>> a significant increase to geopolitical risk. it can come from any number of places. >> the real risk is geopolitical. >> could bring prices under pressure. >> there are issues that for sure haven't been price in the market. >> whether it is geopolitical or a policy mistake, the risk of this thing going the wrong way is there and will continue to be until the foreseeable future. >> this is bloomberg surveillance live from the world economic forum in davos. >> live from davos, switzerland for our audience worldwide at

the economic forum on day three, this is bloomberg surveillance alongside lisa abramowicz i'm jonathan ferro together this week with annmarie hordern. two days of losses on the s&p 500. we've been talking all week about the broken model in europe. emmanuel macron, the french president had something to say about that in the last one. advocating for what he calls a sovereign europe. >> investing more in infrastructure and technology. to basically doing everything we were talking about. that needs to happen in europe. you can feel the urgency to create national security through some of these plans at a meaning that is not as committed to globalization. >> the pendants -- the dependence on russia for energy broken. the dependent something on it states for defense, cracking. >> macron said 20 to may 4

-- annmarie: the cloud hanging over is trump 2.0. jonathan: let's go to the price action. you have a one of the trading week with rate cut expectations and day two. retail sales are hotter than expected. lisa: every business leader one after another has come out and said things are better than expected. is this going to be a rebound here? this is different than the inks we were hearing that would cooperate cuts. for me, that has been a take away. jonathan: equity futures are positive. yields have been pushing higher on a 10 year.

the 10 year yield at the moment in the treasury market looks like this. about 4.08%, the two-year at 4.32. lisa: we have an incredible lineup, i am looking for to our guests including jim fitterling. becky frankiewicz. jo taylor of the teachers pension plan and we cannot forget someone settings things to us, adam posen, president of the peterson institute. jonathan: a big topic in switzerland all week, the pushback against the redcoats pressed into this market -- the rate cuts preston -- priced into this market. >> the market might be ahead of itself in terms of rate cuts. >> the markets have pressed in what is excessive just rates in the u.s.. >> we see rate cuts and we are

predicting they start sooner than later. >> the market is being aggressive on rate cuts and i believe the fed is going to tickets time. >> the six rate cuts, that is a pipe dream if we have a soft landing. >> i think the market is being exuberant expecting as many rate because as they have priced in. >> about this, no way. no way at all. jonathan: joining now to weigh in, adam simon posen of the peterson institute. we got pushback at the economic forum, did you get a sense of that as well? adam: yeah. visible bankers have been clear -- this central bankers have been clear. we are staying at five plus.

no, we are not going to do it. this cycle just sped up at this point. you should believe them when they talk. jonathan: they are talking, they are saying they're not getting. do you have a comment on the -- that has emerged? adam: i think there is good reason for it. there is better news in the u.k. which is going to be an illusion. there is news in the ecb world. it is going to be a short-term thing. by the end of the year, they will start cutting. they will make the direction clear. people who want to traded day today get a little frustrated. it is right to say fewer cuts later this year. lisa: is immaculate disinflation overplayed? we are talking about. . unexpected strikes are we going to see the disinflation we are expecting? are we going to see the

resurgence given what is happening in the middle east and his trade fissures that keep emerging -- and these trade fissures that keep emerging? adam: i tend to downplay the impact of these things in the middle east. the general history going back to 9/11 is the economic impact are not very long-lasting. if they are, it will be treated the same as covid in retrospect. this goes up, comes down, no one should panic. i think there are more risks to the upside on inflation. i'm not a big believer of risk inflation in the west. that is why they are taking out a little bit of insurance. if you emphasize the word landing more than soft, we have achieved it. lisa: i asked someone what they think is the topic not being discussed that should be and they said fiscal. people are not talking about it.

i thought it was a problem and then the treasury market evened out. is that going to be more of a disruptive force? adam: unquestionably. the next 12 months are shot because the number of elections we have around the world and depressing green needs fresh the -- the pressing green needs. for the next five years, none of the high economies are going to be raising taxes but increasing defense spending, increasing green investment, sustaining industrial policies. that is what i have been triggered so that davos, my role , that is where the international cooperation understanding needs to come in. if the g7 plus china are on a geopolitical expansion pack -- path -- lisa: how much higher? adam: we are running the early 1990's in reverse.

i think the capital costs are to be up 0.7%. i don't mean what today's level is, but like for like. if you compare low-inflation in 2019 with low-inflation this year, it will be .7% higher. annmarie: do you see deficit management changing whether or not we get another four years of joe biden or goes back to donald trump? adam: everything changes if trump wins and mostly in bad ways, speaking as an economist. the american electorate is going to be -- if trump wins, democrats will the house. if biden wins, republicans will hold the senate. it is going to be about the stuff fiscal policy -- stealth fiscal policy. we had revenue like no one is talked about. as these machines come online,

they will get spent. it is going to be a lot of fiscal not by legislative means. i think it will be more compromising and therefore more stability under biden. final thing, remind your global viewers, the tax cuts from 2017 expire in the first quarter of 2025 whether trump is there or not. the question is do you have a jump up in taxes? you probably won't. the question is what do you get. jonathan: you said you think things would be worse if trump does win another term. people in 2020 did feel that way. you talked about trade. the prospect of higher tariffs. the former president has put out somewhat of a plan. have you given bouts to what that plan could look like and the consequences it could have? adam: my colleagues and i in

2016 took trump seriously in the sense that he stated these things, let's model what happens. we are undertaking that some exercise. we are taking literally if he puts a patent percent tariff on everything, you have to figure out what that means. does that mean you reduce tariffs on china 10%? no. it is a tax increase on consumers in the u.s.. it probably increases inflation rate 1.5% in the year. does it keep causing inflation? probably not at the same rate but you keep having versions of what we have seen during covid because you're cutting off migration and cutting off more direct investment. you certainly have shortages in this sector or that sector and it is hard to reallocate companies and expensive for them to get inputs. it is for real.

