told ryan chilcote the country is heading into a recession if oil stays at $45 a barrel. >> the current situation 45 dollars a barrel and you expect that to be all year. in that case, the depreciation will be 4%-5%. >> oil price you are working on right now? >> it is a possible scenario. it is the worst possible. generally, it will be higher than now. in case it is 45, the decline would be 4% or 5%. >> how long do you see the recession lasting? >> it depends on markets and we think that it will be 2016 are 2017. -- or 2017. >> one of the price of oil stays low be on this year? >> we will have something like $170 billion. it is something around 10. the price will be around 45. the budget spending is for budget. it loses something with the oil prices. we have the budget. >> ok. let's get more and go to moscow. let's get a sense of how confident the government officials are about the future right now. >> they are not confident. they are not showing yet. they're putting on a brave face. things seem to have stabilized. the big thing we discovered since getting here is that a lot of what is going on is beyond their control. everybody says, tell me what the oil price is and i will tell you what the economy and ruble will be. they do not know and are cautiously confident. >> is there a sense the crisis could have been handled differently? >> there is a sense and the issue is that many people that i spoke with feel that russia could have responded more quickly to the crisis and they could have raised rates to halt the run on the banks and the decline in the ruble. we saw the head of the russian central bank give her mandate as the person in charge of monetary policy. she will stay on and there will be a new person in charge of monetary policy. we heard the russian president softly criticize the bank. there is the blame game going on and i caught up with the minister yesterday. he said this could lead to the ousting of the russian president. a fat chance. >> the crisis will not lead to vladimir putin. there will be a crisis because of the economy. it will not lead to a change in leadership. even if we have stagnation for some time. vladimir putin has established a series of control. >> he has been the finance minister for many years. people suggested he should be the new prime minister and he has criticized the russian prime minister in reaction to the crisis and from the government. i asked him about if he was prepared to be the next prime minister and he declined the comment on an. it is a focus on the oil price. >> thank you. exclusive interviews from moscow. >> everyone wants to know where the oil price is going. it may have an answer. david is the head of technical. >> good morning. i think it is too early to call. there is a risk that we go back and we did have a target that got wiped. we have measures and they are at 50. at the moment, oiled the client and you look at the current move and it would be down. in terms of history, it puts us in another contract that context. we are looking down and we can argue that we are in the endgame . we are at that final point yet. the measures all point to panic extremes and the timing of this is crucial. >> you see it around 39 and it goes up. >> 85-86. there was 75% off of the low and in my view, we have a sharp retrenchment in oil. we will stabilize and find the new equilibrium price. what is interesting is what is the knock on markets if we make the low. >> what happens and where is the next downside. >> level be 25 and oil prices are good. it will benefit european equities and equities in general. is starts to say that it is changing and i have seen the first few comments. are we missing something? i'm not think we are. we're looking for the recovery to come through and, if we do not hold it has to be strong. >> do you think it is a problem with the world economy? >> i'm a fundamental analyst. it suggests there is something more significant going on. >> a big move. in a sense, repeated after a long delay a catch-up and you can argue that copper topped that. oil was in a long-range for a long span of time. we saw it in an aggressive collapse with the new equilibrium price. copper went lower and it had the knock affect on the copper market. >> it seems like it was a realization of what is going on in china. we knew that. >> i do not know. it is not bullish. it is gradual grind and a capitulation and oil that we have seen that broke the straw on the camel's back for copper. there is a risk that copper moves and we see a turn and oil that may not copper. we look at inflation and equity. even body markets. it all comes down to whether oil finds the low or not. that will be crucial to how the next plays out. >> in the meantime, copper will be of -- will be going lower. >> it is led by natural gas and the oil market. you will start to see it get above 52. we are still a distance from doing that. there is chatter about the low. >> you talk about asset classes it's -- classes and equities. what is happening on the back end of the yield curve? what happens with the dollar? the dollar is linked back into the treasury market. >> is it bullish in 2015? we have further. if you look at the index, the risk is that the dollar may take a fall in the rally. we may see it. we have seen acceleration. what will stop it from rallying? we will see it. it was suddenly down at 2%. that could stop the rally. prices are the opportunity. if that is right, it suggests they are over the medium-term. it will recover strongly. there is more to come through and we have been looking at it being undone. we think there is more to go and we like flattening. it is pretty low. >> what is it mean for emerging markets? if you own liability, is it bad news? >> there is a clear emerging-market and oil affects the emerging markets. you see india doing well. i'm surprised korea has not done as well. china, for instance, has done extremely well and i think it will be a big benefit from the oil price. it has gone too far and we view china as a fallback. as a general asset class, what we watch for our measures with equities further in panic. typically, that is pro-risk. >> it would suggest the equity markets should come around. the problem is that it is a relative value story. the other side is that they will do very poorly. the main focus is on things like the european equity markets and china, which we are bullish on. we are not in the outright at the moment. if we can move oil and european equity markets, they could end up very strong. >> thank you for your time. the crisis managing director. >> what