Transcripts For BLOOMBERG Bloomberg Surveillance 20200123

francine lacqua will be with us from the world economic forum. if you look at g10 currencies, the aussie, the best performer is pulling back on bets on interest rate cuts. a signal from the bank of canada on easing. central banks even as we have ripples across the market because of concerns around the coronavirus. speaking of the impact, in the asian session we saw weakness, stocks resuming their decline with chinese stocks bearing the brunt. u.s. futures have been more contained, they were lower in the asian session. touch 1.70. will we get there on coronavirus risks? oil is extending declines from a slowdown. brent at 62.45. we will hear from thomas jordan from davos later this hour. let's get the bloomberg first word news from new york. >> the spread of the coronavirus, china is locking down a city of 11 million people. officials halting travel from wuhan. today the world health organization is expected to decide to declare a public health emergency. in the u.k., a step closer to leaving the european union. the brexit deal goes to the queen for her signature. the agreement will be ratified by the european parliament, setting up a transition for the u.k. that will last until the end of the year. its first priority on the trade .ront, a deal with brussels the comment comes as a surprise to the u.s. treasury secretary steve mnuchin said he was disappointed and added, i thought we would go first. the impeachment trial of donald trump, his defense team is confident of acquittal. willf his lawyers says he continue in office, but how is the impeachment hitting him? mike pompeo says barely. >> it has not,, it almost never comes up. importanttoo many things going on. we have good friends and allies, they see the noise in washington, but it is not something they think they would raise. >> global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. thank you so much. let's get to our top story, chinese stocks closing lower in the lunar new year with concerns on the coronavirus. the outbreak is spreading and wuhan is on lockdown. trip.com spoke about the impact. >> i think the hospitals and communities are better prepared compared to the sars. we are working with doctors in the industry. it was announced if our virus willo have the cover the costs for the cancellation changes and delay of their trips. the head of bloomberg's health team joins us from hong kong. there have been a lot of conflicting developments. tell us what we know for sure in terms of the spread of the virus. it is a tense time in china, hundreds of millions of citizens are going on holiday tomorrow and making trips across the country. loose, 17irus on the deaths so far. china is taking the dramatic step of sealing off the city of outbreak began. this is a city of 11 million people, bigger than new york. they are taking steps to control this outbreak. nejra: at the moment the world health organization has delayed a decision whether to call this a public health emergency on an international scale. makes that designation, how will that change things in terms of how the virus is managed? makes thatho designation, it elevates that to the highest levels of emergency globally. in terms of what china is doing, china is reacting at the highest level. on whaty not be impact china is doing. there will be more global pressure. there will be more demand for information from china. haltn expect to see travel especially people coming to an going from china. that will have a big impact on the economy. nejra: thank you so much. coming up from the world economic forum, we will be speaking to an amazing lineup of top executives. here on bloomberg tv. do not miss our conversation with the greek prime minister and u.s. commerce secretary wilbur ross. this is bloomberg. ♪ francine: economics, finance and politics, this is "bloomberg surveillance." i am francine lacqua hearing davos. canada's finance minister says signing off on the north american trade agreement is the top priority for the government when parliament resumes next week. neau.ng me now is bill mor do you get asked about this? are, it depends where you in parts of canada in british columbia, i get asked a lot, but canadians are happy to know people want to come to canada. francine: will the trade deal be signed off? majority overwhelming of canadians are supportive, and we will move back into parliament. it will be one of our first orders of business. is there anything you worry about? bill: we always worry about the global economy and the challenges that might be around the corner. from our perspective, making sure we have a strong trading relationship with the united states and mexico is job one, and that is why we are getting on this first and foremost. we will manage the other risks, the risk around household debt. francine: can you fix productivity? bill: we have to try to get at the things we can get at. we have a focus on worker training. we are a country that embraces immigration so we can deal with the challenging demographics. those are important building blocks, and we are looking how we can make the regulatory framework more advantageous. we want to keep improving. francine: what will globalization look like in five years? last year was a different mood, but this year i do not know if you can say we have reached peak globalization? bill: i think the challenges we see around global trade are things we need to keep working on. we were encouraged to see the u.s. and china get to a good phase one agreement. they need to continue working, we are all pushing for that relationship to be improved. there is ongoing work and other issues we need to work on together around the world. we are talking a lot about the need to deal with the climate challenge, and that is an issue, but we cannot take action just in our home country, we have to do it around the world. francine: if there is a downturn, will there be the same level of commitment? bill: i think we will have to do more than one thing at the same time. we are not looking at a benturn, but we need to prepared for those challenges. as i look at managing our finances, i have to make sure we have the capacity to react to an issue. oilcine: can canada be a producer and leader on climate change? bill: we think we need to show canadians we will push forward , andin terms of climate adaptability for that challenge, and at the same time be responsible in the oil and gas sector. we are pushing our industry to be more responsible. we think that is working, it is an ongoing challenge, but our industry has been successful reducing carbon intensity of the product. that is the way we need to move forward. francine: will canada be producing oil in 2050? bill: i cannot predict the future. to the extent our industry can get more effective at reducing carbon emissions, that will enable them to be a better part of the world energy scene. at the same time, canadians want for carbonus reduction and that our consumption is in line with our goals to reduce our footprint. francine: what qualities and skills do you need as the bank of canada governor? bill: we have had a great governor the last seven years. the process now is going on to look at what the next governor should have as their key skills. obviously we continue to need someone with deep expertise, and somebody who is able to get the confidence of the market participants, an effective communicator. i am confident we have talented people that are potential next governors, and i am looking forward to that choice. francine: in the next couple of weeks or months? bill: the process is going on now. i expect the current governor's term and in june, so that is the end of the timeline. hopefully we will get to it in advance of that so people understand where we are going. i look forward to working with the board of directors with the bank of canada to get the solution. expecting toowe much from central bankers? .ill: we have to be realistic their ability to be effective in the face of challenges is different than in the last real challenge, so that is a reflection back on people like me. in canada we are managing our fiscal framework well and reducing debt each year. tohave a good balance sheet start with. it makes us resilient in the face of challenges, but recognizing the world today is not the same as when rates were at a higher starting point. francine: doesn't mean you can cut spending? what we see is canada is taking a responsible approach. we are investing in the future and infrastructure, in canadians so we can have middle-class anxiety as a real issue we can address. our approach is to make those investments, reduce our deficit and whetherry year, you are a rating agency or someone looking at our ability to deal with financial issues, we are in a particularly strong position. i would argue the strongest position among g7 countries because of our strong balance sheet to start with. francine: how will the u.s. election be a game changer? bill: as canadians, we are very focused on what happens south of the border. good have developed a working relationship with the trump administration. we will have a strong relationship with whatever administration is in power. we will watch, and most of our tv comes from the united states. it is a live debate among canadians. my job is to work with the team that is there. francine: we have had a lot of coverage of the coronavirus that is spreading. we do not know what it is or how bad it will be or whether it is containable. ?ur people talking about it do finance ministers get on the phone to talk about it? bill: on that front it is too soon. we have not had incidents or concerns and canada. i have not been speaking to my counterparts, but i can imagine we need to stay on top of very real issues like this. there is a level of and zaidi, but i think our health agencies are working well to contain this challenges. francine: the cane -- the canadian finance minister joining us, bill morneau. we will speak to the chief executive of the swiss drugmaker. and after three decades of growth there are clouds on the horizon for australia. and the devastating wildfires. those interviews are later in the hour. this is bloomberg. ♪ >> this community does not just want lower rates, it wants certainty and clarity. >> it is a problem for the banking sector. >> i have a hard time believing they will do more negative. >> the more uncertainty you have. >> the longer you keep that policy, the more side effects become important. >> when you have zero to negative interest rates, you will have bubbles. cyclical, others are more structural. >> you want to ride that wave, but keep your eye open for a correction. youhis cannot be the way can manage the real economy. >> one should expect rates negative are not to stay low. >> my expectation is this trend will move toward zero rates and some positive rates. those were some of the comments on the negative rate environment by banking executives at davos. lagardeme as christine fires the starting gun on the ecb strategic review. annmarie hordern has the details. >> following today's meetiunng, the biggest ever strategy review. inflation is stubbornly low. the ecb will tweak the strategy to give equal weight to too low and too high inflation. legacy was tooe much inflation. the ecb has policy tools that can be under review. the central bank is relying on negative rates, quantitative