he has the power to do it until congress reviews it. it would be a negative supply truck. lisa: when you talk to internationals, how are they preparing for it? adam: this is the question. with my conversations with nine u.s. officials, it is all about what will you stand up for? you mentioned president macron's speech talking about a sovereign europe and you would love the eu to stand up for economic trade. there seems to be a lot of resignation among the officials i'm talking to, including chinese that the u.s. does what it does and simplicity is justified, some say it doesn't

matter whether it is justified or not. the question is what does the rest of the world play out? we help -- the hope for all of us is that the non-us rest of the world creates a safe place for trade and investment and china and the world don't begrudge that. jonathan: do you get for since this is the direction of travel regardless of who is elected to the white house this year? adam: i hope not. there is no doubt there is continuity -- between biden and trump. they have different motivations, the biting team has been better about doing it through law and not through arbitrary exemptions. fundamentally there has not been that much difference. i am hopeful if the biden people get reelected on this issue people like secretary yellen and secretary ramonda and brainerd take the lead and really start get further down.

jonathan: that did not happen this time around? adam: it did not. jonathan: i remember talking about it, we were talking about reducing the tariffs the president put on china. that did not happen. what would happen? adam: i don't think they're going to reverse it with the idea that they are not going to go further to escalate the conflict. jonathan: is good to see you in davos. adam posen of the peterson institute. it is good we are shifting away from the drum of the election campaign. we need to talk about policy and the prospect of policy changing takes over the white house in the next 12 months, what it means for this economy. why has it lisa: back -- lisa: why has it not changed under a

regime that said it would record it back? that is the resignation adam posen was talking about. annmarie: as well as the secretary-treasurer -- the treasury secretary saying we do not want to do anything economically if it affects national security concerns. jonathan: coming up on the program, that conversation will continue. in the next hour, michael spence coming up. do not miss that conversation. equities after pulling back on the s&p 500 attempting to bounce on the s&p. up by .3%. from switzerland, good afternoon. ♪

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difference between the thinkers and doers in davos. lisa: it seems like the thinkers are gloomy and the doers are optimistic. two people that run businesses have optimism and the people who think about what could go wrong or depressed. jonathan: at risk of offending people, i am sure we did. is that because they have a story to sell, a good or a product or service? to sell? for do see reason on the ground? annmarie: i believe them. it has been consistent and with specific examples. we are seeing that in consumer spending, even in beige book showed an increase in appetite of consumer spending. jonathan: is anybody reading the beige book? lisa: i read parts of it. jonathan: equities look like this, two days of losses can't replace with a day of gains. down by something like one percentage point.

we bounced back by .25 percent and euros come back in by a few basis points. when you put together the comments by governor walz and be strong retail sale story we saw yesterday, that is a powerful pushback. expectations could begin as early as march. lisa: it is shocking we are pricing them with an 50% rate cut in much given the pushback we have gotten. i am wondering what other people are seeing that everyone here businesses is not. jonathan: we are going to ask jim fitterling. we are not, just in case you're wondering. you want to pick up previous comments you had on the global economy? the third quarter, you described things as a challenging macroenvironment. has your assessment shifted? jim: it was a mixed economy in 2023. you saw pockets of strength. he saw things like the automotive sector driven by ev's. we saw weakness at the beginning

of the year in consumer electronics, durable goods, things related to housing and a slowdown in the housing markets. the consumer disposable business was good. did today, buying food at the grocery store, health, those areas were relatively strong. as the euro folded, we also saw -- of the year unfolded, we also saw positives. thing coming in line and air industry. we had been dealing with the d stocking in 2023. as consumer demand stayed strong and retailers got inventory under control, you would see a more normal cadence toward the end of the year. i am optimistic from the perspective of faith we have seen rates moderate and we are going to see a decrease, you will see some potential to build momentum into the housing sector by the end of the year.

that carries an awful lot of volume both here and that is the same thing we have in china. china has been slow and europe has been slow. lisa: you are talking about consumer spending at fed policy. this is all the u.s. how much are using optimism in china given some of the pessimism we have seen here? jim: we have a footprint in china and we have businesses we supply from the u.s.. the u.s. is very competitive. if you think about our global footprint, 85% of our footprint is in low cost locations like canada, the u.s., argentina, the middle east. as the export markets and supply chains have lined out, we as a growth in china. china had gdp a little above 5%, not a negative number. that is a positive sign.

but we would like to see is the consumer driven part of the chinese economy has been held back by the construction markets. that will be another leg up if we can see that in 2024. lisa: davos this is haven of the warming and piston ability, and here you are talking about plastics and things demonized. is it awkward this year? jim: it is not awkward. people misunderstand what the industry is trying to do. we were a first mover in advancing sustainability and doing it in a way that creates long-term shareholder value. we announced foid on the world first ethylene facility in alberta, canada. but with future using hydrogen entity furnaces to make the plastics versus natural gas. that is how we make sure we have

zero emissions. it is more investment -- more expensive to do it but with the tax credits and attacks on carbon, canada, that allows us to do that and it has a return on capital. the same token ira in the u.s. has advanced thanks. we are a participant with the advanced reactor. we have a project in our texas facility to build a small nuclear reactor and that is on the basis of a high temperature gas reactor which produces electricity and steam. we need as much steam as we do electricity. i can take that to net zero through that investment. is that a power system that -- that is a power system that will be in place for decades.