else is on the radar? david cameron is heading to washington to meet with obama. security will feature prominently on the agenda. it will be about how companies handle extremists and those familiar with the plan say the issue will be water talks on global threats, in the wake of the attacks in paris last week. he's told that he needs to implement qe and asset purchases may not be enough. >> the next purchases of securities is clearly what is needed at present. whether or not it is sufficient to get inflation at the level that would be satisfactory is another story because there is an absolute need of the cooperation of governments and executive branches all over europe and social partners. social partners and a role to play. >> companies have denied reports that they are in talks with samsung potentially acquiring the smart phone maker. samsung approached black hairy and executives from two companies met last week to discuss the transaction. blackberry said it did not engage in discussions. samsung described the reports as groundless. >> coming up. these are the risks you need to watch out for according to the world economic forum. we want to know what you think. >> what do you think are the key threats? let us know. we will see you after the break. >> the forecast about the ruble and oil prices is possible. i can give you the forecast. >> that was the ceo of russia's largest bank. trying to conflate the ruble and oil prices. >> more on the one-two punch with the sliding oil prices. let's go to moscow. ryan chilcote joins us with another exclusive. >> it is something that everybody likes to speculate on. we could see the exchange rate long before we see the return of hundred dollar oil. the economy minister told me that we could see a contraction of about 5% in the country. oil stays around $45. he is the ceo of the largest private bank. put thing and -- put things in perspective. awhat does the oil price mean? >> it is one of the key economic indicators and one of the major economic parameters. the number was mentioned and was dependent on oil. so, it is going to keep. >> do you expect it to weaken? >> it depends. i am not sure it is fully balanced. they are not far from being balance. >> the balance against the ruble and the oil. >> the current price should be 60 or 70. it is a napkin calculation. i'm not taking into account other factors or proceeds coming in. >> what do we expect from the banks? we saw a run last year. is that behind? >> i think it is. we are not yet -- the rate went up and this is unbearable. the key is slightly more midterm central bank and it is not completely tear desk clear. we have a lot of them and we would love the rate to go down. >> the russian president blamed speculators against the ruble and traders were behaving themselves and not speculating. do you think the speculation is to blame for what is going on? >> i have traditionally been more fundamentally looking at that and the russian economy is going to slow down. oil price was a catalyst and sanctions were another. if we want to look at what happens over the two weeks, we can see there was speculation. it was not from the banks. the banks are tightly regulated. as far as the auto traders are concerned, we do not have a lot of leeway. >> you and the bank are involved in rescuing a bank that was on the rocks last year. was that the opportunity? an opportunity. the group was formed and through a growth in 2008. we took a few banks and we know how to do it. we are not afraid. we have people who know. it is normal business. >> everybody expects to come out and downgrade russia to junk. you expect that? >> the fundamental default happened in trouble for some time. the current situation will be the catalyst and the guys have fairly strong business. they have government support. >> we saw a run on the banks and the money that came out last year went into appliances. any chance the deposits will come back into the system? has the cash been blown? >> there are two things and there is going to be a number one. the second is that a lot of money went into homes. people were afraid to keep money in the banks. i think it is subject to a stable banking environment. not too much falling. the money will slowly come back. which they see some of that coming back. it went into actual cash. >> ribbon. thank you. the ceo of the rushes -- the russian private bank. they give a cautious view and russia is awaiting a recession. >> watching oil price. that is what everybody says. watch the oil price. ryan chilcote in moscow. >> to the surprise interest cut. the details. what was the trigger for the actions? >> a definite surprise on the part of india and the reserve bank. it is the rate at which the bank lends and is 25 basis points. that is the immediate effect. the discussion of ratio or the amount the bankers are required to keep. the comets we saw were that inflation is likely to be below 6% by next year and that it is below expected trajectory and has been consistent with the assessment of the monthly monetary policy. in fact, they're saying that the monetary policy shifts actions and will be consistent with this. you are seeing consistent calls for rate cuts. >> thank you very much. we are joined on this surprise rate cut. >> deal or no deal. we will have more on that wild share price swing. what is your main concern -- what is your concern? >> we will talk about that later on. let us know what you think. we want to get your take on all of this and the main threats we face. let us know. you will find me and my cali -- colleague. we will see you after the break. let us know what you think. >> welcome back from european headquarters. >> these are the top headlines. the economy will enter a deep recession. a low prices remain around $45. the contraction would be around 4% and 5% and he adds that russia could return growth next year. >> with think will have visibility to have the positive gdp performance. >> the bank of england has announced a cut. the benchmark rates are 7.75%. it is the first since 2013. the stocks, bonds, and the repeat will stop >> petroleum and dutch shell have called off plans to build a plant. they say it is no longer commercially feasible and that of people is in global energy markets. it is the second project to be canceled in recent months because of falling energy prices. >> a whirlwind 24 hours. it jumped in yesterday's trading. samsung was eyeing the company. the rumors have been flatly denied. let's find out what is actually going on. over to you. >> it has been denied. what a roller coaster ride it was