easing. moves ise boldest favoring the green bond. in qe1 could be discouraging bonds. these are seen as being resisted by colleagues. everything is about timing. some officials doubt the review will finish by the year's end. notice how long it has taken the fed which is still under review. francine: thank you so much. we are in davos all week for the climate is the top theme. the two key themes are plastic waste. we are making significant efforts in trying to show a strong commitment to make all of our packaging reusable or recyclable. we are exerting a lot of effort with plastic waste, and then co2 emissions and greenhouse gases. commitmentve a 2050 to be at net zero, and we will be issuing later this year a more detailed roadmap how we intend to get there. we are seeing more consumer interest and interest from financial markets. that is a good thing because it means you get rewarded for the efforts you do in that space. francine: when you look at the world economy, is there a danger that if recession hits that green emissions are left behind? >> the momentum has been reached where it is here to stay. that tipping point is already here. i think it will stay with us. it should not be something that is cyclical. it is not cyclical when it comes to our commitment. economy for robust the rest of 2020. francine: you are the perfect barometer to understand where demand is. where do you see your strongest regions? >> we see a robust economy in the united states. the message the president's giving. we see good volume growth in europe. for the rest of the world, all the maximumnot at speed but robust and strong showings. francine: that was the nestle chief executive mark schneider. coming up we will hear from thomas jordan. this is bloomberg. ♪ rancine: economics, fine, politics paired let's kick it up with your i spoke with thomas jordan, about the strength of the franc and the e.u. minimum exchange. over thee have seen last couple of months that the swiss franc is strengthening. also the willingness to intervene when necessary on the forex market. francine: how much more can you intervene? that iseverything necessary. we have to maintain price sustainability in switzerland. we are looking at the market very carefully. monetary policy in switzerland is determined both by interest rates and by the exchange rate, so we are looking at both, and if necessary, we take the necessary decisions. the u.s. has put you on a currency manipulator watchlist. does that impact your ability to -- thomas: know, we have to explain the situation, that the currency is overstated by the with the statistics are set up. there is also very low inflation in switzerland. it is necessary to use the instrument to maintain a reasonable monetary policy in switzerland. francine: you said you were talking to the u.s. do they understand your perspective? thomas: we explained it very carefully, and they are very understanding about the specific situation about switzerland. francine: does it worry investors if the u.s. -- i don't know if you took calls when it happened on the 2020 manipulator list. thomas: we can explain that very well. we do not manipulate currency, but we have to intervene in order to steer monetary policy in switzerland. it is important to avoid that the swiss franc becomes too strong so that we have a deflation environment in switzerland. francine: there is an open dialogue with treasury e? thomas: there is an open dialogue with treasury over the specific situation. francine: we have seen the spread between government bonds actually widen. what is happening? thomas: from one month to the other, in both directions -- what we have, of course, is a very much smaller interest rate differential today than it used to be, and this is exactly one of the key reasons why we have negative interest rates in switzerland. francine: under what circumstances do you cut interest rates further? thomas: we always do a cost-benefit analysis. we have to cut rates if necessary, but there are side effects. so we have to look very carefully at what is necessary, we have to weigh the cost-benefit analysis in a risk benefit way. was thomas jordan speaking to me a little bit earlier on. let's switch focus to one of the biggest banks in the netherlands. my next guest has increased profitability at abn amro. --ter authorities opened last year authorities opened investigations into money laundering. you so much for joining us. how much longer will money laundering still play some of these that plague some of these banks -- plague some of these banks, even yours? hope this is the last moment in time. we are working very much together now with authorities, all the banks in the netherlands, but also ross europe, with authorities -- also mores europe to have utilities within this problem. francine: where is the problem? that we are not reporting them? >> some clients got in that should not have got in. that can be all over the place, and it is not -- the criminals quite smart, so it is not easy to cope with. francine: will the same issues be plaguing the banking sector in three years? ? no, i don't think so. definitely it will not be easy, but i don't expect this kind of investigation in three years' time. francine: how much of a headache is it for the banks? >> quite a headache. below zero, like in davos. that is not good for interest rates, for banks to cope with because the people who deposit money, especially smaller accounts, they do not understand whenyou give them money you ask money from them. so in other areas i don't know if we will go to a more zero or a positive environment like the u.s. francine: are policymakers understanding that? the americans want negative rates, europeans want higher rates. kees: let's talk to some european banks now. that is not a good place to be. do central banks understand that there is a limit? wherewe talk with them, the problems are. they understand our problems. but they have to take their own responsibility for what they do. of the maine purposes of abn amro -- how is that going? is it talk, or will the banking sector take it seriously? kees: three years o ago we put - putthree years ago we sustainability at the head of the talks. our clients are changing their business models anymore sustainable way, and our stock likes to work for the organization. francine: last year and dollars you called for the government to reduce its stake in abn amro. there is their decision, but they have made clear that purpose. francine: you are stepping down in april. appointed.sor was what are you doing next? i'm stepping down. i think i am going to have a walk with my dog and my wife. francine: thank you for joining us. the chief executive of abn amro. coming up in just two years, -- has transformed novartis. we will speak with the chief executive of the drugmaker next. plus, after almost three decades of growth, there are clouds on the economic horizon for australia. we will discuss that and the devastating wildfires with the country's devastating wildfires. that is later in this hour, and this is bloomberg. ♪ francine: this is "bloomberg surveillance." i am francine lacqua at the bloomberg -- at the world economic forum in davos hi, viviana. netflix is positive about growth in the u.s., but they say that the rest of their will does not going on for speed. >> we are seeing a very robust economy in the united states, and this mirrors the message the president is giving us here. we are also seeing good volume growth in europe. some pricing pressure, but good volume growth. i think the rest of the world all throughout, not sort of at the maximum speed, but a robust, strong showing. viviana: lufthansa is considering selling stock and its aircraft maintenance business. a partial spinoff of the division is being considered, but bloomberg has one an initial public offering is the most likely option. deutsche bank is zeroing in on how steep its management bonus cuts will be, as part of taking an ax to discretionary pay across the firm. it comes at the lender prepares to unveil its biggest loss since 2015. boeing expects to reach production of the 737 max within a few months. even before of the grounded jet wins approval. they halting output, expected to return to a normal weight -- rate of production. it is not likely to be cleared for service until the middle of the year. that is the bloomberg business flash. francine? francine: let's focus on pharma. it is just two years since my next guest took the reins at novartis. what in that time, this was company has undergone a dramatic overhaul, focusing on cutting edge medicine and expanding in the field of gene therapy. in total, he has engineered disposal and acquisitions more than $60 billion. narasimhan. welcome to "bloomberg surveillance." gratulation's on the overhaul so far. there is an increasing focus on the overcoming of manufacturing hurdles. what are we doing differently? vas: there are incredible medical advances, but there are also advanced technologies. we have been able to expand our manufacturing footprint. week opened another facility -- we opened another facility in colorado. human able to process cells in asia, in europe, in the united states. we are scaling up our gene therapies with our platform, so we feel very good that we are going to be able to meet the demand in the years to come. francine: is their worry about how many patients will have access, given the price tags? vas: we have seen a lot of support. with our cancer medicine, we have seen 20 markets reimburse the medicine, which shows it provides tremendous value. in many cases, we can bring almost a cure to these patients for their cancers. medicine,e of our sma 99% of patients in the united states have been fully reimbursed, again, showing that insurers have been valued with these -- francine: will many more patients have access to these? vas: i believe that cell and gene therapies will be the next wave of innovation. we will have many of these over the next decade. we wanted to build a leading position in both of them, so that is what we have endeavored to do. we will generate positive returns in the near term, and in the longer term we hope to build an entire portfolio. our aspiration is to bring these to patients everywhere in the world. francine: and your market space, you highlighted emerging assets out of the once -- you highlighted emerging assets. what are the ones that our mother most -- are the most promising? vas: last week we excite -- we announced an exciting partnership with u.k. government, with a medication to tackle cholesterol. it is a vaccine like approach. we hope we can tackle cholesterol at scale all around the world. another exciting medicine is a medicine called lmp. this is for a whole set of kidney diseases or this would be a first advance for these patients. i think we have a unique, robust portfolio. we have 160 five projects that we have in clinical development. that gives us the replacement power to make sure we can grow in the long term. francine: talking about the generics unit -- are you shaping it or overhauling it? the sandoz is one of largest generous manufacturers in the world. we see good profitability. our plan right now is to make sandoz a standalone unit but give it the resources it needs to build a leading global position. we are committed to it as a generics unit within the novartis group of companies. it is challenging, but with a new