by the time you're done with the canadian project, 25% of our global ethylene will be zero scope one and two emissions. we have a plan by 2052 take our entire fleet to 0 -- scope one and two zero emissions. annmarie: you are getting $25 million from the department because of the ira. do you expect that money to dry up if we see a change in administration? jim: one reason the department of energy supports as we are trying to mitigate the risk and show how to deliver these units at a repeatable cost that is affordable. you need any industrial company that has good provided management capabilities like ours that can deliver a megaproject at a low cost. we hear about big nuclear projects and cost overruns, i am not in a business where i can pass all of that cost down to the consumer, i have got to be competitive. we are trained to work with x

energy and d.o.e. to say here is our target for the cost of this energy, for these capital projects. if we can execute that, you will see other industrial players follow and at that point you want me to subsidize every further investment. jonathan: music to people's ears who are nervous about paying more taxes so they can subsidize more of these things. lisa: this is the fear and this is what i keep hearing. what is necessary to make things economic to drive things in the right direction? kind of desperate feelings. it's a policy to 13 million barrels of oil a day in the u.s.? jonathan: the secretary was clear about that in a way i have not heard this administration who basically ignore the fact that u.s. crude production had gone through 13 million barrels a day. jim, we are going to leave it there. annmarie: what is so surprising

is all this money is being flooded into this market and companies and states, money is going to read states like texas, georgia, florida. potentially it could help republicans even though this was a huge legacy of the biden administration. jonathan: just amazing. coming up, a strawberry minutes to come. we will catch up with becky frankiewicz and then with jo taylor. all of that still to come from davos, switzerland on day three. this is bloomberg. ♪

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jonathan: let's check in on the price action on the s&p 500 after two days of losses, equity shipping up as follows on is a b, the nasdaq, the russell. the nasdaq up by 0.5. the s&p up by .3%. we have seen a big readjustment in debug market -- the bond market. not even -- down by not even one full percentage point. lisa: i am curious about how much you can see the bond market is a love and the stock market hang in there if you talk about

a soft landing. people may be overpricing the potential for rate cuts because of the strength in the economic data but that should be supported for risk assets. jonathan: yesterday was a fantastic example of that. you'll shift higher, we could check on the bonds. the two year -- yields up yesterday off of better data. retail sales look good. lisa: they came out better than expected followed by a beige book that indicated cooling. consumers continuing to spend. is this inflationary? we don't know. some people say it might not be inflationary. can you get a move in the bond market like this and not see inference on stocks? people realize the world can go on at rates at these levels. jonathan: the bond movement since. the move in the fx market is more complicated. look at the euro, president lagarde saying we are not going

to cut anytime soon and yet it it is terrible and the data in america is good. relatively speaking, the u.s. economy looks better than what is taking place here in europe. lisa: which is the reason why we are around 109 and we will probably stay there. jonathan: that tension, that. lisa: tug-of-war especially with inflationlisa: in the u.k. heading up. what do you do with this? i don't know but the ecb is walking back this rate cuts. jonathan: just like the federal reserve. escalating tensions in the middle east. u.s. lodging more attacks on the houthi rebels were central command called an imminent threat to vessels. pakistan munching strikes against militant targets in iran responded to similar attacks from tehran yesterday. that sounds like an escalation. annmarie: it is an escalation and top of mind of individuals here because this is an artery of trade and now they are having

to spend more time going around africa. we need to see what the u.s. struck. is this another degradation of what the houthi may use or are they going to ratchet it up so that the houthis act. ? lisa: the fact that u.s. foreign minister is here, i wonder what conversations are happening. it seems like a momentary pause where the meeting of minds can happen. annmarie: those two individuals will not be meeting together. potentially they will walk past each other but there are other players here, saturdays, guitari -- qataris here, people who could broker a deal. jonathan: apple selling versions of its smartwatch without a blood oxygen future after a setback in its dispute with mossimo. netflix announcing it would not

launch any app for the new vision pro. it has not been a great start for the year for what was the biggest company. did microsoft take over? lisa: microsoft took over. jonathan: apple, massive run-up in 2023 despite soft numbers off of the iphone. lisa: especially given the fact that we have heard next things with the potential of some platform --puttering entity smartphone market -- potentially plateauing entity smartphone market. give thought it was a marketing ploy. it actually was not. that is my take away. jonathan: if you wanted the blood oxygen future, by it before christmas. did they do that? we will find out. annmarie: by it here in europe now before you go back to the

u.s. because it is still available in other countries. jonathan:. next results in luxury retail. shares rising after putting higher than expected sales with a strong demand for jewelry in china and the u.s.. watches in switzerland slumping, brimming volatile demand and a shift in luxury spending habits. later in the program, we will catch up with a massive person who focuses on tourism in china. that is what to watch later to gauge what is going on. lisa: -- i cannot agree more. it seems like there is real weakness. we keep seeing it and it is not clear what levers the chinese authorities are willing to use but they have a lot of money they have not spent yet. maybe they're not buying luxury watches from switzerland. it is not as if luxury has not been doing well. jonathan: that conversation this afternoon.

joining us now on the potential witnesses in this market, becky frankiewicz, the chief financial officer at manpowergroup. we saw in the latest report, temporary workers, real weakness starting to emerge there. becky: temporary workers is in indicator of the economy, it slumps. before a drop in the economy we estimate over month a reduction in to bring workers, but we are still sick resilience. the labor market driven by three areas, lots of concentration, jobs that help people, registered nurses, didn't want drop in the u.s., jobs that transform businesses, and a newcomer, jobs that provide affordable experiences. we saw pizza hut and walmart come into the top 25 for the first time in months. lisa: affordable experiences, fast food workers.