when you are looking at the share price. yesterday the report was that samsung had the biggest smartphone supplier and to the tune of $7.5 billion. that is about a 37% premium on where the stocks have been trading before the reports and the big moves were the reports that executives had met to discuss this. then, the denial and the view that these reports were groundless. they say they are not engaged in discussion and did not specify if they received a proposal. it seems as though the reports are away in the stocks closed up after hours. >> i want to climb and. we will come back to the story. we're getting some details from the bank. lowering the key interest rate to 0.75% and lowering the key interest rates ending the minimum exchange rates will stop >> let's have a look at your us swiss. it is the highest since the swiss national bank ended that and defended its own currency. >> will get those up for you in just a minute. looks like they continuation of the situation in this environment's though we were soon. they are rallying to the highest level since 2011 after we have seen it ending the floor. it is the reaction of the floor being watched. we were seeing a massive move. >> this is capitulating. it is fictitious. we will find more throughout the day and get experts on. as is them saying they cannot defended. >> we will get you a chart and put it into context. we appreciate that this has been in place since mid-2011. it has flatlined since then. we saw a huge move in real volatility. they took the aggressive move and said they are going to defend it aggressively and have ever since. he barely budged in the pair. subsequent to that, you can really see the magnitude of this. we were talking about she we and saying, if there was one world currency and one central bank it would definitely need to come more and they would lower interest rates. we are seeing that and we have central-bank diversions with the rest of the world going the other. we get back to a little corporate news. >> we were talking about what was happening in the telecom sector and what we can expect to see. a little bit more volatility. they join us now. the europeans are tough right now and we know that. there has been talk of more consolidation. what is the operating environment look like? >> you look at the last 3-5 years and we see operators struggling to grow and they are contracting. if you look at the industry expectations, you see contractions in revenue moving and from 2016, the expectations of positive growth are driven by regulatory impacts moderating because of the costs of mobile termination rates are lower and the private take supports revenue growth. >> you were talking consolidation and mobile spaces. >> it is a market in germany and all the rates are quite eager. there is that. regulatory hurdles are important. you need to have operating markets. you look at france paying and standing out for consolidation. >> second 2000, we see talk about telecoms, media, and technology. the gap between the telecoms and the media is really starting to close. there is nothing to separate. it has become a big media player. it continues in 2015. >> telecom operators are spending more money to have good competitive position and having a good tv product. we are seeing the box and integrating. it will continue to 2015. >> thank you for the nice look we can expect and mobile. we have had huge currency moves. >> so much time where they held the key flow. we have seen it effectively capitulate and a huge move as a result. we are down and by 15. so, the floor has gone. it has gone and we are trading at 01. an aggressive move. back in 2011, we got down to it getting really interesting to see if the levels get pushed for. >> you go through the comments that the national bank has been making and the cap was no longer justified >> or viable. >> they are trying to do what they can. it has not worked. what is your biggest concern? you can tweet us. we would love to know what you think. we have a report later on in the show. >> welcome back. the news of the hour and the week. >> a lot more. i will tell you that. this is down 20% in the last few minutes. the markets are blowing three key levels. it is a move in advance of the ecb and it seems they cannot feel with the level of pressure now generated and it is drying higher. we have broken through the euro dollar, which is crumbling. >> it is the biggest since 1971. we have the swiss national bank president holding a briefing in european time and it will be interesting to get the language of what he says and what he cannot defend the frank. >> i am told it would love to the key levels and the market is running freely. the magnitude of the move shows you how much pressure there is. it is in the space of a few minutes on a major global currency. it is jaw-dropping. >> they try to defend it. we came to this. it was the year of the hack attack. a new report warns the threat may be coming from somewhere unexpected. >> we face threats of external bodies and we need to monitor internal security. joining us is the director of cyber security. good morning to you. before we get to the responsibility we face can you give us a sense of where the debate is and how big of a threat we now face? last year seemed to be the one where everyone was effective. >> there is a lot about big hacks. the attacks are real. the news is getting out there and there is a debate about the news being made public. a lot of financial institutions do not make it aware that have been breached. technology has gotten more complex. we have to have a difference in the physical and virtual world. we cannot walk down the dark alleys. the cyber world is different. that is why. >> what change my view was something like sony and a huge corporation not preventing it and it kept coming and coming. they could not get on the computers. how do we deal with something like that russian mark >> we are all aware of the story. bad guys only have to get lucky once. the words we use our the attack surface. the more we use it, bad guys have ways. it is difficult to protect against everything and that is why the industry is transforming. we need to think about the business process. the assets are what they are. >> i want your take on involvement. there is an education process that needs to be underway. we need to educate the board and everybody at the desk using a smart phone and log in in and out. is the message getting through? >> there has been a call out for some. of time -- for some span of time. for a moment, they are starting to collaborate and