Attack by the president elect. Its tuesday, january 17, 2017. Worldwide exchange begins now. Good morning. Welcome to a very special edition of Worldwide Exchange. Im sara eisen. Im wilfred frost. Were coming live from the World Economic forum in davos, switzerland. This week its the annual gathering of the Global Political leaders, ceos, bankers and decisionmakers. As u. S. President elect trump prepares to take office friday. Among our guests this morning, we have the ceo of Society Generale here. And we have jacob frenkel. We will talk geopolitics with ken rogoff. Ian bremer joins us as well. So many big stories to talk about. A forum of international leaders, ceos and global elite. Starting in just about ten minutes time, president xi jinping, the leader of the biggest communist economy in the world will address a whole load of corporate leaders, likely to back up the argument for free trade. In three days time, the new leader of the biggest capitalist economy in the world will likely start articulating an argument against it. Theyre really setting themselves up for two didnt sides of this globalization, free trade, interconnected type of world. Especially with donald trump, the president elect speaking over the weekend coming out against european integration. It gives us fodder to talk about with our guests here. As we said, president xi jinping will begin in about 10, 15 minutes time. Well bring you the highlights from that. And well talk about the relationship between beijing and washington with ian bremerment. Before that, lets check the Global Markets. Show you whats happening. U. S. Equity futures slightly negative following what weve seen in overseas action. Dow futures down about 40 or so points. S p futures are down about 6 1 2. Nasdaq futures down 12. As for the tenyear treasury note yield, we have seen higher yields postelection. Thats backed off a bit. As you can see, were way off the highs at 233. Some buying of treasuries this morning. Selling of stocks. Not a pronounced trend. Quite a lot of guying over the weekend. And that upcoming brexit speech from theresa may, that caused jitters and risk off sentiment over the weekend. The british Prime Minister will deliver a speech this morning. She is expected to say britain will not seek a deal that leaves it half in and half out of the eu. Lets look at the pound. Its rebounding today, having hit a fresh threemonth low over the weekend. Today up about 0. 9 . So, 1. 215. A decent rebound today. A somewhat buy the rumor sell the fact moment. High drama. The pound sold off and it is rebounding today. That speech due in about an hours time. That lower earlier this weekend. As for the European Equity trade this morning. Lets show you whats happening across the continent in europe. The dax is negative. Sort of down about three quarters of a percent. Fewer declines for the rest of europe. As for asia overnight, theres the ftse 100 down 0. 3 . Remaining resilient. Asian trade saw the nikkei down sharply. The rest of asia up. Oil prices were down about 1 on friday. Down about 3 for the whole last week. Not doing too much well, up about a percent and a half, wti. Rebounding from last week. Dollar, as we said, soft across the board. Yen up about a percent. Euro up about 0. 6. Gold prices to round things up, up 2 last week and gaining this morning about another percent or so. Among the top corporate news, General Motors is expected to announce plans to invest 1 billion into its u. S. Factories. This will include adding more than 1,000 jobs in the u. S. The news could come as early as today. The automaker faced criticism from president elect trump for building vehicles in mexico. Sources telling phil lebeau the investment had been in the works for some time now. Yesterday, president elect threatened german carmakers with a 35 tax, a u. S. Import tariff. He argues german automakers are better building u. S. Auto factories if they want to sell to u. S. Consumers. It will come with a press release these days. In other political news those days, president elect trump is taking issue with one part of the House Republican tax plan. In an interview with the wall street journal, trump calls the border adjustment provision too complicated. The measure is designed to increase u. S. Manufacturing by taxing imports. A number of Global Leaders are responding to comments from president elect trump. French president Francois Hollande says europe does not need to be told what to do by outsiders, this after President Trump did that interview with the london Times Newspaper in which he described himself a big fan of britain, endorsing the brexit vote. But predicting more countries would seek to follow the uks example. Trump also critical of Angela Merkel for her open stance on refugees, suggesting that nato is obsolete because it has not defended against terrorist attacks. Provocative xhcomments going do here. Germa that reaction across europe here has been extreme to those comments over the weekend. Our davos lineup of guests starts now with the ceo of Societe Generale, Frederick Ouda joins us. Lets kick off with some of those Political Developments over the weekend. Your own president , Francois Hollande saying europe does not need the interference of the president elect trump what is your response to that . I think beyond what is being said, what is important is that europe in this new world that you are describing with this transition may be doing something more fragmented and has to think about its future. There are elections in france, both in france and germany, europe and the eurozone has to think about