that is my transition in terms of what that means. are these the jobs you want to see be created that will generate the strength in the economy or are these the jobs that underemployed services that have had a birth of employees for a time? becky: during the pandemic, fast food lost a tremendous about of employees so we need clement across the economy. we need on roads in every sector. fast food is one of the sector that provides an on-ramp for people to get better jobs but reside particularly pandemic and not be blustery to come back. hospitality and leisure is another place where sentiment is growth. lisa: there was news out there google after cutting jobs plans to cut more jobs. around the edges, they can hire more people. are there certain sectors you are seeing market weakness that could be leading indicators of what is to come or are you not seeing that anywhere? becky: where the big tech

headlines came out of the layoffs, tech unemployment was 2.5%. all of those people were scooped up in small and medium tech companies and companies like walmart who happens to be the top hirer for ai skills, doordash is number two. every company is a tech company now so some of the headlines were misleading. overall, tech has slowed but still incredibly strong in one of the fastest sectors. annmarie: ai has been a huge focus of this davos. what are you hearing from people in how it can disrupt the labor market? becky: we have made iai ray brady -- ai very big here. we have seen publishing growth, aging people opting out, retiring. we need ai to come in and take some of the roles so we have enough people to fuel the economy. it is going to disrupt some roles, which is like history, research shows ai will create net positive roles.

it is the first technology driven information that does not need tech gadget skills. you can be an engineer without expense. jonathan: a question i'm going to ask mike, exactly what annmarie hordern is talking about, globalization decimated factories in certain countries. there was a fear artificial intelligence can do the same thing to services. do you not sure that fear? becky: it is going to have any impact on services and entry-level skills which is something we have not talked a lot about but it is going to create new opportunities and new jobs. the challenge is we need to humanize work a while re-digitizing work. jonathan: it felt like it was a new era of market power, leverage shifted coming out of the pandemic. has the pendulum swung back? becky: i am asked that question

from seals around the world. during the period negative balance shifted to the employee and his markets continue to be tight, they have power but we are seeing a balance as demand reduces. for the first time in history we are seeing a new combat between employer and employee balances at the center. lisa: you think real wages will continue to rise going forward? becky: i hope so because we saw a real wage growth rise in the u.s. and i hope we reward that with higher wages, whether at the fast food line. in fast food, to digitize it, you need his skill to run the digitized capability. we will see weight railroads -- wage growth results. lisa: you are on the ground, what is your leading indicator to understand what we are missing, whether this is a turn

or one-way or another, up or down? becky: we see real-time demands. when we report, we see in real time. we are seeing a softening in demand, meaning jobs posted. we are seeing that across the economy, even in registered nurses. i think the first half of the year for the u.s. economy is probably going to be more of the same that we saw at the end of the year cooling. annmarie: you still think there will be a lot of demand for those jobs? becky: i think it will be continued demand at a lower pace that we saw at the end of 2023. jonathan: just to lean on your experience, you have a decent read on inflation, input costs, in your current position. was that moment transitory, this teamwork that lisa gets first treated with? it was poison 12 months ago? is this moment a transitory phenomenon?

becky: i think both are true. i think we have a little bit that will stick and little bit that goes away. i hope the stick leads to better jobs, better wages, and a better economy. jonathan: thank you. becky frankiewicz there of manpowergroup, one of the biggest staffing firms on the planet. lisa: confirming what we are seeing with is the jewel data -- digital data. on the flipside, real strength, the tech hiring part. i love that she said that, the idea that walmart was the number one hirer. it highlights what some of these layoffs are not affecting the economy because people are snapped up. jonathan: some of the elections that will take place this year, is the calendar on the president's side when you hear things like weakening antilabor market, that will not be good news for the president. annmarie: that is the one thing they're holding on to, that the

labor market has been strong. if inflation does not come down and you see a weak labor market, what do they have to bubbled on? -- what do they had to hold on? the president is going to be toting bidenomics today. lisa: 100 cuts would come with softening at weakening and the other a strong labor market. a strong labor market is one reason people csi blending. are we even landing? what is the landing going to look like? is that something joe biden is going to be comfortable with? jonathan: i am not going to make a call on that. 12 months ago it was hard landing and then no landing and then soft landing. we flipped back and forth the last 12 months. lisa: this feels stickier. have you not heard everyone use soft landing and they are from every walk of life. annmarie: adam poser said he is

20 quality landing and get rid of soft. jonathan: the focus is on demanding. it is the year the landing. i am sure everyone is going nuts at home now. shut up. coming up, jo taylor of the ontario teachers pension plan. a snapshot of the market, this is what he looks like at the two is on the s&p 500. equities pushing higher. in the bond market, yields coming lower. the last couple of days in reverse. in davos, switzerland, this is bloomberg surveillance. ♪ the first time you connected your godaddy w and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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♪ (captivating music) ♪ (♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪) >> i will campaign for president biden. the stakes could not be hard for

our country, the world. he stood up for global values, universal values, for america's obligations. jonathan: john kerry yesterday. secretary kerry was blunt,. he has got his views. we estimate about the 13 million barrels plus of crude produced daily in america. he said it was necessary. lisa: is this a -- annmarie: that policy success? he talked about it and region were on russia. jonathan: we have barely heard from this administration on fossil fuels. lisa: we have not heard anything. the fact that that has become the de facto policy to as much oil as you can has been one of the main drivers of oil prices going lower. what did he say, if we did not have that we would have social unrest? that is strong wording.

jonathan: the fact that we are in the 70's, the 13 million barrels a day, if you do not have that, crude entity -- snapshot in the market, a little bounce back from two days of losses, higher by .3%. the absolute reverted gas to catch up with on financial markets and investment trends, a man i have been fortunate to spend time with his jo taylor. good afternoon. fantastic to catch up. people who are not familiar with what you do, you have a pension firm that has to cater to one unique retirement profile and one career. can you walk us through how complex that is? jo: in some ways it is not complicated because we have one community. we are lucky from that perspective. our members, we have about