understanding there are issues in trying to make people more aware. we are starting to understand the threat from people. the context is that two thirds lead to organizations. is down to poor behavior for security. malicious may be part of it. we're trying to do our day jobs and we are working in an unsecured wi-fi environment? we are trying to do our job. the second question says there is an increasing gap was security that says thou shall not and -- >> the department needs to come up and experts say it is a digital threat that is not being taken seriously by company because they should have a person on the board and that is rarely on the case. >> we are starting to see change and it used to be a back office functions. it used to be technical. it was the technical part. the risk is understood and it will be easier to communicate. a needs to be driven as a business process. >> worst in 2014? >> the risks compound and increase. bad people do bad things and there is nothing inherently bad about technology or the internet. i would be a great advocate. we have organizations that exist without an embed people try to do bad things. you can do it with little risk of prosecution, compared to physical industries. >> i can do my bit. what should i? >> check your passwords and think when the e-mail comes in. >> not opened automatically. >> basic intelligence. >> think of what happens and you will see the e-mails coming. you have credits. do not click it. if you really think about it, go back to a different route and check it. we will find it there. do not click. think. >> thank you so much. the director of cyber security. terry king. >> we take you back to the move of the morning. the staggering move. it is a staggering decision to end the defense at the 120 level. look at where we are question mark we are down by 30% on that. the qe story and the ecb story is coming up for the national bank will stop they decided to move in advance of that and the market is making the move aggressive. we will see where we stabilize. is there any stabilization? the pressure has been building. the move is massive and we will get more when we come back. >> welcome back. streaming on your tablet, your phone. to the breaking news of the hour and the week. >> spectacular is the way to describe it. a massive move and you can see it down. let's look at hans nichols for more. >> all of us have spent a pheromone of time reporting. you talk to them and they are pleased that it has been established. all the headquarters will have a difficult time down. some of the middle will be getting products cheaper. we'll talk about a company that is a competitor with general electric. take a look at their stock. it is down the last time i checked. a remarkable story that shows you how difficult it was to defend the ceiling or whatever we want to call it. how much were they actually spending to defend it a you can see the sharp move with other companies that will be heard on this from the export and we had thomas jordan the swiss national bank president, who will be speaking later today. remember when they introduced the negative deposit rate at 0.25%? they are bringing it down and it is a time where there was a little bit of talk that had to do with the ecb and quantitative easing. they were focused on the vrable and does not want to be as big of a story. certainly, the swiss expect this to happen with the european central bank and start purchasing both sovereign bonds. >> massive moves on the currency markets. we are looking back at the downside and we show you the build up of the story that deals with that. the question is, can it do anymore? if the story does not a bait and it is still one of money flowing in, is it negative? >> you have to look at the size of the holdings and this is not entirely swiss. i want to see with the negative 0.75 does. look as we learned from russia. you have to -- you have the p shooter and they have the bazooka. >> the currency is bouncing around. going berserk as everybody tries to find the floor. >> the first word is next. second hour of the polls. >> the swiss national bank surrenders its currency floor and the currency plummets. >> oil at $45 per barrel. >> key risks you need to watch out for in 2015. >> good morning to our viewers in europe. on guy johnson. >> i'm francine lacqua. a lot of news. >> the last few minutes, there has been dramatic action on the foreign exchange markets. the decision to ditch its floor. it has held that since mid-2011. qe is on the way. this is what we have seen. this is the five-year chart on the session. the downside is incredibly aggressive. that is what we have seen on the day. we are down by 15%. >> the president is holding a briefing later on today. enforcing the cap on the frank was no longer justified -- franc is no longer justified. >> they are all due to tie up on the 22nd of january. the smb -- the cap is gone. they removed the cap the costly defense they had on the euro swiss franc. this is down nearly 16% so far in the session. they have also moved more negative than they already were. interest rates in switzerland have gone more negative. what you take away on one hand the cap, presumably this is the kind of counterpunch. we are going to take this cap away we are going more negative on our interest rates. that is not having the desired effect. let's have a look at some of the equity market impact. have a look at some of these individuals. the more you export, the more pressure you have with a stronger swiss franc and a lower euro. for the likes of the global businesses, global exporters -- as if it was not enough news flow for everyone -- dividends were already a big question mark. this has got to be one of the best dividend paying stocks and the banking industry. credit siu's pressure. these banks are under pressure -- credit suisse is under pressure. these banks are under pressure. this was a three-year trade that they defended within an inch of their life for three years. >> it is interesting to see. the market reaction is huge. we will wait to see how it stabilizes. there are some key levels. the sense is that it is hard to get a handle where we are going to settle out on this one. >> dropping like a stone. you look at that regional -- richemont, down 8.3%. >> a lot of people took out mortgages in swiss franc's in those countries. >> you get a read across quite quickly. it is a mortgage story that feeds through from one to the other. this is plan b. as one very known at 6 -- well-known ethics guy told me you have to wonder whether there is a plan c. do they have