this market. Do you agree with president elect trump . Do you agree with the sentiment that another country might vote out of the eu . I doe dont think so. Europe brings a lot of benefit, whether its to the countries in the eurozone or not. Do the people get this . No, theres a question mark, economically and have a Security Point of view. These are the two main items people think about. We need to provide better answers, more growth, more jobs, more security. I think personally we can do that better by being together than rather going on our own. Having, again, even more fragmented europe and landscape. One of the other comments president elect trump made is he suggested that the eu was run really as a project for germany, led by them. Whats your take on that . Is there different policy from the central bank where policy is shared that would benefit countries that germany doesnt let it happen . We still have in the eurozone didnt economies, different competitiveness. More than ever i think what we have to design is a mix between more convergence of the economies, perhaps the fiscal policies, and then effectively maybe more solidarity. Once we consider we cannot have the same economy everywhere. So i think, yes, its imperfect, but we need to we can make additional steps towards more efficiency of the eurozone and europe. Wilfred brought up the European Central bank. Whats your prognosis for the policies of mario draghi . Will he not need to be as stimulatetive or negative Interest Rates . Among the positive signs ive seen in the last three months, one thing is probably that the central bank has more margin of maneuver if rates are increasing in the u. S. , if the fed is normalizing. It gives more opportunity Going Forward beyond probably end of 2017 for the ecb provided growth is there, maybe inflation outlook is better to carry on normalizing. And exiting the negative investigate environment. We had a clear theme in the last couple of quarters of banks earnings coming out of the United States, banks were in the middle of q4 earnings for banks. The theme was clear for jpmorgan that they are gaining market share whether its in trading or Investment Banking in part from european banks, whether its Deutsche Banks crisis, italian banking crisis or brexit. Does it put increasing pressure on european banking space as a whole . Do you feel like the u. S. Banks are gaining market share from you . The picture is a bit more blurred. Its not so clear in europe. They have the strategy and sometimes a retrench from certain businesses. U. S. Banks have consolidated and benefited from an economy which is doing better than europe. So, shgs yshg, yes, profits can dynamic. Beyond this, whats important for europe, you need to have a few strong european banks, and overall a strong europe and Banking Sector to finance the economy. Still banks is the major component of the financing of the economy, not Capital Markets in europe. We might migrate to a system, but it will take some time. You came out after the uk vote and you committed to europe, now theres talk that if the uk does leave the common market, that could be a problem for the banking seconder in particular. How are you thinking about it . Im shot sure it will be a problem for the Banking Sector. It are add more complexity to adapt the design of the operations. Can i say for a bank like Societe Generale its not a big deal. We have a presence in the uk and eurozone, with licenses, premises, people, brands. I think its not a big deal. For the banks, which might have concentrated resources in london, yes, they might have to rethink and put more people in europe. But i dont think its more operational complexity and of course a lot of energy which will be dedicated to the negotiations. I would have preferred the uk to stay, but we have to live with that and adapt. You mentioned the better Interest Rate environment in the u. S. , a drastic change in that, Bank Share Prices in the u. S. Responded accordingly, also hopes of deregulation. Do you look at the u. S. Banking environment at the moment and wish you had something similar back here at europe . Again, we have different models, different financing models, different cultures. We need to find that not only which works for europe. As part of this, we should not be naive in terms of regulation. Yes, we need to exit this negative rate environment and then we have, of course, to adapt our Business Model to the challenges the new technologies, Digital Technology changes and capitalize on where we are strong. And where we have been able to keep our clients and very loyal clients. Im positive on the longterm outlook. Frederick, thank you very much for joining us this morning. Thank you. Our first guest from davos. We are just Getting Started here. Its chilly, but we have our heat warmers. Xi jinping is about to address the World Economic forum. Thats happening this hour. Its the first time a chinese leader has been in this forum. Up next, ian bremer joins us to talk about the future of the washington beijing relationship under the trump administration. Hell be here to react to any headlines which we will bring you. The first time for president xi. The first time for Worldwide Exchange. Wie back in a were back in a couple minutes. With the xfinity tv app, anything with a screen is a tv. Stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Welcome back to a special edition of Worldwide Exchange live from davos, switzerland from the World Economic forum. The end of this week marks the transition of power in the United States and along with that comes a plethora