leadership team we can be successful. francine: will it make sense in five to 10 years to have such a big generics arm? vas: i know that having a position where we are one of the most high already generics producers in the world matters. with quality,es and in those situations we can step in with high quality generics. regulators have different guidance in some case on how to dispose of some of these medicines. what are you working on to make sure that actually some of these drugs do not end up where they shouldn't? vas: we have made a broader environmental commitment. it is a huge topic, sustainability and nature. have committed to be carbon neutral by 2025. in our third-party operations by 2030. have signed up for annual targets which will be published, and it will be part of my compensation and the executive team's compensation. we want to show every year that we want to tackle it. we have also committed to water neutrality and that we meet the highest standards by 2025. in general we think we are in a pretty good plays in managing the waste coming out of our facilities entering waterways. vas: but it is regulators -- nejra: bu francine: but it is regulators in certain cases. are you confident in these regulars around the world? vas: what you're raising, that is a broader conversation we need to have with the medical community and with regulators. francine: thank you so much for joining us. he is vas narasimhan, the chief executive officer of novartis. thank you for joining us in davos. after almost three decades of continuous growth, there are clouds on the economic horizon for australia. we will talk about that and the devastating wildfires with the minister of finance. this is bloomberg. ♪ francine: economics, finance, politics. this is "bloomberg surveillance ." let's focus on the future of australia. during his third gate of continuous growth, australia's economic track record is reason to celebrate. but there are clouds on the horizon. focused onountries china -- the country has been dealing with devastating wildfires, the worst in recent memory. turning us now is australia's minister of finance, mathias cormann. thank you for joining us. let's start with the fires. it is unclear when you speak to various members of your government whether there is an acknowledgment that this is because of climate change or is this just something australia has to go through. mathias: we have been quite clear on the record, of course climate change has an impact. we have had bushfires in australia for thousands of years indeed. we absolutely acknowledge that climate change has worsened. the intensity of this fire event there that is something that we clearly have acknowledged. the prime minister has said he wants to tread carefully on targets because he does not want to hurt jobs too intensive in the industry. mathias: we are focused and policies that are environmentally responsible. we are one of the handful of countries around the world that there are mission -- emission reduction targets that we are on track to meet and beat. tot is a commitment reduction in emissions by half. the emissions intensity to be reduced by two thirds. that is more ambitious than the european union, then canada, new zealand, than many other countries around the world. we have effective measures in place. in the end, what we are guided by is whether a particular measure is better for the environment and that we do not inadvertently make things worse, as well as being economically responsible. but this is also a government -- the morrison government is not buying into renewables. mathias: well, that is false. we are a world leader when it comes to investing in renewable energy. 35% of our energy supplies come from renewables. by 2030 that is expected to raise to 50%. bearing in my the population of 25 million people across whom we are spreading in a couple of places. we are investing twice as much in renewables than germany or france, to name a few. bushfires, it the may be too early to add up the cost. do you have estimates as to how much this is costing? mathias: we have made a commitment in terms of our bushfire recovery investment, a $2 billion investment fund. it is too early to quantify, but we will monitor the data as it , with the budget in mind. francine: when you look at the u.s.-china trade deal, is australia a loser, or will you come to terms? mathias: australia and other countries around the world are theer, a winner due to relations between the u.s. and china. we welcome the fact that there have been these developments in this phase i agreement and that they have been put in place. end, a better trade relationship between the u.s. and china with these long-standing it shipped -- issues, that is good for china and the world and the u.s. and australia. >> why should we be optimistic about the phase i deal when tariffs are in place until november? that would impact exports -- mathias: there is constructive engagement with some long-standing issues of concern. these issues reaching sustainable accommodation between the u.s. and china. it is obviously something that is working with trading nations around the world. francine: do their need to be better terms when it comes to agriculture products? mathias: we have trade agreements between australia and china, and we are in negotiations that involve china. australia continues to work all around the world to secure opportunities to get a better opportunity for consumers to get access to affordable, high-quality products. your aaas said that rating could be at risk. how do you respond? mathias: we maintain and have maintained for some time a aaa rating from the credit agencies. i am not going to provide commentary on commentary. we note that all of the agencies in recent times have reconfirmed our credit rating. francine: but do the fires change everything? have you been in contact with the rating agencies echo earlys: first, it is too to assess the economic impact in australia from the fires. but the australian economy has proven to be resilient. of course, slower growth globally has had an impact on the drought, with floods in 2019 and the bushfires. but our economy continues to grow. wages continue to grow faster than inflation. i have to correct something from your introduction. the real wages growth on this point since percent is on average than it has been for the last 30 years. inflation is lower than it has been historically, too. the gap between wages growth and inflation is precisely on the average that it has been over the last 30 years. francine: it is a short time, so you will have to come back. getting into the widening gap that we have been talking about. mathias cormann joining me. "bloomberg surveillance" continues in the next hour. we will have more from davos throughout the deed -- throughout the day. thomas keene joins me. we'll talk about sustainability. we will also talk about the banks aired we look at currency exchange, and of course the coronavirus that could be contained, certainly drastic measures from authorities on how to deal with this. but it is having an impact on the markets. we will have plenty more on all those stories next. this is bloomberg. ♪ good morning! oh no, here comes the neighbor probably to brag about how amazing his xfinity customer service is. i'm mike, i'm so busy. good thing xfinity has two-hour appointment windows. they have night and weekend appointments too. he's here. bill? karolyn? nope! no, just a couple of rocks. download the my account app to manage your appointments making today's xfinity customer service simple, easy, awesome. i'll pass. francine: lunar new year lockdown -- china bans travel for 11 million people in wuhan as it looks to contain the spread of the coronavirus. stocks sink. lagarde's self-assessment -- the ecb kicks off its strategic review today, its first since 2003. officials planned a two-part approach to break down the central bank's inflation targets. and we bring you all the action from davos and beyond. the hour we hear from leader of the swiss national bank. and the conversation with the u.s. secretary of state. good morning, good afternoon come good evening, everyone. this is bloomberg surveillance. tom and francine. you had a great panel yesterday on negative rates. i know the conversation moved from political concerns to trade and there is more talk about banking consolidation that may not happen this year in europe. tom: you got the timeline right. this is typical of four days in davos, or even five days. yesterday was much more political, and today the focus is on this new awareness in urgency and climate change. and also the continued bank crisis. i am calling this a boom-bust davos. i usually do not come up with that phrase until tuesday or wednesday. --it -- it is a great theme it is a boom. does it go bust? francine: we also have the imf managing director. we will talk about what bankers have been saying, but now let's get to first word news in new york city with viviana hurtado. viviana: we begin with a deadly coronavirus. china ramping up efforts to contain it. the city of the outbreak, will wuhan,utbound -- of travel has been banned. adam schiff has said that donald trump is a danger to democracy. the opening arguments to just a prosecution with two juries in mind, one, the tendered who will vote on impeachment, the other, the american public. they will have ballots in the upcoming presidential election. in a few hours from now, the ecb announcing the first strategic deep dive of its inflation goal since 2003. the central bank is not expected to change interest rates of quantitative easing and it is likely to present new challenges such as -- to tackle new challenges such as climate change and currencies. parliament approving prime minister boris johnson's brexit deal. it now goes to the queen for her signature. then the agreement will be formally ratified by the european parliament. all that setting up a transition period for the u.k. that will last until the end of the year. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. this is bloomberg. you so much. a data check, and we need that from london. here is dani burger. we areothing major, seeing the stoxx 600 down by about .2%. one sign this might be virus related, we are seeing travel and leisure in europe leading those declines, concerns that the spread of coronavirus might hurt sales as well as economic growth. that is partially why oil is down 1.2%. jet fuel a big concern with the virus impact, and we saw that with the sars epidemic. the year weaker, only seven bids ahead of the ecb decision. it will take a lot to move the euros out of its current tight range. the pound also lower by .1% as the dollar gains. aboutrate cut bets last 50% after stronger data. i want to show you individual stocks moving on virus concerns. it is going to be luxury goods as well as travel. tom? francine? francine: dani burger with some of your main stock movers per let's kick off with monetary policy in europe. earlier we spoke to the swish -- the swiss national bank chairman, thomas jordan, about the minimum us change rate. thomas: we still have a highly valued swiss franc. strengthening,is so for us it is important to maintain our monetary policy that means having the negative interest rates of -75 basis points, but also the willingness to intervene if necessary on the forex markets. francine: how much more can you intervene? thomas: well, everything that is necessary. we have a mandate to maintain price stability in switzerland, so we are looking at markets carefully. monetary conditions in switzerland are determined both by interest rates and by the exchange rates, so we are looking at both, and if necessary, we take the necessary decisions. francine: the u.s. has put you manipulatory watchlist. does that impact your ability to intervene? mathias: no, we have to -- to explainw, we have , and the way the statistics affect the way it is set up. if necessary, we can use the instrument to maintain a reasonable monetary policy in switzerland. francine: you said you were talking to the u.s. do they understand your perspective? thomas: we explain it very carefully. they understand the specific situation about switzerland. francine: i don't know if you took calls when it happened on the currency manipulator list. does it worry investors, or do you think it hurt your credibility? thomas: it doesn't because we explain it very well. we do not manipulate currency, but we have to intervene to steer monetary currency in switzerland. we do not want to weaken the swiss franc, but we have to avoid that it becomes too strong. so we have a deflation environment in switzerland. francine: there is an open dialogue with treasury? there is, regarding a specific situation. francine: we are seeing these sweat -- the spread between swiss government bonds and german government bonds whiten. what happened? what you have is of much smaller interest rate differential today than it used to be, and this is exactly one of the key reasons why we have the negative interest rates in switzerland. francine: under what circumstances do you cut interest rates further? thomas: we always do a cost-benefit analysis. we still have room to cut rates if necessary, but of course we know there are side effects, so we have to look very carefully at what is necessary, to weigh the cost benefit analysis in a risk-management way, and then we decide what is best in order to have the optimal monetary conditions here in switzerland. francine: that was the swiss national bank president, thomas jordan. two years after being sanction, i guess joins us now, he is the founder of russo. thank you so much. we need to start with sanctions. have they changed, and do you hope they will be lifted? yes, when we have a solution. it will happen as soon as this year. hence cinco do you believe that sanctions will be lifted? -- francine: do you believe that sentience will be lifted? that --ieve francine: we do not want to spend too much time on sanctions. but if you look at the russian changes, does that impact sanctions lifting at all, or are they completely disconnected? >> russian political changes at this moment has one goal, to boost economic growth. , my opinion was that sanction pressure was bottoming in 2018. the economy has to find a new way to attract capital and raise it, and it is more and more on how government boosts through infrastructure spending and reform, through government expectations and investment. thata lot of the sanctions you have faced -- on your experience of sanctions, the guest that sat in this chair yesterday said sanctions do not work because things are so fluid now. efficacy to sanctions, or is that a process from another time and place? oleg: sanctions definitely work. it is very painful, not just for me and my employees, but for investors. it have affected that it has affected a couple million people in one day. the market collapsed, if you remember. and of course it was a better way to apply them, with international law, based on the yuan resolution. if tension was applied to climate change, we will never the u.n. resolution. if tension was applied to climate change, we will never see -- francine: if you look at sustainability, do we need sanctions against sustainability , people that don't believe in it, that do not do enough in it? oleg: we had a few agreements. how are you going to enforcement? it is so-called based on goodwill, but in reality, who, in a competition advantage, which is represented by this plan, indonesia, south africa, china? no one. awould rather get back into climate change discussion here. i was surprised no one mentions nuclear solution. could it be somehow disappeared? it should be substitution. to frame this because you are the singular voice in the world in business with a physics degree from a major university, and also your heritage of reading jack london. we are sitting here in happy , and the industry has to provide leadership toward a better climate change. are you optimistic that the industry of jack london, the industry of the 20th century can move forward and really advanced to a better climate? 100%. in my previous experience, when to hydro, we went almost 100 percent. there is not enough resources. it does not need -- it does not mean you need to burn coal as you do in indonesia. in the power generation, you need nuclear. america,his because of the skeleton of the past, three mile island, on the efficacy of nuclear as a solution here? oleg: yes, it is the only solution. you cannot make a decision based on so far it is temporary. it depends on the day and the time. energy saving, it is important. tom: the united states of america is transfixed across much of the world by the hollywood of chernobyl. what do you think of chernobyl as a physicist? is there a fear of nuclear energy that was -- oleg: there is a way out of causeproblems that chernobyl or fukushima or three mile. there is a new type of reactor that does not allow this to happen. it is a reality. nuclear now is safe as a solar panel. francine: you have called for a co2 tax, right, of $100 per ton. you move the yuan headquarters out of new york? are you getting any traction? oleg: it is a different subject. how are you going to enforce it? what would be the solution? legalthey extend their system without liabilities? maybe it is better to move to a solution and a place where it would not be suppressed by u.s. institutions -- austria, dutch, whatever. is very said, it difficult for us to do. in the threef years to go, we need to discourage people to use coal. but now we need to punish people for using coal. real opportunity for some supply. tom: i spoke to john kerry this morning at length. he strongly agrees with you on these things. how do you respond to the political america that is removed from the former secretary of state's views or your views? how'd you do can -- how do you convince america? what is the process to get america into this debate? oleg: i think you in the media should be more -- how do you say -- open and show the speeches like you see when you travel in china or what is going on in indonesia now. if people really see what is going on, it is our common resources. -- thatthat is polluted is anyone's problem. again, the leadership. i keep stressing this point more and more. it is a reality, because it has failed to do, even after paris, everyone has been so optimistic, and now it is $100 that is the only way to stop the people even to think -- francine: do you see sanctions being lifted? will you sell the business off so theo oleg: we hope -- business off? oleg: we hope to reach an agreement. we do not want to talk about anything that will implicate the process, but -- for thebe a tough year car group and gas. it will be a tough year. francine: would you sell at off? who will buy in my enterprise in sanctions? that is the issue. rusal,e: the founder of oleg deripaska. theng up, we will look at review that madame lagarde is putting in place. this is bloomberg. ♪ tom: good morning, everyone. "bloomberg surveillance," at the world economic forum. it is the best day at davos, thursday before the exhaustion, the end of the week on friday. we see things getting set up, things that we got wrong, things that we got right. we can move forward with a lot of good conversations today. francine lacqua and tom keene. this is really important. somebody's got to ensure all the stuff, the business transaction out there. it is dry as dust. and theally boring, chief executive officer with a spirit nobody pays attention to you guys. you like that, right? that you- the goal is do business and try to avoid global catastrophe. how was 2019? >> 2019 was more a normal year. tom: boring. >> i would not call it boring. year, 2018e biggest was the fourth biggest year ever recorded. this is our business, right? tom: this is important. >> our goal is to pay these people to -- that had some losses. francine: this year there were bushfires at but also some bright spots. secondary there are perils like bushfires, smog, drought. it is pretty clear. climate change is affecting it and making it more costly. so, yeah, she insurance is becoming more expensive. francine called me a second peril yesterday. francine: first peril, actually. tom: we are all observing the realities of climate change. i was with john this morning. america, the arctic, the antarctic. you are not insuring the antarctica. how does climate change affect s in australia come in new york, in other places? christian: climate change is a trend and we do not ensure trend -- we do not ensure trend. we have a challenge to adopt it, but people should not see climate change as a risk, it is a certainty, something is happening. we will see increasing premiums everywhere. all the air is affected by climate change. it is hard to predict now in 20 years how this will be and how it will affect the micra regions. but it is pretty clear it will affect everyone. francine: what are your plans in china? christian: we are in a free market in reinsurance, the number one foreign player in china, one of our important markets. the big clients, the smaller clients, so for us it is a very important market. probably the most important market we have. francine: when you look at the virus outbreak in china, which we have covered extensively because it is having an impact on the markets. how that will -- how will that impact you? you assess risk. will it be huge quite contained? christian: overall, pandemics can be a very big risk. the spanish flu is devastating. we have not seen anything like that since then. we do not have any more information than the who right now. the key parameters are incubation time. the question of how easy it is to transmit from human to human is essential. and then how lethal it is -- we do not have much data there because we don't know how many people go to the hospital and diaper we do not know how many were infected and -- hospital and die. we do not know how many were infected and did not die. valuable is a conversation because you are in the reality of paying for these issues. christian mumenthaler with us here. please stay with us. worldwide, this is bloomberg. ♪ >> it has not come up, it almost never comes up. in meetings with my counterparts, there are too many things going on in the world. much, and weut so are such good friends and allies, they see the noise in washington but it is not something they would think in the time we have between us that they would raise. an important conversation, the secretary of state with kevin cirilli. very timely, and francine. this is in the zeitgeist of america this morning. is america paying attention to the impeachment? it is a legitimate debate. francine: we have polls, right? we will have plenty more on that. we will speak with richard edelman, the chief executive of edelman peer that comes up shortly. this is bloomberg. ♪ tom: this is davos. look at the distance. getting ready, she is out there skiing. she goes to the mall in singapore and they do that snowboard thing. we don't do that. we are here early. we welcome all of you to the meeting of world economic forum. not skiing or snowboarding in new york city. viviana: we begin with a few of the democrats attempts to convince the u.s. senate to remove president trump from office. adam schiff leaving the -- he says mr. trump has shown a willingness to be constrained by the rule of law. democrats have three days to make their case. on saturday, the president's lawyers their case. -- there is speculation the deadly virus outbreak may hurt demand. chinese officials halting travel from the city at the center of the outbreak. american oil stockpiles have gotten bigger. in the u.s., stepping up pressure on south korea. it is morning it will send layoff notices to 9000 south korean workers at u.s. bases as south korea doesn't agree to pay more for american forces. outflows grewfund the most in three years. the redemptions equaling about 3% of industry assets after years of high fees and lackluster performance. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm viviana hurtado. this is bloomberg. tom: there is a dirty little secret out there and it is the gratefulness i have for richard edelman of edelman. it is really simple. bloomberg on the economy and bloomberg surveillance, i read cover to cover that edelman trust barometer. this was 1868, way back. we are thrilled. richard, it is wonderful to have you here. congratulations on moving the dialogue and davos with your important document. let's cut to the chase. what are you trying to accomplish in 20, 40, 60 powerpoint pages? richard: there is a level of fears and it all has to do with i might lose my job to automation or big economy -- gig economy. it is causing people to be concerned with social mobility. business has to step into the void. when business does this effectively, they are going to do wages. tom: what is so important is the dynamics year to year, the edelman trust barometer where in 2008 businesses were on the bottom. richard: government was on the bottom. now incompetence, business is 50 points higher than government. however, business has a problem of ethical behavior. people wonder whether or not business is going to do what it says it is going to do. do don't talk. advice do you give to a chief executive that has been embroiled in a sexual harassment scandal from me too. richard: you have to make sure the workers get retrained. they had the skills necessary. yet to do sustainability. you have to talk about lgbt. you have to make sure that it is a diverse and welcoming workplace. it is vital that women are the other half of the world. you should do this because you want the best employees. the quarters of employees say they want to be a part of a company that values values and consumers say i am a believer in the buyer. francine: our company still bad at dealing with crises? do they do enough -- do they do the wrong thing because they don't talk enough to the consumer? how do you deal with -- companies are almost out of touch with what the common person is fearing. or any othering company that is in this crisis, you have to make sure your first audience is your consumer. if you do well by your customers, make sure the plans planes are safe. passenger safety is the first job and your employees are the partners. talk to them and make sure they understand that they are in this together. tom: you are too modest, richard. are you representing boeing in these challenging times? richard: we have a lot of confidence in dave calhoun. tom: the secretary of transportation was on fire yesterday over how people pre-edelman screwed it up. what is the richard edelman chemistry to get this american iconic company back on track? richard: is a great company. it has superb values. it has to be safety first and making sure pilots are trained and make sure the plans are flown multiple times before they are put back into service over the summer. this company will deliver a safe 737 max. accounts.you dropped you dropped the account of a private prison company. what clients will you not take on? richard: we want to take on coal.o, guns, we want to work for companies that are improving societies. tom: 15 years ago, i stood on the promenade here and look over -- seals at the more visible and more verbal in their messaging. that is buried in a report this year there it is, front and center. ceos stand up and start talking. how do ceos talk to that america? richard: 90% of our respondents work for companies that say we want our ceo to stand up for diversity, sustainability, immigration. this is a new thing for ceos. what is this matter? the most trusted -- the most trusted institution -- how do you get a ceo to do that? you say, look, your employees need you to do this. to meet and i are going in a piano bar tonight and we will be there with the ceo who will need your help. how do they speak to an america that does not trust wall street or fancy guys in suits and ties? richard: talk about your business, talk about its importance in society. be a human being. francine: if your advice is to be a human being -- richard: i think a lot of the ceos are pretty good. kevin johnson from starbucks is a good guy. i want to take straws out of the coffee cups because i think there is better we can do. tom: ups, started out driving a brown truck. that is america. francine: what is your number one piece of advice for politicians? is it the same as chief executives? they need to change. have the power to change regulators. richard: government has a huge trust advantage over business on sustainability and gig economy. work with business. don't try to over regulate by yourself. you have to be like a seesaw on the program -- on the playground. somebody.w francine: we will be fine. richard, thank you so much. richard edelman. coming up, german defense minister is encouraging germany to spend cash more quickly. an exclusive interview next. this is bloomberg. ♪ francine: you are watching bloomberg surveillance. amazon has gone back to court over the pentagon cloud contract . the company asking the judge to prevent microsoft from working off contract. trumpwsuit claims donald dislike of amazon ceo played a role in microsoft winning the deal. exxon mobil is getting ready to sell more overseas assets. bloomberg has learned the company has plans to -- that would be followed by a selloff of oil and gas properties in germany. the two sales could bring more than $2 billion. wells fargo's main regulator going after some of the bank's former managers. as many as 10 of them could face civil cases related to retail banking scandal. that could result in the bankers being fined and barred from working in the industry. that is your bloomberg business flash. francine: thank you so much. kramp-karrenbauer, she stressed the need for germany to speed up the process of spending government funds. calling for investment in the denver structure and defense. >> germany is a country with a very strong economy that can contribute best to development and prosperity in the world if we remain a strong country. to do that we need two things. first of all we need internal reforms to secure our competitiveness. this is something the green is not so keen on. we need investment in future technologies and our infrastructure. if you look at our budget and the investments, we see that we don't have any problems when it comes to the funds. we have enough money, but we do have a problem with our procedures being too complicated. not enough is being invested. this is what we need to tackle first. within the government we are agreed that we do not want to put our surpluses to one side but that we want to spend them in a meaningful way. in infrastructure but also increased defense spending. >> how do we fix the issue around bureaucracy in that it takes too long to get approval on things. this is something that people recognized for a long time. talking to people in berlin, when we look at the housing situation, we talked to private companies who say it takes too long. we all recognize that more needs to be done. how do we move that forward so that things get done more quickly in terms of the approval process? >> first of all, we are aware of the fact that we are to slow, but we now need to tackle it and we have a good opportunity, because everybody, there is an opposition in favor of more regulation. we need to invest in new technologies and new electricity networks so that we can achieve and reach a german wide consensus. if we want to protect the climate we need to invest more. was annegrett kramp-karrenbauer. the chosen one for angela merkel . tom: explained that one. francine: it is a democracy. angela merkel has been considered one of the most successful politicians in europe and the person would automatically take the leadership of that party is seeing not by the markets by the people of germany as the one who could become chancellor. there were questions about that in the last six to seven months. it is not a done deal. a lot of things could change. it depends on how she deals with the defense ministry in germany. tom: the president of the united -- it is likeay merry pop. early in the movie, the weathervane thingy changes and starts spinning around as mary parachutes in with an umbrella. , doing a marylla poppins act. on wednesday, bob prince told jon ferro the boom bust is over. carmen reinhart fell off a chair and a guy from morgan stanley fell off their chair. they aggressively disagree. >> it is a banker theme because the bankers are very mixed. there friend said what happened in davos is a contrarian indicator what is going to happen in the economy. so whatnerally upbeat, happens in six months from now? here's the other big issue about this. people are worried that if there is a next downturn, how aggressive will it be? bett says he believe it will very severe -- he believes it will be very severe. it is all passive funds. so many people are in liquid assets that when the crash does happen -- tom: how do they get out of etf's? scale. with the idea of there is gossip but i don't hear transaction combination as in other years. what is the theme you see? >> in the u.s. people are hoping there will be some of it to diversify these big banks. jp morgan is a big whale in the room. goldman sachs, morgan stanley, they are about $80 billion in market cap's, that is a fraction of what ap morgan is. looks like in this regulatory environment, that could happen. europe is a lot harder. you go around davos and see people talking but it doesn't look like they are going to get married anytime soon. francine: thank you so much. reporting on all things financial. the deutsche's finance minister. this is bloomberg. ♪ francine: this is "bloomberg surveillance." francine for the world economic forum in davos 2020. continuing quite strong with a number of guests. peopleirus has killed 17 , infected hundreds around the world. what is being done to contain this? >> good morning. we see it is sweeping across asia and even a case was shown in the united states. chinese officials under a lot of pressure and taking steps to contain a city in china where the virus was first found. they are putting the city on lockdown. 