to do that and are you going to see even more? >> when will we find out who is putting money in? do we find out? >> you will see a set of data. where money flows in and flows out. i don't know if we have the actual chart for the bond market. one year, two year, three-year four-year, five-year. government bonds in switzerland are no negative. -- now negative. india cuts rates. that is more to do with the fed in terms of concern about oil and deflation our pressures. this was them trying to defend themselves against the aggressive movement of qe within europe. this is the 2015 fever. protect yourself from other people. >> it is a currency war. >> thank you very much. you could argue that previous to this was a currency war. they cannot maintain -- the pressure is too great. this with other people who are losing the war, not winning the war. >> visit russian money? i don't know the answer to that -- is it russian money? i don't know the answer to that. >> the theme is currency wars. the asset class in 2015 is negative bonds. there is a whole new world of trading. germany, negative rates. switzerland, negative rates. the united states of america, deflation. 30 year bonds are at a record low in the united states. this is a whole new shifting gears for currency wars, thinking, and trading. >> the swiss are currently losing it. >> badly. >> badly. >> the russian money that is flowing out of that country. we have ryan chilcote in moscow this morning. he has been talking to the country's economy minister. let's have a listen to what the economy minister said about the recession that his country is going to face if oil stays at $45 per barrel. >> if we take the current situation something like $45 barrel, and we expect that to be all your long, in that case, the depreciation of gdp should be between 4% and 5%. this is one of the scenarios one of the possible scenarios. we think it will be higher than now. but in case it is $45 the decline would be 4% or 5% of gdp. the recession is very dependent on global markets. we are looking at positive gdp performance in 2016 or 2017. >> what if the price of oil stays low beyond this year? >> we will have something like $170 billion as a government reserve fund. the fiscal gap is 3 trillion euros. it is roughly more than three years of budget spending. the ruble price is important for the budget. >> for more let's go to ryan chilcote in moscow. we were wondering whether there was a link between russia -- we can kind of hand at a link, but we don't know -- hint at a link but we don't know for sure. how confident are government officials about the country's future? could russian money go elsewhere, possibly switzerland? >> if the politicians are confident, they are not giving it up just yet. the bottom line is that no one wants to make a forecast about what is going to happen in russia with the economy, the ruble -- it all depends on oil and no one knows where oil is going to go. it is a bit depressing if you think about it that if you are running a country's economy with the single biggest factor in influencing what happens is actually completely out of your control. >> let's talk about the car industry. the russian car industry. sales are down are expected to be down 24%. there is probably an import story. give us the background to that dramatic number. >> it is extraordinary. for a brief period a few years back, russia was europe's largest car market. big deal. 24% is massive. car sales were down 10% last year. they did spike in december. there is a run on the banks and people bought whatever they could because they were concerned about inflation. a good number of the cars in this country are imported -- russians love their cars. that is why you see this expectation that car sales could fall by 24%. that is how it is going to hit your western carmakers. it will spur some of them to produce cars here. >> that is a massive whack. coming up more on companies on the move today. ♪ >> welcome to "the pulse." huge news, breaking news. >> the snb has decided to abandon its floor at 1.20. we have seen gyrations from the foreign exchange story through to equities through to the bond market. >> we are expecting more from the president of the snb this afternoon. we are trying to quiz you on whether this is basically a panic from the swiss national bank or whether we tried to defend that floor and we are moving on. >> i think it is much more plan b then speculation. this won't be the end of plan b. i think it is also a recognition -- you can hold a peg for a limited period of time in a storm and the storm would pass and if you need to remove the peg, you do so. but, times from geopolitics -- but calmer times from geopolitics may not come soon enough. it looks like a new year reappraisal. different plan needed. but the market clear itself. -- let the market clear it self. the belief must be that we will eventually get back to a currency that is less overvalued in due course. >> i want to bring in more in stanley's -- morgan stanley's global head of fx. plan b is in place. what are your thoughts? >> luckily we did not write about it in the last weekly publication of morgan stanley. we looked into the development of currency reserves. we were in substantial opposition of this increase of currency reserves. the ecb is looking at quantitative easing. that was giving us an indication that they wanted to increase the balance sheet. then you have the swiss national bank guaranteeing to buy swiss francs at an exchange rate of 1.20. i think that is a reflection of this. it is quite interesting when you see the detail of the announcement. more important -- and this goes back to some of the suggestions made over the weekend -- it was suggested that we need to look into the trade rate index. not so much about euro swiss, but the trade rated index. that is where the crux is today. the trade rated index move is sharply lower. i think the swiss central bank will come back into the market, but they may not intervene into the euro. it is meaningless when you have the ecb printing one trillion additional euros. so you do it against the u.s. dollar because that is much more effective to get the trade rated index a boost and that is why this is a dollar bullish story. you can come out of this with an even more bullish interpretation of matters when compared to before. >> you think we are most likely to see them formally or informally move to something where they are trying to control the currency more broadly? is this giving us an indication of where they want the trade weighted index? >> i think