of questions about u. S. Foreign relations. Our next guest analyzes global risk, joining us now is ian bremmer, president of the euasia group. This is the year of geopolitics at davos. The significance of xi being at World Economic forum. The biggest event of the week is inauguration with trump saying he is antiglobal investigation. And the biggest event at davos, the chinese president saying he is supporting globalization. Its the end of paxamericana. Its about consumption which the chinese can drive economically, but they cant drive political negotiation, a sense of citizenship or global institutions. So there is more unease with what the world will look like if china will do the leading. How big a step of this is china taking a bigger share of impact over the world . China didnt want trump to win. They dont want the uncertainty. They recognize theres an opportunity for them to pick up influence with other countries in their region. Theyre a trade partner for a majority of the countries in the world. That was happening anywhere. In the philippines, president duarte was saying china is the future, not the United States. They saw the future was increasingly china. China doesnt like the idea that not only is there massive uncertainty around trump but specifically the u. S. china relationship on north korea, taiwan, south china sea. Trump is picking a fight. His advisers are, rex tillerson, thats a serious problem for the chinese. The question is does xi jinping make a district response to that today. The question were trying to figure out on cnbc is does it put the u. S. At an economic disadvantage if china starts to lead the push towards globalization, free trade and other as pecpects that should o the World Economy . An ameriexit is different than what ameriexit is what trump is doing. We can coin it here. That means that the United States is not taking on a lot of burdens. But we are the biggest Global Market. If we tell the mexicans, you know what . Youll redo nafta. The mexicans will redo nafta. Theyll do it fast. The japanese, we didnt give them transpacific partnership, abe got his butt on a plane and gave a golf club to trump saying were still your buddy. That doesnt mean that longterm the United States is not going to be hurt by china developing architecture and having much more political influence over these countries. The sorry brits. Fair enough. Fair enough. He wont let that go. In a different article you compared the leadership styles of trump with president erdogan and putin, and expressed surprise that that access will be forefront of the coming administration in the u. S. Will that last . Are those three that similar . Theyre really about personalities. In both cases you have strong authoritarian leaning personalities that done care about the values of the countries underneath. So the fact that trump would say im prepared to work as closely with putin as i am with an la merkel, that shows you the ideas of liberal democracy, rule of law, independent judiciary, support for a free market is not whats driving trump. Its can i put points on the board . Its easy for an individual trump to put points on the board quickly with an individual Vladimir Putin or an individual president erdogan. Is that going to last . The fact is as quickly as an individual can get into an alliance, an individual can l d leave one. The alliances around the world are so durable because theyre codified in common values and institutions broader and deeper than just one leader. So the relationships were talking about now, never mind the scandalous issues of russian hacks against the u. S. And the rest are clearly built on much weaker foundation than the appliances that have really underpinned the globalized americanized world since world war ii. One of those is nato what is he accomplishing by criticizing nato at this point. Obama started criticizing nato by saying a lot of countries need to do more to actually pay. If trump is willing obsolete takes it a step further. Obsolete was the headline grabbed by folks. If you read the entire speech, he also said nato did some good things. We know he loves making these headlines. If you are countries in europe right now that are themselves thinking about more exits, the fact that he supported further exits from europe where obama said we wanted to keep europe stronger together, trump doesnt see an advantage in a strong europe. Not as a nato partner, not as a european bloc. I think thats an enormous worry. China doesnt see much advantage in a strong europe either. Russia wants a weak one. At least in the United States, we have the biggest market, technology and geopolitical stable. In europe, you have a problem. You could make the argument, go back to the brits, if youre going to leave, the best argument for leaving is that you think europe is collapsing over the next 5, 10 years. The election of donald trump furthers the cause and case for why you want to go brexit. We will hear from Prime Minister theresa may making that speech in an hours time. And president xi within an hour. Our set up here at davos, ian bremmer joining us. Still to come, we state down with Jpmorgan Chase international chairman, jacob frenkel. Before we hit the break, we are making the most of our trip to davos. Sara put her currency knowledge to the test when we went to buy swiss chocolate. I laugh, i sneeze. There goes my sensitive bladder. Sound familiar . Then youll love this. Incredible protection in a pad this thin. I didnt think it would work, but it does. Its called always discreet watch this. This super absorbent core turns liquid to ge