item with her allows on trade with the eu, but back theot in any way demands of those who voted for brexit when they thought they were taking back control. The deal makes clear we have to cede a lot of control. Francine are executives ready for a no deal brexit . Roland they absolutely are not, and they are flabbergasted this could be a possibility, and they are looking this week to the government to rule this out. Francine what would happen if the big chief executives are not ready . What is march 30 like if there is an accident alexa . Accidental exit . Would be pinched soon, and the economy will contract i ate percent. By 8 . We will have a problem in terms of urgent supplies with food and medicine. The rest of the world is amazed we are having this conversation. Francine people must be working on this. Roland only in the sense that they cannot believe this is a possibility, and it would be easier to rule this out rather than say people should spend into gameplaying how this can work out. Francine roland dacre rudd, thank you for joining us here. He is the chairman, rlm finsbury. We will be speaking with tijane thiam. Anna lots to come on the banking story. Saying upt of brexit, to 50 chance of a second referendum. The market is leaning toward a softer brexit. We will see if they are wrong. Says plan b rudd looks like plan a. A conversation with the ceo of Credit Suisse i had, Credit Suisse ahead. Ubs, after reporting 13 billion weighing on that is others in the Banking Sector. We will talk about that next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 13 minutes into the trading day, and equity indexes are down across the board. 0. 25 . E drops, about coming up later today, we will speak with the ceo of saudi aramco. That conversation from the World Economic forum in davos. One of the most important voices and globalies, oil, markets. You do not went to miss this interview. Our top stock stories, lets go to annmarie hordern. We have to begin with ubs down more than 14 down more than 4 . 8 billion for their key , and a company citing what is happening in the volatility last quarter and geopolitical tensions, and trade tensions weighing on that. 4 foride, more than logitech, they also raised their outlook for 2019 between 9 and 11 . Hugo boss up more than 3 . The fastest sales growth in four years, citing key markets, china, u. K. , and france for strong demand. Thank you very much. It markets opening slightly lower. Latestrs digest the batch of headlines on Global Growth and trade. From our team in singapore, great to have you with us. I read plenty of analysis putting this in context about the size of china, the extent to which we sell the downgrade from the imf, it was not much that much. Good morning. With new york on holiday. There was not much for them to trade. The imf report got a bit more prominence it would have otherwise. The Group Downgrades are not huge. People are surprised how much they knocked europe lower. That is what caught peoples attention. Report about the chief Financial Officer who will be extradited to the United States from huawei. We saw s p futures trade lower on the back of that. Issue thought the huawei was behind us so they are surprised to see it come back into focus. The trade deal is not done yet and it could be a hindrance between United States and china. What people want to know is whether or not donald trump will be willing to separate a key issue, the trade import on one side and intellectual property issues on the other. If he decides to merge them together it could make negotiations difficult, and that could become a headwind for Equity Investors in the weeks ahead. Anna the good news matt it is cheap to buy safe haven assets. Yen is 110 for a dollar, and you get 2. 75 for buying u. S. Treasuries. Why havent safe haven assets bended further . Why havent safe haven assets been bid further . Talks did bojome may be hawkish lee give notice this negative rate policy they have had for a long time. They see a window between now and the end of the year. They will increase the sales tax and want to get this out of the way before that hits the japanese economy. We may get a hawkish bank of. Apan tomorrow if that is the case we may see the yen get stronger. The market is unsure about where to go, but the american markets will reopen and we will get a better picture. You will see yields heading lower. We might get a few more clues. A quick word on the pound, we see it weaker this morning, down by 0. 2 . My colleagues here asking why the pound is not getting more they boost on the headlines on tabling votes that could lead to a second referendum. M a market perspective, right, they might not be used to Jeremy Corbyn or what is incentives might be. Party own with the labour he does not have enough those to bring this forward. In fact he is out there now the public domain, people have to take it seriously. We see the threat of ministers leaving the conservative party to go to the labour side and it becomes a more realistic opposition. It will have to be taken seriously. There are so many balls in the air, we have a vote next week, there is a risk we get a hard brexit. There are so many possibilities. It is becoming difficult to trade sterling. Matt thank you for joining us, our bloomberg mliv strategist. You can reach out to us and the mliv team. Another hint of our davos to thee, we will speak chairman of j. P. Morgan, Jacob Frankel joins us at 10 00 a. M. U. K. Time. He knows what he is talking about, and a great person to listen to what it comes to International Markets and the Global Economy. Lets look at the sectors on the move 20 minutes into the trading session, and see if we have any gainers. Travel, and estate, leisure rising on the stoxx 600. On the downside, banks, resources, oil and gas. This is bloomberg. Anna good morning. 