that so far it seems to be informal. it can be done at any time, if liked. they want to say to the audience, we want to do have a relatively trade weighted index. you have to think about the effectiveness of intervention. when you intervene, it becomes very costly. was the dollar goes up, it takes the swiss franc and everything else equal. think that the swiss national bank wanted to keep the trade rated index relatively stable. there inflation outlook would become much more deflationary. we already have too much of a deflationary theme in the euro. >> the ecb is going to launch massive qe. i'm assuming they don't talk but this is a reaction to an event that has not happened yet but an assumption based on event that will happen. >> he is saying there is no played waiting for the dust to settle around the ecb and for everything to calm down. plan a does not work and i can't sit with this floor. i need a new policy and my new policy starts with removing my bank, clearing the market and much more negative interest rates and then i will come in and intervene and stabilize. >> would mario draghi look at this and say, now i would really have to do qe? >> one of the things that does follow from this is that mario draghi gets help from a weaker euro. this is dollar positive and euro negative. the snb has walked away. this is going to accelerate the euro downtrend. it is going to go down faster. that helps mario draghi. >> how much more negative do you think rates could become? they cannot fight this one. this has to be passed on. how do you think global investors will react to the story in the medium-term? >> you have negative interest rates in an environment where there is an offering of a quality currency. i think that you cannot look at interest rates and regard them as a flexible instrument open for significant negative prints of 2%. at one point you have to make the depositor to pay for the services of the banker or the luxury to deposit in that bank. that is going to put capitalism upside down. that -- you cannot have that. we need to look for other alternatives. this is a move which is done because he wanted to protect for inflows. a depositor would have to pay the swiss bank for the privilege of having a deposit in the switzerland. this is a limited instrument. this puts the emphasis on the exchange rate and switzerland does not make any difference at the end of the day. they are falling inflation rates in switzerland. that means that the change rate may come here as well. -- exchange rate may come here as well. >> mkkit, will this have an impact on the london property market? i'm a wealthy russian in moscow right now. where do i put my money? i know it is the $1 trillion question. >> nobody wants to be the recipient of all the big safe haven flows. i will have to ask how many people are not going to be buying places and i both soon -- in davos soon. i'm not sure that puts off that bit of the market. with safe haven investor is going to look elsewhere. >> i was waiting for gold to come up. [laughter] >> we have this problem. you have falling prices in switzerland. they don't want a strong currency. they don't want a strong currency, but they have given up stopping it from being strong. it has gone up really quickly in the last hour. places where you can put money where they are not objecting to it are pretty few and far between at this point. i think money is going to prefer to be in real estate and properties and earning negative interest rates on deposit. people really don't like having to pay to have money in their bank. >> what are the implications for some of the other european stories? the other countries that have negative rates associated with the ecb. walk us through the ripple effect of how this is going to be felt. for instance, we have already seen the poles canceling a bond auction earlier this morning. >> this is our super dollar positive. one remark i have to make is that the target must be to keep the trade rated index relatively stable but otherwise you are creating a huge deflationary problem and that is unwanted. you will see them intervening in dollar. that is positive. number two unfortunately you have $9 trillion outside the united states and so the dollar goes up. if you have invested in assets would -- which do not produce dollar revenues, your asset -- you are in trouble. this dollar strength is negative for emerging markets. at one point, america, which is currently enjoying local funding cost -- this is an invitation into a local u.s. dollar, domestic u.s. dollar trade. you fund in dollars and invest in housing. that is going to lead to a substantial acceleration of monetary volatility into the united states. the gnu have to think about what is super good for the united states -- then you have to think about what is super good for the united states -- is that good for emerging markets? we will be sandwiched between continued strong performance of assets in the united states and the weaker asset performance outside the united states and that is going to go forward and backward. one is currently dominating. in the next few days you will be seeing the domination coming from the emerging markets and that is the reason why equity futures are down this morning by a significant amount. >> do you agree with that analysis? >> i think it has been the theme of the stronger dollar. periods of dollar strength are associated with stress on emerging markets. we are part way through that. we have had a dollar rally for a while now. we can see the volatility in emerging markets. this is a reflection of that continuing. this is the first one where we have had someone let their currency appreciate. it is a brand-new twist. [laughter] i agree it is dollar positive and dollar uptrends have not historically been smooth. the last american crisis came out of one, the asian crisis came out of one, the russian crisis came out of one. >> thank you so much. >> just while that has all been happening we have an interesting twist. the rate contract -- oil has been going down generically. the various ratios of these two contracts -- it is below wti. we have seen this move by the snb impacting the equity markets . the luxury goods makers are under pressure. richemont is down on the back of all of this. let's get analysis from caroline hyde. >> the shares of richemont down 11%. it is a switzerland-based company. it has cost in swiss francs. it is all about the luxury watches that it makes. it is behind the brands such as cartier and the most iconic watch brands that have the most intricate details made