11 million people will not be able to leave that city. it comes at a very interesting point because they are about to start the lunar new year with tens of millions of chinese citizens would go traveling in celebration for that. airlinescific, chinese says they are not allowing flights go in and out of that city until the end of february. we are winning for the world health organization. yesterday they said there's not enough information yet to declare a public emergency. today they are reconvening hopefully we'll get more details. tom: annmarie hordern, thank you so much. part of the meetings is planning -- then you simply get lucky. she has been a wonderful guest for us over the many months and years. we are thrilled she could join us. an important economic and investment team with great respect, i'm going to rip up the script and i want you to explain this city in central china. say we went tos china, we went to the mandarin hotel. we are going to beijing over go --shanghai and look at the how does it fit into the mindset of china? >> is a very special place. it is been an inspiration for poets and artists it also easily it is become a technology center is fascinating. china's tech centers are not centered in one place. very special expert kind of buts and so it is quite sad it is very important city in the south. francine: what do we misunderstand about cities. rural parts in china are as big as our biggest metropolises. >> we think about the coastal provinces but we really forget the enter, central western part of china are still very important. when we think about growth slowing down, we have a huge divergence available. tom: limit get back on the plane that you have on economics. you started with harvard. i want you to give us a general trust that you have that europe can clear this sort of financial system as indicated by negative interest rates. rua euros optimist? optimist? a year >> europe suffers from a chronic aggregate demand and a very long-term, low inflation, low interest rate. i don't see that as a single issue. financials are very strong. tackling thee not fundamental structural issues in europe. francine: you have done. what does the u.s.-china trade deal tell us about the future forum that capitalism will take place in china? it has accelerated its financial services which is important to bring you -- really desperately needed. i think the opening up will have an impact to make it more efficient. this trade deal, there is nothing substantive. does it completely depend on what happens in your selections? >> we have to understand the context under which the truce happened. something happened in china and something will happen in the u.s. what happened in china, slowing economy and political events. we have to set modest goals in phase two. tom: thank you so much. i really cannot say enough about the perspective she has given us. ecb and thened, the return to normalcy for europe front and center today. ecb.s a grizzled pro at christine lagarde, the announcement in the important news conference. all of that coming up on bloomberg. good morning. ♪ ♪ this morning, will this boom bust or -- boom, climate change. calls ity of america world war zero, everyone is on board except the u.s. and china. will we promenade down promenade? in davos is it different than a convention in las vegas? from the meetings of the world economic forum, good morning. on a very busym thursday. as you go down promenade, it is a corporate avenue. when we first came here it was not like that. francine: it is like the tube in london at rush hour. i feel like we have had more interviews than ever before and a lot of the action yesterday was that the congress center. president trump giving these speeches to- mini reporters. tom: we will drive forth that discussion and many other things , one of the dominant things is climate change. in new york city with our first word news. >> house intelligence chairman presidentf portraying donald trump as a danger to democracy. he was the first democrat to make his case in the impeachment trial. the opening arguments with two cherries in mind, the senate who will vote on impeachment and the other the american public. they will cast their ballots in the presidential election. tona ramping up efforts contain the deadly coronavirus. the city at the center of the outbreak, wuhan, has all travel suspended. hundreds are infected. a few hours from now the ecb announcing the first deep dive since 2003. the central bank is not expected to change interest rates or quantitative easing. it is likely to examine new challenges like climate change and digital currencies. in the u.k. a step closer to leaving the european union. parliament approving boris johnson's brexit deal, it goes to the queen for a signature than the agreement will be ratified by the european parliament. setting up a transition period for the u.k. that lasts until the end of the year. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over this istries. bloomberg. >> with your main stock movers here is dani burger. at a weaker day in europe. down nearly 2/10 of a percent but the u.s. turning around. we are treading water. some virus concerns are still hitting european stocks. travel and leisure are the laggers.agga -- oil trading above $62 a barrel. some hedging heading into the lunar new year with the yen gaining against the dollar up .2%. is theer big macro story ecb decision that we are expecting today. little changed as european bonds across the board. the yields of the bund down one basis point. notecb is on autopilot, much change expected in policy despite this big strategic review that we are expecting today. for now, little movement and leasttraders are hedging the -- traders are hedging the least heading into this meeting. francine: the final steps to completing a european banking union remain elusive. can progress be achieved? joining us now is the dutch finance minister. thank you so much, minister. we have talked about the bank union a lot, will we be able to see concrete progress before the deadline? >> thank you for having me. what we all hope we are working on is making the next steps on the banking union. my assessment will be that quite a lot of time is needed, particularly because it is essential that we reduce the risks that we have in a number of member states. and quite a substantial group of banks. >> will they be open to a european portfolio? >> what we have said about the union from the beginning is the infrastructure that we currently have lax the deposits and guarantees system. if you do that well it is an asset. if you don't do it well it increases the risk. that is why we continue to be in favor of the deposit guarantee system provided we do it in the right way and we start with reducing risk. tom: the heritage of the netherlands, the dutch, and capitalism is extraordinary. they moved forward into the 20th century with unique capitalism in the netherlands. what will it look like post-brexit? what will capitalism look like with dutch leadership in 10 or 20 years in europe? >> thank you for the compliments. when i look at brexit it truly is a tragedy. disaster,opolitical even though it is not perceived like that for the european union. for us as a country with very strong ties to the british, to the business community there, this is very difficult. tom: it is the fiction of henry viii or the reality of royal -- royalll shall, dutch shell, you have a heritage in london, will that be shattered? >> it will not. we will team up with our british friends and allies. i would have loved them to stay in the union. -- when there is a balance between france, germany, and the u.k., we in the netherlands are at ease. we typically look to the east, west, and south. the balance is now gone and for the european union, both in economic terms and geopolitical terms brexit is very bad news i think. francine: we talked about the digital tax and the u.s. and the french have reached a truce. what does that mean for u.s. tariffs? our u.s. tariffs on hold? can we reach a consensus on the digital tax if european countries don't agree on it? we managed to agree at an oecd level and we would also need our american friends. there the digital era is and it is an essential part of our lives. it makes sense to think about how to tax it. that is the hurdle that we need to take. is impossible it is impossible for the european union itself. francine: is europe competitive? a lot of companies say they cannot compete with americans. what new industrial policies should we put in place to give european companies a chance to beat these guys? >> that assessment is too grim. it is true there is much to be done in terms of the eu infrastructure. there are many things to worry about. if you think about the pure economic power of europe, it is tremendous. to me it is essential and i think we will manage to do that, to act as one in whatever the world will provide us with in --ms of trade wars, that is if it will come to our doorstep it is a something the european union will address. tom: i was just in venice and they were showing me in the hotels where the water was, the terrible floods they had. on waterhe high ground coming into a country, nobody does it better than you. tell us how the netherlands will finance and budget a rising water level even with the ground sinking eight millimeters a year or whatever the statistic is. how are you going to finance your reality of climate change? >> in the same way we have done this in the past couple of centuries. water is asth the old as the country. essential in this particular fight, i think it plays out to other areas as well, taking a long-term view. it is basically irrelevant whether you can find the water fight thext year -- water for the next year, it is relevant whether you can find it. you have to have forward planning and i would advise other countries to take that. tom: you are doing this in real time with forward planning. what would be your counsel to the institutions trying to discover short-term planning? how do the dutch do it in a way that people can learn from? >> frankly speaking we are also struggling with climate change, how to adapt, how to make sure insecuritiesthes the and the concerns of the public seriously. in the end that is the task. to go through this transformation but make sure we do it in a way that our population can follow. there is still a lot to learn. it is the short-term and the long-term. for politicians there is always the temptation of forgetting about the long run. francine: how is your national investment fund going? do you know what you want to invest in? >> we do. we will come up with plans and provide them to parliament in the next three months. francine: you cannot give us a preview? >> what we do want to do even though the economy is doing well , we are high on the list of the world economic forum in terms of economic dynamism, we do think we need to increase our exposure to innovation, artificial intelligence, because that is the way in which we will make money in the future and be able to provide our population with good schooling, housing, police, etc.. francine: thank you so much. he is the dutch finance minister. coming up from the world economic forum we will speak to a lineup of other top executives. including goldman sachs and the royal bank of canada. don't miss our conversations with the greek prime minister