300,000 teachers, have are working at half are retiring. our retired members have strong views about what they would like us to invest in. the challenge for our dynamic is we have a group of members who live a long time. they work for a shorter period because often they do something before they become a teacher. we have to look out into the future to make sure the plan is funded. jonathan: inflation doesn't help because things are indexed to envision. jo: this year it is 5%. that does introduce a challenging dynamic where inflation is a challenging instrument. jonathan: does it change the way you have to invest? jo: we have learned the hard way over 34 years that you state your course and plan for longer-term -- stay your course and plan for longer-term. when real is 5% or 7%, that makes the issue more challenging. lisa: at the time when there

were basically zero rates for a long time, you are one of the pioneers for creating your internal private equity unit where you invested in companies. are you moving away from that now that we'll yields are getting closer to what you need? jo: we have been investing in private equity over 25 years and we have had a 25% increase so that has service will. what can we do going forward? if i picked on private equity for one thing, it is like a liquidity. we have to decide for a long-term pension plan if we are willing to serve as willing to sell assets -- willing to sell assets. lisa: what is the answer? jo: i think the answer is to invest carefully, look at businesses that are better than what is in the portfolio and stratify solutions -- try to find solutions not on --

jonathan: we spent time talking about private markets, red-hot, the enthusiasm to move into private markets. we have been there a long time. can you talk about how participants in private markets are changing and what that means for what you do? jo: it is a great entrance because it helps you have people who might want to do by your assets. there are certainly people talking about out. where we struggle is pricing levels we don't find attractive. in infrastructure which is one of the hotter areas of this week in terms of the disclosures around blackrock and others, we are finding a more interesting projects are priced at a level that is quite hard to get a full return. jonathan: you see interest and equity after what we have seen in the private markets? jo: if you ask people in doubles, they would say they are

keen on credit because they don't like equities. you can participate in credit at a mid teens return and it doesn't have -- attached to it. lisa: you're hearing from gold entry asset management and he is saying he likes single be and he is going into public credit. are you moving in that direction, too? hold to maturity, there is the return you were looking for? jo: the days i operated at a credit, i have not been able to hold to maturity yet. the issue for us, we do some private credit in around rush in underbrush -- in and around our activities, you have to be quite active. lisa: what is your bogey? in we talked about pension plans and the present bogey and how invisible it was in the days of real interest rates. what is the bogey for you? jo: -- we have done 10% probably

since inception. that would sound like it is possible. one of the challenges is we are seeing higher rate asset classes , private equity slowing down in terms of what we are seeing. businesses are not growing as much as they were. we are holding among which affects return. you have to work harder in making them grow. jonathan: day one in davos, we do in early-morning forum, a panel on private markets. toward the end, we talk about politics and is within 24 election -- and. the 2024 election the room -- -- the 2024 election and the room goes silent. no one wants to go there. you need to invest internationally. you and i were talking about

this, can you walk us through the publications around elections in 2024 -- the publications around elections in 2024 -- the complications around elections in 2024? jo: it is complicated already but there are already complications. there is a degree of any american first sentiment and that may be amplified as we go toward november. from our point of view, the thing we have largely adopted is a state-by-state approach to what we want to approach. if you are canadian, you are seeing it as being left of center. we look after teachers who are left of center. for us, we have to be careful and things like health care and other issues where it is more of a politically sensitive area in terms of how we want to operate and will it be consistent with that area. the zone where we will -- where we will be looking at it is in

two areas, one is an infrastructure where relisted approval to operate. that does not apply to the federal overlay. when you come to the federal overlay, it is their reaction to when we invest somewhere else in the world. we can operate in businesses in china where it seems to be in a strategically sensitive area which may limit our opportunities in the u.s. jonathan: health care massive in the u.s.. is it too sadistic to say once it is easier to do business than the other given what you have said? typically a conversation about doing business in america we would say texas good, california hard. when you talk about health care, it does not sound that way. jo: i think it is somewhere in the middle. it is easier on is something to that question. it depends what are your health care you want to be present in freshwater. of health care you want to be present in. tom of the outsourced

treatments, that gets more difficult because is on the periphery of what was fully adopted. jonathan: i would love to do it again soon. that was jo taylor of the untargeted teachers pension plan -- of the ontario teachers pension plan. lisa: that was fascinating to me, adam posen and jo taylor talking about how policies are not that much different under trump as they were -- as they are hunter biden. -- as they are under biden. jonathan: chevron, earlier this week talking about the ease of doing business in a place like texas versus california. you get a different flavor of things when you start talking about health care. annmarie: which is why governor kemp came to davos from georgia. he is making these deals of clean energy into his state. jonathan: next, michael spence with us in davos, switzerland on day three of the world economic forum.

equity futures on the s&p 500 trying to bounce after two days of loss. up by .3%. ♪

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>> from the world of politics to

the world of business. >> we are going to have volatility going forward. >> at this particular moment in the markets, terror risk is higher. >> i have no idea how to interpret the market. >> right now, and in the year with the melted, there is too much run-up. >> earnings are running. >> live from the economic world

forum in davos, this is bloomberg surveillance. jonathan: i cannot wait to go home, i cannot wait to go home. three days is enough for everyone. maybe two. from davos, at the world economic forum, good afternoon, good afternoon. this is bloomberg surveillance. alongside abramowitz, i am jonathan ferro alongside annmarie hordern. bouncing back after three days of losses. the data has been good. i think it is really forcing the message. lisa: it seems the more the more optimistic or more optimism we hear from the leaders in davos and then the more pessimism from central bankers, they say, hold up, we will not get where we are going. so that seems to be the tension. jonathan: we have all been here a few times.