in switzerland. this will have them hard. this is a company that report to its numbers in euros, but the entirety of the index in switzerland is absolutely feeling the brunt of the swiss franc gaining to such an extent versus the euro, the dollar every single traded currency tracked by bloomberg. when you are such an exporter, this is the key problem. asia is a significant slowdown. it was protests in hong kong which meant that asian sales collapsed 12%. they have such headwinds facing them at the moment. they have concerns about the steadiness of the european demand. for more tourists are traveling through the fashion capitals, milan, london -- spending in the luxury boutiques. retail sales are doing slightly better in europe. there is a concern when it comes to bringing back those sales abroad, you bring that money home, you transported -- it is going to be heard so much more by the strength of the swiss franc. that is why we are seeing such a collapse of the share prices. >> thank you very much indeed. caroline hyde. >> let's gets more -- get more on swiss watchmakers. great to have you on the program. thanks for coming in. the swiss national bank is abandoning its floor. the swiss is at 1.04. that must have an impact on expensive swiss watchmakers. >> for sure. the cost for switch watchmakers is in swiss francs. -- swiss watchmakers is in swiss francs. you have a cost base, you have inflation, you have income. richemont would be more supportive. the euro will probably go down. all the labor links to swiss francs there is precious material. that is denominated in u.s. dollars. the equity market is overreacting to the news regarding richemont,.. it is not good news for the swiss watchmakers. >> let me cut you off. but's get a sense as we were talking about this yesterday. -- let's get a sense as we were talking about this yesterday. are these watchmakers rich enough that they don't care if it goes up by 25% or will it make me think twice, even if i'm a russian oligarch? do i say, 25%, i might shop somewhere else? >> the point is that there is no alternative to swiss watches if you like watches. watches over a retail price of 1500 euros, 95% of them are made in switzerland. this is a typical case in which if you want that category -- [indiscernible] [indiscernible] for sure, there is an impact. there is no alternative. >> how does this work? do they raise the price point? what is the story for them in real terms? how do the mechanics of this actually work? >> the luxury companies usually have pricing power. they can decide how to adjust their price according to the change in the currency. the more a brand is desirable, the more its pricing power. the more it is offsetting the stronger swiss franc. now is very important -- what we see in the next few days. the product innovations that the brands put out. they will probably put up the price of a new product. >> give me a sense of the brands. is it more difficult for rolex to sell one the swiss franc is a 25%? -- when the swiss franc is at 25%? >> it is a situation that is pretty unique. it has much more pricing power. historically, it was better than for the company who made rolex. the more your brand is desirable , the more it has the possibility to offset. it depends model by model also. the watch companies will not increase 5% prices on all models. one flagship products that is really resilient, you may increase the price on that more than other products that are not selling like hotcakes. >> it is very interesting. huge breaking news on the swiss national bank. the swiss franc going up by about 20% or 25%. it does have an impact on luxury goods. >> i imagine there are some very nervous restauranteurs. >> it is the companies. >> are you going to be going skiing in switzerland this winter? [laughter] maybe the model has changed a little bit. risk and responsibility at the world economic forum. the biggest threats to world security and cyber warfare makes the cut. we will talk about this with a great panel when we come back. let us know what you think the biggest threats are for the year ahead. tweet us. ♪ >> welcome back. next week, the business elite gather in the swiss else. it will be much more expensive. i had of that, they released their global risk report. >> but bring in the zürich insurance group's chief risk officer and the world economic forum's lead economist. we are all getting ready for zürich. the big threats we worried about for the rest of the world. what are the risks we face? >> see conflicts flaring up. [indiscernible] >> this is terrorist attacks? engagement of warriors in certain hotspots around the world? >> conflicts between states. they don't have to be armed conflicts. they could be conflict seven economic nature. currency wars, sanctions, different types of conflicts. it is a worldwide trend we observe. different cyber, different things like that. conflicts between states. >> the nature of conflict has changed -- that is probably the point we should take from this. it could be a cyber attack these days. the nature of conflict seems to have changed so dramatically. >> the nature of conflict has changed and the nature of risk. if you look back at the global risk report when you look back at risks that have been highlighted 2007 through 4014, economic financial -- 2014 economic financial risk fiscal is use -- issues, what we see now is much more a picture of fragmentation, instability insecurity. the whole notion of risk is somewhat shifting. >> how do you ensure against that? are there models? are you still try to figure out how to price that into people's insurances? >> we are in business to underwrite risk. in that regard, it is a good environment for us. what would unplanned urbanization ultimately mean? more than 70% of the world's population is going to be produced in the cities. more than 80% of the world's gdp is going to be produced in cities. these are on the opportunities for us. >> what are the risks that we are least prepared for? some of these risks are evolving and they are happening fairly quickly. what are we least prepared for? >> a huge risk in terms of impact -- climate change. many households do not have appropriate access to water. or clean water. we are not dealing with this trend. we are not dealing with climate change and the consequences of climate change. >> the onus cannot always be on governments. the governments have taken a step back. what can companies do? >> davos is a lot about the public-private dialogue that we talk about. there needs to be collaboration across countries. and with the