23 minutes into the trading day, a negative session for European Equity markets, down by 0. 3 . The labour party is backing a plan that could bring a second referendum. Motionsorbyn proposing to avoid a no deal outcome, one of which could trigger another vote. Joining us is londons bureau chief. Lets talk about what theresa may told us yesterday. Government giving us their latest updated plan. Plan b looks like plan a, but the clock is ticking. There was a lot of tinkering at the edges but no substandard change. No substantive change. Significant things she said, a general election would not be right at this time. I think that is significant going forward. Suggestsof changes Prime Minister may would Like Parliament to take control at this stage. The failure to make substantive changes suggest there may be a strategy were she will say she did what she could, but parliament took a choice that did not agree with hers. Matt what amendments will we see . Lew between now and january 29 . Three,ill see two or cooper is giving the Prime Minister until saturday, and if not she wants parliament to take back control and put forward options. Reporting ministers in theresa mays government, 40 ministers up to resign. They will struggle to get a deal done that parliament can agree on. Next week we are looking at the labour party suggesting everyone has unofficial votes and options , one of which is the second referendum. Roland rudd was talking about a 50 chance of a second referendum, something he has campaigned for. Options, of the party policy,r and what they are trying to do is get cross Party Support to get it through. It would face a struggle, and theresa may says she does not think there are enough votes for a second referendum, and it. Ould create problems they need to be conscious of that for a general election. Matt thank you very much. Londons bureau chief on this developing and exciting story. What will happen in parliament . What will happen in brussels . How will this all end up . Will it be done by march 29 . We will get more on brexit from davos. Will be joined by the editor of the evening standard, george osborne. This is bloomberg. Matt 30 minutes into your trading day. Fleeing the risk rally, european stocks fall after the imf cuts its forecast for Global Growth. Xi jinping warns of serious dangers ahead. London loses out, trading platforms are shifting operations to the continent as the brexit deadline nears. Jeremy corbyn holes for a vote but could not Jeremy Corbyn calls for a vote. 13 billion dollars of outflows in the Fourth Quarter, and the ceo tells bloomberg the Wealth Management division failed to impress stock drops as much as 5 in early trading. Welcome to Bloomberg Markets european open. I am matt miller in berlin alongside anna edwards in our headquarters in london. I want to get out to davos. Policy chiefs and Business Leaders are descending on the small swiss town for the first day of the World Economic forum. We will be live there a week. Francine lacqua is standing by. Francine we have plenty to come up from the World Economic forum here in davos. I am speaking to many chief executives. Up. Ane thiam is coming and we will speak to the chairman of ubs and bank of america to figure out what brexit means. We will talk about the u. S. China trade, is it a slowdown, we will talk brexit. We will shortly be joined by andrey l. Kostin, president , vtb bank. And we will speak about the question of the day. Kostin also ask mr. About russian sanctions. Anna francine will be back shortly. Lets take a moment to focus on the markets and the trading day we have here in europe. Equity markets looking for guidance from the United States later. In europe, fascinating stories, hugo boss up by 5. 5 . Air france and some other Airlines Make some gains today. By 3. 4 , they guided higher this morning. Lets look at the downside, interesting stories coming in the Banking Sector. Down. Deutsche bank, and other big businesses falling. A move lower in the Banking Sector as a whole. The biggest fall 10. 2 , derivatives contracts, we heard about that. We continue to see that show up on our screen. This is the brokerage business group, they have refreshed their guidance and get a confident outlook. Thatarket is selling off stock today. Lets get a Bloomberg News update. The International Monetary fund has cut its forecast for the Global Economy. In a second downgrade in three months, the lender predicts 2019 will see the weakest pace of world growth in three years off of weaker demand across europe and volatility in financial markets. Forum inrld economic davos, Christine Lagarde warned that Downside Risks are rising. 