politicians usually have a feeling that it is kumbaya. nothing kumbaya about this moment. if you can be constructive on the economy, and we can talk about whether you cannot, i don't think you can be constructive when it comes to geopolitics in any way, shape or form. annmarie: the big overhang is not just a business meeting but feels like a former policy meeting, as well because of what is happening with ukraine, president zelenskyy here making his pitch, but the iranian foreign minister here at a time when pakistan and iran are having a tit-for-tat, with iranian backed groups, whether it is hezbollah or others causing conflict in the middle east. lisa: there is an army of police officers everywhere you go, and people are at checkpoints looking over this, so it seems like there is a big presence here as a result of this. that is the elephant in the room . for the people who are on the

ground doing deals and looking how consumers are spending, what they are doing is not that dire, and that divergence comes out again and again. jonathan: lisa almost scares me a bit. he sat down, put the microphones on and looked into the bloomberg terminal, and lisa sounds optimistic. what is the caveat? lisa: there are so many things that could happen, whether it is inflation, people are kind of poo pooing that, so these are some of the things that people take off the table. jonathan: just trying to work out what happy valley has done to bramo. lisa: we will analyze a detailed. jonathan: that is the next hour on the show. . in t bond market, yields lower after climbing higher the last few days that 4.08% on the 10 year. lisa: we are looking forward to this hour,.

-- all the banks' ceos have been optimistic in terms of deals and people coming together. james quincy, ceo of coca-cola, we could talk all about price increases, and the ukrainian foreign minister, right now, on the macro geopolitics level, there is nobody more important than our next guest. jonathan: absolutely fantastic, michael spence, the senior advisor at general atlantic. good to see you. michael: great to see you. jonathan: the author of permit crisis, we reflected on ai together last year when that book came out. we are going to do the doom and gloom, and you will do the optimism. why should we be optimistic about the technology? michael: it has the potential to produce productivity and relax supply-side constraints and

relieve potential inflationary pressures. maybe not by the end of the year, but by the end of the decade, we could be on a different sustainable growth trajectory, so that is the optimistic one. not to dismiss the downside stuff. that is important, what you need a balance. what you do not want to do is focus on the downside and then skip this enormous powerful tool we have been handed. jonathan: i will focus on the downside and maybe you can convert me. i asked this last year, too. mobilization decimated many fracturing bases in places like america. a lot of people were out of a job and career in some towns are still suffering. there was a fear this advancement in technology would do the same thing but to services. is that wrong? michael: yes. the reason is what i call automation bias. people think -- and for good reason -- right?

that what everyone talks about, they said they were trying to figure out how much progress we had made in ai, but when we talked to the machine, we thought we were talking to another human being, and we benchmarked ai routinely against human performance. it is the next step that is problematic. so, when people see this, the machines do images better than humans and then people say, why don't we replace the humans? but the ai's, we have prediction machines. a right the first draft. they may put some out of business, but they are and most natural use is as powerful digital assistants, not wiping humans out. lisa: what scares me -- jon said i did not sound optimistic -- i

heard a lot about the potential to disrupt the financial system dramatically using artificial intelligence and hacking into different systems and putting out there this of all sorts. we are seeing the question around what kind of interference could come to the forefront. cyber battles on that front with artificial intelligence, how do you put that aside and focus on the optimism? michael: you don't put it aside. when we wrote this paper on foreign affairs, you definitely don't put that aside. that is serious. you have copyright issues, misuse of overriding kinds. what you do is balance it with the program on the public policy side to make sure this stuff is not and have been jp morgan and other few large entities and everybody else like small and medium-sized businesses that are missing in action, so we are not saying it is either this or this, but we are saying we need this.

annmarie: does it need to be regulated across multinational countries? michael: yes because of the way the internet works. and you have election interference flooding the system with extremely possible sounding misinformation or biases and all that kind of thing. you can regulate that, unless you close off your internet. maybe the chinese can do it because it is relatively isolated from the rest of the world, but for the rest of us, i think we need the global process, as well as the mystic regulation. annmarie: how are you looking at how ai plays into the election? we have already seen changes because of the ai ads with people's voices. people already see that as fact. michael: we have to regulate that out of the system. don't know how to do that, and it depends on where you are.

if you listen carefully to the commentary on this, europe has a different attitude. i was listening to the minister of communications in singapore. they said this probably would work in the u.s., but when we see something as problematic, we remove it, period. you might say, so, -- and she made the point, i think correctly, that we will not all end up in the same place, on this kind of issue, but i have a little sympathy with the single port approach. this is clearly destructive. maybe we should have a battle with polarized free-speech lobby. jonathan: we went there, so let's talk about it. how do you think these systems are going to change capitalism, free markets? i wonder how things will shift and maybe quite dramatically. michael: well, they are already

changing. i was talking to somebody, and in the core of this, we are going to have ai systems on this by the end of the year, for sure. there will be many versions of the big ones, they will be pretty powerful. it will change everything. we are just going to have powerful ai digital assistants beside us the whole time. jonathan: you mentioned may be losing civil liberties, and i do wonder what the cost benefit analysis of that looks like. michael: i am not so worried about that. there is a longer-term discussion when these things become more powerful than they are now, or whether they really are somewhere near the artificial general intelligence, but i think we are a long way away from that, so just have powerful tools in our hands and

have to decide how to use them. i do not want to be pollyanna-ish about it, but it would be a terrible shame in a world that has fragmented supply chains, lots of supply-side constraints to throw away the most powerful tool we have for producing productivity surge and growth. lisa: there is another issue that is the drumbeat under questions, which there are a lot of who are unemployed and not employable. as the world becomes more technologically advanced, you would have to have some skill to use these technologies. with that population growth where it becomes for gated with those with education and skills and those who don't -- i for gated with those with education and skills and those who don't? michael: there are two hallmarks of gen ai in large language models. one is that they are