private sector as well. the private text -- sector needs to take responsibility. >> is the half-life compressing? technology is having a huge impact. you get a sense that some of the stories are gathering pace. >> i think that is the general perception. one year ago things were heralded as a great european success story and now overnight, the bank seems to collapse. the oil price, nobody has really seen the oil price dropping that dramatically. we just learned this morning about the swiss to the euro. instability, change rapidly. resiliency is a key topic for companies, as well as for governments. >> biggest people are concerned about the risks not in the report. if it is something that no one saw coming, that is when people are taken on their back foot. as a company or government, how do you address the risk that you don't even know about? is it possible? >> there are some factors that prepare against a set of risks. having education in place, having proper infrastructure. even it cannot prevent the risk, it helps you prevent -- recover afterward. having a strong, solid economy. getting the fundamentals right can only strengthen. >> it is about preparation and mitigation. you can someone get prepared for financial risk. ciber has a lot more to do with reputational aspect. the whole question of recovery. do you have plans? recovery plans? how to reach out to regulators, communities, stakeholders so that you can bounce back after an event. >> thank you so much for joining us today. we are back in just a couple of minutes. ♪ >> welcome back. it has been a busy morning. what do we need to know for the rest of the day? the british prime minister -- is he on the plane already busy about to get on the plane? what kind of reception is david cameron going to get in washington? what does he need? >> this is his chance to make himself look like a leader on the world stage, but also to showcase the issues on which he is going to run his campaign. they will probably talk about the economy, something with president obama is going to be keen to show the success in the u.s., but also global security. that is very much going to be on the agenda. >> hans, you have been covering the white house for 10 years before moving to berlin. what is the kind of perception david cameron will get in d.c.? >> it will be a variety of bad sports jokes, sports puns. that is the only thing we will be expecting. they played ping-pong at one point in london and then they grilled something in the backyard of number 10. david cameron had a groanful pun about giving the president a proper grilling. there is a fine line. david cameron has to show that he is sticking up for british interests on the tech side. there is a thorny and difficult conversation and one fraught with political peril for mr. cameron. >> they will also be talking about cyber security. the linking of intelligence and national security. >> one thing that they have discussed and will continue to do is david cameron is trying to push for companies such as facebook to make some data accessible to british authorities. for example, when you have posts by extremists, if there can be any intelligence sharing with british authorities. he has also made promises that if he is reelected in may, that he will give security agencies in the u.k. more powers to access encrypted messages, which is fraught with controversy come on the political side and on the -- controversy, on the political side and on the economic side. >> we will leave that conversation there. the arrival shortly of david cameron in the united states. to wrap things up with you, the snb is the big news of the morning. plan b is i guess what you would call this. we will see whether there was a plan c after the swiss has cratered like it did. >> we will take a look at thomas jordan, the president of the swiss national bank, he will be holding a press conference. what is next and where is the frank going to settle vis-à-vis the europe -- swiss franc going to settle vis-à-vis the euro? that is really going to be driving the conversation for the rest of the day in europe. when new york wakes up and figures out how expensive davos has gotten for them. we will make sure there were not any cancellations. >> it is a very fair point. we announced this on national tv. in terms of the swiss national bank and what we are watching out for, the president will be talking in about an hour from now. 1:15 zürich time. what are we expecting him to say? he is going to justify his move, right? >> he is going to justify this remarkable reversal. it was may 2011 that the one point 20 was set. it is no longer there. are they going to set another floor? they lower the negative deposit rate. is that the only bulwark? also look for reaction from the swiss business community. their job for exporting just got a lot more expensive. we will see have the smaller companies do. just how expensive that the cost of business is going to be without expensive swiss franc. >> hans nichols, think you very much. we had an interesting conversation with a specialist on swiss watchmakers. if you are really high-end you have much more capacity to increase prices than someone who is more mainstream. >> if you are a big buyer of expensive swiss watches, maybe you can take the view that they are only going to get more expensive overtime, so by when now because the swiss franc is only going to continue to appreciate because the value of the swiss franc is going to -- watches will go up. >> that is it for "the pulse." "bloomberg surveillance" is up next with tom keene his team. follow us on twitter. >> follow the conversation we are going to continue to have. we will take a break. we will see you tomorrow. we will leave you in the capable hands of "surveillance" in the united states. ♪ under the mattress, or at least, you're going to pay a lot to a bank in switzerland to take your money. oil cannot find a bit. we speak with michael leavy of foreign relations. well, it is a least liked idea in america. olivia is interested in, are we going to raise the gas tax? good morning, this is "bloomberg surveillance." a stunning thursday, january 15. here is our top headlines. >> a surprise move from the central bank in switzerland. unexpectedly gave up its minimum exchange rate for the swiss franc and lord its interest rate in deposits. the frank is searching up as much as 15% against the dollar and stocks are sinking. oreo draghi's predecessor at the european central bank has some advice, time to break out the qualitative easing. >> purchases of securities is clearly what is