13 billion in the in a sign the, worst may not be over, the bank warned increased volatility, protectionism, and geopolitical tensions could weigh on client activity. The ceo says outflows are more about Market Sentiment than ubs. If i look at the u. S. We have net outflows, but if i look at investor assets, we have been performing better than our peers. It looks like this is something that happened in the entire market, we are the only firm reporting money in the u. S. Market. Competitive position has not changed. It is reflective of the sentiment we saw in q4, less leverage and more people going into cash. A meeting of top chinese officials, president xi jinping said they need to maintain political stability amid an uncertain outlook and a trade war with the biggest economy. The u. S. Is said to be seeking to extradite the while wang ceo from canada. Huawei ceo from canada. Global news, 24 hours a day on air and at tictoc on twitter, powered by 2700 journalists and analysts in more than 120 countries. Bloomberg. Matt thank you very much. Lets return to the World Economic forum in davos. Francine lacqua is there joined by andrey l. Kostin, president , vtb bank. Francine i am delighted to be joined by andrey l. Kostin. Thank you for joining us. It you have been coming to davos for 23 years, and you almost did not come this year because of sanctions. Did it curb your style . Have not seen any changes, but it is business as usual and there is no good reason for russians not to come to davos. We are not under european sanctions. Francine did they say you cannot come . Saying top management is for compliance and legal services, but then on the top level we thought different. Francine who are you meeting with this year . On the my focuses are chinese and the gulf, not so much americans or europeans. Francine is it more difficult to do business being a russian businessman this year . Andrey yes and no. Is 90 ofd, our bank our business in russia. Have branches in shanghai and other parts of the world. Sanctionser hand, the do not help, and it creates problems and difficulties for us. Change the circumstances so we have to adjust, and conditions for our activity. Francine that means more business with china . Not necessarily, we are working with arab countries, biggest investors in russia. Our bank made a lot of transactions in india. Francine you said the u. S. Crossed a redline when they targeted you. We may a nether see another round of sanctions do you think you will be in the crosshairs . Andrey i do not know, it is hard to say. I was punished not for my careful, we are very not to give any reason or justification for these. Policy, thatlobal is maybe the division inside the United States, where we see the growing conflict between the congress and the president. We are hostages of the situation. Francine do you have insight on what russian banks could be hit . We do not have any insight, we do not have access to any information. We just have to wait and see. I hope there are no further steps. I think it will affect the general situation not only in russia but around the world in the financial sector. Francine how painful would new restrictions on russia be . Andrey it depends on what the restrictions are. Francine what is the best case and worstcase scenario. Andrey we do not know. , howve some plans for this we can continue our business. Years, passedfour the introduction of the first sanctions, it showed the russian economy is surviving the sanctions. That years ago it was said the russian economy will be torn to pieces, but it did not happen, we continue to work with reasonable economic matt welcome back to Bloomberg Markets european open. 45 minutes into the trading day, we are looking at losses across europe, not huge drops like we saw in asia overnight, and not as bad as u. S. Futures are indicating. Markets will open in new york in a few hours. Back to switzerland to the World Economic forum in davos. Is two degrees warmer than a half an hour ago. The World Economic forum in davos with an exclusive conversation with Tidjane Thiam, ceo, Credit Suisse group. Thank you for giving us some of your busy day, what are the markets looking like . It seems that the markets and volatility have heard some in Wealth Management. It is difficult, you haveee the results, things gotten better since the beginning of the year. 2019 is starting better for us. We can handle decreases in revenue. Thank you for it was different q4 was different for us. Confidence. Of we have dealt with our major legacy issues, and there is no cloud hanging over us. It is significant and we are pleased. Are you worried a client outflows because of market volatility . Overall, management has been resilient. We talked about it yesterday. Changed. Aterial has we gave it detailed guidance on q4. Any significant deviation we would have to tell the market. Francine how can you compete with blackrock when it comes to Institutional Investors . Tidjane we are not really competing with them. Progress,de excellent we started a few years ago and have been successful, the resilience of the assets. We have a global relationship with our clients were we provide Investment Banking and Wealth Management. It is a strength in these difficult markets. Francine you are expecting more tempered markets in the First Quarter . I think one thing we can learn from the last 12 months is any forecast is tricky to make. We take a cautious stance. Lowcost, low risk, flexibility, so we can pick up on any outside. Benefit, butady to a Strong Capital base, we can deal with a downturn. Francine what is the biggest risk in 2019 . Tidjane