multi-domain. it is the first time ever. i think that is the biggest surprise that they got, even the people who did it did not think this was going to be as effective in that dimension, but the other one, apropos your point, as you do not need a whole lot of technical training. you just talk to them when they talk back, right? they do what you say. of the most advanced technologies, i think this is one of the most accessible, where it is less likely that we will trap people away. when i look across the world, i see 800 million users in india, that's great. i see places where that is not as powerful a trend, because they don't have the infrastructure or tools to be part of this, but are there or

whole bunch of people in the category of nursing who will have digital assistants who will not be able to use them? i don't see it. lisa: who will win the ai race, u.s. or china? michael: neither. they are both powerhouses. the only difference between them five years ago is that research and development community in ai was integrated, and now it is bifurcated. that is geopolitical tensions and national security issues and national security issues. beyond that, i don't see one flat out winning. i know we are trying to hold them back by denying them access to certain things, and so on, but will it hold them back permanently? i doubt it. jonathan: michael spence, thank you, the nobel laureate

thinkin -- giving us a lot to think about. lisa: i think there will be good applications but i am not convinced regulators can move fast enough to regulate something moving at light speed with top aide executives and tech creators. how does the government compete with that? jonathan: that is where i struggle, too. fantastic to catch up. the brilliance michael spence. coming up, samantha power of the u.s. agency for international development. that conversation is around the corner. equities attempting to bounce up .3% on the s&p 500 for most of the morning. in new york. ♪

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>> you have delivered tough messages to iran, including discussions with the former minister last week. obviously, there are a number of sanctions and measures already in place, but i think it is volatile that we send an unequivocal message to iran that its behavior is supporting these groups, whether it is hezbollah, or the iranian armed groups in iraq and syria. it is unacceptable. jonathan: i am told we should not have favorites, but that was my favorite, david cameron. i think we could have conducted that interview for another 45

minutes. we do not even get to brexit and his role in that, his departure and return to politics. we have to talk about the middle east. it is dreadful what has unfolded the last three months. it has had a real economic impact, with more developing in the red sea. annmarie: there is a situation in gaza but then there are houthi militants firing at commercial vessels with a tit-for-tat between iran and pakistan. and the question from david cameron, don't all these roads lead to iran? lisa: there is also a question of what is the main agency that conducts some sort of diplomacy between these? the united nations has not exactly play that role. there has been a question of who placed a middleman? and it is a merchants cutter. but it is shifting in the global power structure of things actually get done. jonathan: let's talk about those issues. we will be joined by samantha

power, the administrator for the united states agency for international development and former u.s. ambassador to the united nations. can we lean on your experience at the united nations? we have people like jamie dimon or jp morgan talking about how dangerous the world is right now. from your perspective, how dangerous is it? samantha: objectively, you have more displacement on planet earth than we have had since hitler. that's bad. we have more conflict happening today in more than 30 years. but i will say one of the priorities president biden had been coming into office was to rebuild alliances and get democracies delivering for their citizens to try to fight back some of the more authoritarian trends, which are not just in big countries, but including an established democracies where election results and so forth are challenged. i think what we see when it comes to ukraine or the humanitarian response to gaza is

more countries digging deep to provide humanitarian assistance. there is a lot of diplomacy going on behind-the-scenes for sure, including thinking, for example, in the gaza situation about a two state solution and getting that political process back on track. but there are a lot of stakeholders, a lot of countries involved in that. again, we pride ourselves in reaching out to many of those countries and making sure we are organized because my agency is not going to be able to deal with all the humanitarian symptoms in the world. we have to deal with the root causes of the complex so that the citizens are not suffering to the extent they are today. annmarie: this might be a difficult question to answer, but how problematic is it for you to deal with humanitarian aid needed to get into gaza when the u.s. vetoed cease-fires at the un? samantha: part of the challenges the people behind october 7 are still at large and one to kill israelis -- want to kill israelis.

while those capabilities exist, of course, the military effort is continuing, we managed to increase humanitarian assistance flowing in, but not enough, and there is a major food crisis apparently the people of gaza, that partners on the front lines are trying to respond to, so we think it is incredibly important to work the hind the scenes with israeli and egyptian government, all stakeholders to increase the pipeline. i was in egypt about one month ago and saw the backlog of truck after truck after truck of truck drivers who had food and medical size -- medical supplies to deliver. annmarie: shouldn't there be more leverage pushing on them? samantha: we have seen the size of that leverage to get them where they are, but nobody can be satisfied given the conditions inside gaza. again, remember how october 7

happens, a lot got into gaza, and it got him through channels and when the after action is done, we can better understand. but you can understand why people who went through the experience of having more than 1000 civilians brutally murdered and hostages taken would be cautious about open sesame and letting them in, but gradually, we are getting more and more points of entry opened. again, we need to get the number of humanitarian and commercial trucks way up from where we are today. lisa: the u.s.' lovebirds, how much has it declined as its role has begun -- on the u.s.' leverage, how much has it declined as its role has become muddied? how much have we lost clout in the u.s.? samantha: as one as ambassador of the u.n., certainly, our alliances and road to eight in the intervening four years, and

that is why secretary blinken and the president have invested in restoring alliances because they are not popularity contests but networks to leverage at times of crisis. we are at davos, and i don't feel any loss of leverage. i am trying to get the world to rally together. the number of major ceos that show up to be part of that coalition is extraordinary. we are trying to and lead poisoning in developing countries. one and two kids in developing countries have elevated lead lead levels -- lead levels in their blood. philanthropists organizations are stepping up, and ukraine is the best example where every dollar of usaid and u.s. agent -- u.s. aid and u.s. agents have developed has brought them closer. lisa: as the un relevant anymore? samantha: the u.n. is countries. the late and great diplomat used to say, blaming the un for the