and the u.s. from her stash u.s. commerce secretary wilbur ross. this is live from davos, this is bloomberg. ♪ ♪ ♪ the community does not just want lower rates, and one certainty and clarity. >> negative rates are a problem for the banking sector. >> i have a hard time believing they will do more than go slightly more negative. >> the more divide you have around the world the more uncertainty you have. >> the longer you keep that policy the more the side effects become important. towhen you have zero negative interest rates almost by definition you will have a bubble. some are cyclical and others are more structural. >> you want to ride the wave while it is happening but keep your eye open for the interaction. whichs is not the way in you can manage the real economy. should expect rates negative or not to stay low. they expectation is that in end this trend will move toward zero rates and then positive rates. is the single best thing our team does at davos. ushave 450 people around making this go for bloomberg. when they show you the energy of those voices on a great debate it captures what you don't see with the pretty pictures of the hills and the valleys. welcome again. a debate like 2008 and 2009, and the financial space it is negative rates. as madame lagarde going to talk about negative rates? francine: we do have some headlines. on negative rates, a lot of companies and a lot of analysts and banks have told us the fact that the ecb -- they understand this is a problem. we are expecting christine lagarde to take questions on it. she canknow whether change it or promise the market they will not go into deeper negative territory. there is a strong idea that negative rates -- germany,e a saver in italy, or france and you've suddenly realize you don't have -- [indiscernible] this is a social cohesion problem. the man fromion by barclays is simple, does it translate over into bond price up and yield prices down and equity prices to the sky? that is what we have. francine: i am looking forward to hearing from christine lagarde and the ecb press conference with the rate decision, the first one of 2020. let's move to the u.k.. we have a spokesperson of boris johnson, one of the key world leaders that did not show up here in davos. talking about a number of things, they were talking about what they could do in trying to achieve a trade deal with the eu. conversations with that are ongoing. we spoke to ursula yesterday. tom: she has been very visible. francine: she was here for three .ays here, am a foreigner considering what we have seen before from the european commission there is certainly a different body language to how she is speaking. of course her moment with president trump yesterday. francine: on those slack headlines. for is the spokesperson boris johnson saying there is no reason why an eu u.k. deal could not be agreed to by january 31. on january 31 the u.k. is leaving the eu. partyou start the harder of negotiating the future trade relationship. tom and i do this every day trying to figure out what to put in our show. this is the real stuff. the u.k. has said it has to be done by december 31 of 2020. people worry they may not be enough time and that boris johnson not offer an extension. people and the markets worry that there is another cliff edge when it comes to the u.k. and the eu. also on trade and on the european central bank, someone new with new important duties, the international managing director says that uncertainty caused by trade tensions and this horrific virus in china, may be that uncertainty is the new normal. she also mentioned that negative rates will be lower for longer. let's listen. this uncertainty is at the top of the list. uncertainty can be caused by many factors, trade tensions were last year's number one. from the start of the year we got climate shocking us in australia with the fires, we have tensions in the middle east , now there is concern of a sars like virus. we have to recognize this is the new normal. seere also keen to governments stepping up on the policy front. monetary policy has served us well and it cannot be the only savior of global growth. whether we would be ambitious enough on the policy side. how theto see consequences of prolonged interest rates may play out. >> coming into 2020 you talked about how the global economy is in a precarious position. coronavirus, is it possible you have to relook at the numbers or your projection that was already reduced? kristina: at the start of the year we are at a better place than we were in october when precarious was the word we used. why are we in a better place? because trade tensions receded with the u.s. china deal. because monetary policy has done a decent job. cutting49 central banks interest rates, 71 times in a synchronized manner. that has boosted global growth by 100% each point. we are seeing signs that trade and industrial output may be bottoming out. but wehtly said downgraded our forecast -- it was two things. adia abruptly slowed down and couple of countries experiencing unrest. overall, the forecast for the is a bit better than it was in october. was the imfat managing director speaking to us a little earlier. coming up we will have plenty more negative rates and more on this ecb review. markets will want to know exactly what christine lagarde will say later. this is bloomberg. . ♪ >> it hasn't come up and almost never comes up in meeting with my counterparts. there are too many things going on in the world. region here inn kingston they care about so much. they see the noise in washington but it is not something they would raise. see the scope and reach of what the islamic republic of iran has done you cannot forget they tried to kill someone in the united states of america, they have conducted assassination campaigns in europe. this is a global phenomenon. when we say that iran is a leading destabilizing force in the middle east it is because of this terror activity they have spread across the globe. tom: kevin cirilli speaking with the secretary of state, an active week for the administration and davos. hereissed is boris johnson or his secretary of state? we do have the chancellor who was here, if you look at boris johnson, he has come to davos for many years. he was the mayor of london. now he is a powerful prime minister with a big majority parliament that is not in demos. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind? can you help keep these guys protected online? easy, connect to the xfi gateway. what about internet speeds that keep up with my gaming? let's hook you up with the fastest internet from xfinity. what about wireless data options for the family? of course, you can customize and save. can you save me from this conversation? that we can't do, but come in and see what we can do. we're here to make life simple. easy. awesome. ask. shop. discover. at your local xfinity store today. lacquakeene and francine from davos. we have been following here in switzerland a very difficult story in china. it is a virus and that is different and that is serious. francine, you have the headlines we have been seeing from the u.k.. thecine: i understand health secretary was just speaking in parliament. he was saying they are monitoring the situation closely because there is an increased likelihood that the virus could have touched the u.k.. health officials from around the world are now trying to figure out exactly where people are traveling to and whether this impacts their own country to see if they need to be in lockdown. mr. hancock of the united kingdom saying there is increasing likelihood of a coronavirus case in the u.k.. >> right now we want to do a quick brief on this before we move forward with the conversation here. doing that in most of the southwestern part of switzerland , thomasville e.a. -- thomas has been following the story. geneva is one of the great locations for the world health organization. rather than go into specifics, let me ask you and open question. this is world crisis and serious on a thursday. what is the who doing in geneva to begin to investigate and understand this virus? meetingare having a right now as we speak to try to determine how easily transmittable the virus is and how severe it is in order to determine whether or not to call it an emergency, a public health emergency with international standing. tom: what is so important here and with our memories of sars those years ago is the absolute character of the virus. as the believe that this is a new virus? belief that this is a new virus, or is this new territory? it is a new virus, of a category called a novel coronavirus which is exactly what sars was, there was another one called mars that was maybe a little bit forgotten. thatally it is a virus ands from animal sources starts transmitting to humans is iten the question is transmittable between humans and how much? francine: china has extended these travel restrictions as we hear of more deaths, what do we hear from sars and how best to contain the virus? some praisea got from the who yesterday because during sars the government tried to cover up the extent of the crisis at the beginning which made it difficult for other countries to formulate their response to it. chinaime it appears that is being more forthcoming and the extent of the action of shutting down wuhan, which is bigger than new york city, it shows how serious they are dealing with this. time andk you for the the important update from geneva, switzerland. we begin with more scrutiny into the power of giant index funds. u.s. antitrust and are investigating mergers, they are asking companies about communication with their biggest shareholders. the probe showing investigators are trying to determine how much influence institutional investors have. day two of the democrats attempt to convince the senate to remove donald trump from office continues today. u.s. intelligence chairman adam schiff leading the prosecution saying mr. trump shown no willingness to be constrained by the rule of law. democrats have three days to make their case. on saturday the president possible lawyers begin their arguments. the u.s. stepping up a pressure on south korea morning it will send layoff notices to more than 9000 workers they are. if south korea does not agree to pay more for american forces. president donald trump once five times as much. global news 24 hours a day on air and on quicktake on twitter powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. francine: thank you so much. as davos comes to an end, we have today and tomorrow, one topic was on everyone's mind. much -- >> you have heard from everybody . >> australia is another example of how this can impact the lives of people. >> every company has to do something. i have a son and a grandson and they will look at me and asked me what i did. >> we are trying to show some real progress with a strong allitment by 2025 to make of our packaging reusable or recyclable. >> we think that if we have a carbon price or a carbon tax all over the world this could help us in this transition. >> we have to set up policies around the world that shakes the demand patterns of the market. it is not supply that creates economics, it is supply and demand. you have to change the demand profiles. >> we did a lot in terms of the next generation. they are very focused on the issue with the ethical signature. >> hopefully because of