i am afraid to say it is politics. Country is ang a more challenging job than ever before. There is a lot of thinking on how business could be disrupted. I am not certain but there is the same level of how politics is affected by technology. This is a new world. Francine do you think governments are the real obstacle to world growth . Rude, buthat would be i was a Political Uncertainty does not make our job as Business Leaders easier. There are a few things many of us believe in, free trade, stable frameworks, probusiness policies. I believe in the longterm that is the way to generate growth honorablehe more portions of the population. Policies that are being advocated are subjected to the shortterm but have longterm implications. At thee when you look could economies of asia that you have been optimistic. Is there a concern that if stimulate inwards they leave out growth the slowdown in from four years ago they explained they would transition from an export led infrastructure to a more consumer oriented model. Important to reform the welfare system. If you look at chinas economy, the Health Care Sector is booming. It is a mix of the old chinese economy retrenching, and new dynamic supported by the consumer, and that is the secret to longterm growth. The chinese economy is moving in that direction. Longterm, we are not worried. Shortterm, we see slowdowns in asia. We tie to have a continuous strategy. Francine what is Client Sentiment like overall . Tidjane it is variable. September, and in japan, the sentiment was negative. We my clients said felt that coming. There is an improvement. A lot of indicators are lagging. Sentiment is the leading indicator. See sentiment turning negative before the numbers, and now you can see sentiment stabilizing before the numbers stabilize. Francine what will happen with brexit . Tidjane i was hoping you would not ask me about this. I have always said on the record i believe it is in the long term interest for the u. K. To stay in the eu. , itreferendum has happened is up to Political Leadership in the u. K. To manage this. All we can do is prepare for the , and we have been working hard to get ready for march 29. Francine how money questions you get on brexit a day . Tidjane it depends. More in the last weeks people are concerned. Managecan do is help them, and be there for our clients. And have the capital to support them is crucial. Francine what do you need to make your life easier and 2019 . Support from shareholders, regulators, governments . 2019 is an important year for us, it is our first good clean year. We do not have restructuring costs to bear anymore. We refunded our most expensive funding. We have a huge tailwind from that, and we do not have a restructuring unit anymore. Factors are a big tailwind , and we are focused on serving our clients, and pleased to be out of restructuring and to do a buyback so we can return capital for our shareholders. Francine we will see a chief executive who wants to grow the bank . Has anything changed on your strategy . No, we are staying focused on management and longterm growth. One thing we have been is consistent. Year boring to come back from year to tell you the same story. Are leading the same strategy. We are very well positioned. Francine i feel like every january i ask if where we will see european banking consolidation. Appetite. There is no tidjane the appetite is there. From everybody in europe, because everybody sees we are maybe it is because of environmental and structural factors. People see there are structural impediments to a better performance in europe, but those are difficult to address, the notions of banks getting bigger. A lot of people think banks are already too big. There are political issues there and regulation. Lows to capital requirements, until we have a more level playing field, it will be difficult. Francine do we need in market first and then go crossborder, and what is the catalyst . Our strategy has been clear, to focus on switzerland. One of the best managed economies in the world, we do very well. We project ourselves in parts of areworld where there profitable opportunities, and that is where we will see emerging markets. That strategy has worked for us. Francine how much is that linked to the Monetary Policy of the u. S. . \ tidjane there is clearly a correlation. Drawn by low Interest Rates, that is coming back now to , ofte issues, but longterm growth of the middle class, we believe in emerging markets. , thanke Tidjane Thiam you for joining us, braving the cold. More interviews from davos throughout the week. It is only day one. Matt thank you very much. That interview with Tidjane Thiam is always a highlight. We have a lot more to come, the biggest names in finance, including philipp hildebrand, vicechairman of blackrock, the chairman of ubs, and brian moynihan, the ceo of bank of america. Stay tuned for that. Syngenta, and the ceo of saudi aramco will also join us throughout the day. Anna that is it for the european open. 0. 8 thise down by morning, waiting for guidance stateside. Plenty more to come from davos. This is bloomberg. Francine gray clouds on the slopes. Davos kicks off concerns about the Global Economy worries and political risks are back in full force. Bankaul shares sink as the announced funds in the third quarter. 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