technologies and industries it is a win-win. tom: very good. the meetings at the world economic forum have been good. this morning i had my most important panel. of theing discussion boom now which is climate change, global warming, and folding it all into the rage which is esg. what the bank of america has done is they have done, not talked about it, but they are doing the work and the analysis. ahead ofdoing that their u.s. equity and quantitative strategy and the senior vice president of clarity for bloomberg surveillance. this is how we do this. she has done the best cheat sheet on esg i have seen. you are going to trot out all of america, your present and future customers and put this sheet in front of them. what is the single message about how esg is not a poke or a rage but will be permanently good? >> i think this is the most important work i have done as a research analyst. is notfinding that esg just a nice to have, feel good of metrics but it is a mandatory input into everyone's investment process. found there are serial risks that you can signal. --you have a bunch of second you have lined up a heavyweight financial team to talk esg. back to the accounting and dynamics of four accounting statements. where in those statements does esg work? >> if you think about the united states as a service economy. when you think about the biggest cost that most companies have you will have -- you will have lower earning risks, better r.o.e. and a more stable company. of these different aspects drive the bottom line of companies. what i think is interesting is this is not some new exercise that investors are doing. these are things that investors have thought about since day one. talk aboute sustainability, but the transition is going to be painful. thehat is happening is world is becoming a little less short-term. we are starting to hear investors like warren buffett telling companies to stop issuing quarterly guidance, forget about the short-term. forget about the long-term sustainable model. -- i think this is a change in the mentality of corporate america. think about the whole shareholder to stakeholder movement from the business roundtable. this is something that is happening everywhere and it is starting to percolate in meaningful ways. the most interesting thing right now is, as a key message that i took away from all of this research, you have to use these aspects that capture reputation and brand equity. of assetsut that 70% on s&p balance sheets are in attainable, you cannot assess them -- tom: within your research you had the courage to look at people that are not anti-esg. what is the biggest price for the old guard that does not get this? >> we are seeing a meaningful spread in the cost of capital for companies that are disclosing their information, that are conducting themselves well and companies that aren't. there is a 30% premium for companies that are quoting quote -- quote unquote "good." extraordinaryn powerpoint on esg, good or bad. her name is savita. on with mr.d i were solomon of goldman sachs coming up in a number of hours. please stay with us. this is bloomberg. ♪ ♪ tom keene and francine lacqua, meeting at the world economic forum. we have been talking about climate change and all the themes going on. also the underlying business characteristics, like our conversation moments ago. expert,w, america's jason bordeaux in an visit with columbia school. time, is the law catching up with the boom and the climate change debate or is the climate change discussion catching up with international law? jason: neither. policy is nowhere close to the level of rhetoric and ambition that was a theme last year and is even more of a theme this year. the level of concerned ambition. you see what microsoft is doing and all the european banks are doing, the pressure of the traded oil companies. there demand is still because policy is nowhere close to shifting our demand for hydrocarbons. tom: the distinction in my conversation with john kerry and claire o'neill of the united kingdom is the fractured american political debate. can we affect productive climate change policy with the american political debate? jason: very challenging at the national level. states like california and new york are leading the way. at the national level it is impossible to have a conversation about climate change. this is not just about president trump his unwillingness to spend time on this. a much need to have longer conversation in new york and london. why does london have a gorgeous electric taxicab and i am in a beat up toyota camry in new york city? jason: you need policy to drive people to shift towards lower carbon pieces of fleet. the trump administration has rollback fuel economy standards, mayor bloomberg tried to get new york city to shift towards hybrids and that was overturned by the courts because the federal government controls fuel economy standards. this is starting to change because economics have started to change. cabs, it on the black is actually a chinese company that makes the black cabs in london. tom: i know, but they are gorgeous. it's like the bentley i take work every morning. francine: we will change it to a black cab to get you to work. jason bordoff from columbia university. this ♪ is bloomberg. ♪ is bloomberg. >> this is bloomberg surveillance. of --g me now is the ceo you have been on a world tour. you just came back from russia where you had a panel with putin. what is the big take away? >> it is hard to get good information. i do these things because my job is to get information about the global economy. there were lots of takeaways. getting up to speed on the moscow economy and how sanctions are affecting them. to putht it was good that information in the back of your mind as you advise companies. >> are they the next place for the next big deal for you? ken: no. russia is a while in the future. it is a long life. i have been doing this for 40 years. loyalties andime you get to know people. russia long time before will be investable but someday. you are spending a lot of time in hong kong with the proposed takeover of the london stock exchange by the hong kong stock exchange. what is the tone there? is happening in hong kong is concerning. -- world is getting to be what happened with trump and china and the trade war coming down will be positive. there are a lot of issues. i have been doing this for 40 years. there have always been major issues. we tend to get through these and business is one of the things that keep things moving in the world. want to dousiness transactions and get to know each other and it supersedes the cycle of politics. >> with so much time in russia and china what does that say about where you think power is shifting? >> don't over say it too much, i was there for a brief time to get information. obviously china is important. of united states was 23% world gdp 10 years ago. if you would have bet that the u.s. would have been larger or smaller based on the rise of those other economies, we are up to 25%. there is a lot of handwringing in the united states, when you have 25% of the world gdp, the u.s. has great laws and great capital markets and innovation. when you listen to two trump speech, you know trump and have worked with him, how are world leaders receiving his message here in davos? >> they receive it in different ways. wasthing they did do, this at least very carefully telling the story that the u.s. economy is booming. we do have 3% unemployment. there are so many things going on. we are deregulated. there are a lot of things in policies that are generating substantial rewards for business and people. i know sometimes you can get caught up in the tweets and the presentation, i think you did a good job of combing that down and saying, look what we are accomplishing. the policies have been good for business. >> what is the process given that you called -- what are his prospects given that you call the last election? >> it is too early to tell, we don't have a candidate. in order to call a fight you have to know what the other side is. there is a lot to go in the primaries and lots of stories to be told over the last six or seven months. let's wait and see. >> the other thing everyone is talking about in davos is sustainability and the green initiative. i have had three bankers say we are talking about green too much. i am wondering what you are hearing and what you think is the opportunity -- is it realistic for the financial industry and blackrock which is leading the charge to make real change. >> it is a complicated question. we have to advise our clients on how to navigate in an environment where esg will be part of what they are held accountable for. overboard on go some of the requirements of things they are talking about? sure. people ask me why i come here and i come to find out what the consensus is so i know what won't happen and do the opposite. -- people arey going to have to deal with the fact that large institutions like blackrock and rating agencies and government institutions will be monitoring certain environmental social governance checklists. we will have to help our clients do that. >> you advised aramco, where do they fit into the situation? >> the world is going to continue to use and needs cheap energy. there are 500 million americans -- billions of people who are struggling and the access to cheap fossil fuels, it is their life. india, china, africa, they are not as worried about the environment as they are about making things meet and life. i think the fact that -- what worries me about this is the severe pressure on fossil fuels and the severe pressure not to invest in developed countries might lead to a shortage, sooner than we think. >> what do you think the next big market risk is? >> markets are priced for perfection. timee spend too much trying to predict the event. you have to know that there probably will be one. i have learned you have to know what it is and that one will happen. it may be this year. brothers had made it through that one year they would probably be a $150 billion market cap company. you cannot get taken out. you have to know the risk is possible. it.have to plan for withine: our conversation wall street continues, in the last couple of minutes, this is the chinese network television saying that china -- beijing has canceled holiday events amid the virus outbreak. i think that is extending to hong kong. this is the news of the day outside of dabo's. to have an update from the world health organization. we also heard from the u.k. secretary of health moments ago in the u.k. parliament saying that she fears that the virus could be in the u.k.. global health organizations are monitoring the situation trying to figure out who is coming in and out of the country and how they can contain the coronavirus. an ecbup later we have decision followed by a press conference, her first news conference of 2020. on the agenda of the ecb review and a lot of questions to field on negative rates. this is bloomberg. ♪ ♪ jonathan: from douglas, switzerland, this is book -- from davos, switzerland, this is "bloomberg surveillance." excellent conversations you and i have been having, and today no different. tom: this happens every year at onos, but there is a shift wednesday. we saw that yesterday. last night through the evening, the investment in finae

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