world's problems is like blaming madison square garden for blaming when the new york knicks played badly. they are playing better now, but it is the countries that constitute the u.n. that should not be enforcing. either is the countries at the un that stood up against the who the -- the houthi attacks on commercial shipping because those countries recognize that their countries are at stake, and that will affect people and countries around the world, but there is too much polarization and there are fewer markers these now than 10 years ago, so we need to see democratization proceed and and the march to authoritarianism because authoritarianism in oppressing

their people prevent there from being the accountability and need to see when you need more prosperity. when you have more people who cannot get access to jobs and to criticize direction -- corruption in their own areas, development are very linked, and people have tried to separate them in a way that is not unfolded. jonathan: there is a bit of a division that is merged, and i would say has been exacerbated by what is taking place in the middle east the last months, a division between the administration you represent and the younger population who would typically vote democrat. how do you close the gap over the next eight months? samantha: it is not my job to talk about domestic politics at all. resident biden, who says, do not compare me to the almighty, compare me to the alternative. so, i think that is the nature of the argument. when you think about the kinds

of values young people have, one team to protect the natural world, one teen to fight climate change, that is a leading animation for young people, the choice, i am sure, will be evident. jonathan: samantha powell, nice to see you -- samantha power, nice to see you. coming up, steve pagliuca, the owner of the boston celtics. an italian team who be my beloved team last week. i woke up to a text from steve myself just to show me the youtube highlights. what do you think we will be talking about next? from switzerland, and the world economic forum, this is bloomberg. ♪ the first time you made a sale oaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

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♪ ♪ ♪ ♪ i do think that both will a sickly continue to grow and be very relevant. what will change, and the big thing that is changing is actually the risk-taking is what is going to move. so, we have historically had risk-taking in the u.k. that risk-taking and the assets that go with it, not the people alone, but the assets echo with it. that's the next phase.

>> jonathan: a nice, warm welcome from our next guest, accusing me of playing moose. really excited about our next conversation. let's get to the equity market and we will bring in our next guest. two days of losses, the nasdaq up by 0.8. we will also be speaking to brian moynihan of bank of america. we will start to get earnings from big tech the next weeks. lisa: arguably, that will be

more of a bellwether on u.s. economy. to me, apple, apple is the main question, especially given the downgrades that is actually going to be taking off that has a whole host of potential challenges. jonathan: why don't they just pay the company? i don't understand. are they still saying they have not taken that technology from someone else? lisa: it is being litigated. jonathan: that is a wise decision. lisa: you can just buy the watch here. jonathan: apple just cannot physically sell them, is that right? lisa: or distribute them or whatever. i am not even an expert, but i don't even know if they have best buy here. jonathan: i am not sure they do. bonds look like this, two year, 10, 30-year, climbing off the back of comments from governor waller of the federal reserve. putting that together with the data we saw yesterday, which we

have not talked much about this afternoon, retail sales are pushing back against this idea of weakness and rate cuts coming in march. lisa: this has been one of the interesting drivers in the market activity with better-than-expected data and forward looking indicators from the beige book. this raises the question, and i mentioned before, how much can come as growth that is not inflationary? can we still see the disinflation continue without any kind of hit to growth? the kind of soft landing? jonathan: let's move on. the euro against the dollar, 1.08 or so. moving the gdp is steve pagliuca. owner of the boston celtics, and an italian club called atalanta. thank you for the text messages last week. how much fun are you having? it seems like you are having a blast. steve: it has been a good year.

we opened up in a good way. we are winning. jonathan: let's get to the nba burst, cuban getting out of the mavericks, some people talk about teak of nba franchises. can you give us your view? steve: i don't think they have peaked at all yet. with streaming, i watched the game last night and we have not really penetrated all the markets. meteorites are still going up. -- media rights are still going up. it is one of the top 10 rated shows in the u.s. jonathan: let's talk about that, the nfl is crushing that. the nba, it feels like we are hitting the ceiling and that broadcasters never own the asset, they rent it, and they are finding the game really expensive, and they are trying to work out where to put it.

do you get it on a streaming device or through cable? what do we do? what do you see further down the road to suggest to you that media rights and tv rights for sports like basketball can keep climbing? steve: we are in a period now, for those who have followed media, you have had bundling, re-bundling, and we are in a big un-bundling phase with streaming, cable, linear tv, and that means that the players like google and facebook all one programming for people to watch content. content is more and more valuable. nba content is hugely valuable. they are fighting over that. you will see consolidation. back to bundling because it is inefficient to have ultimo software systems with multiple marketing, so you will see a re-underling.the programming -- re-bundling. but the program will always be valuable, so i don't think we are through with rates going up for premier sports. lisa: are buying sports teams

better than buying regular companies? steve: if you win. [laughter] lisa: i just wonder if it is a good investment. steve: it is not when you lose, but then you just fire the owner. [laughter] lisa: they are trying to buy a whole host of football clubs in europe, and you see this as the hot investment. at what point is it too hot to handle? this is sort of what happened in certain spheres of private equity during some of the room times that turned into blessed times -- boom times that turned into bust times. steve: i have to say that i certainly did not addictive values of what would happen of what has happened in sports, but it turns out it has been a good business because of the dynamic of people biting for audience -- fighting for audience. secondly, it is a fun investment. people like to be part of tribes. sports is a great feeling. even some people --

[laughter] lisa: it is also a great feeling. steve: when we bought the team in 2003, they barely had contact with any other customers. i don't even think they had emails. there was no facebook, twitter, now x. so what has happened is technology has allowed fans to get up close to the players, to really be part of the club. and now you have gambling and bedding coming in, which makes you further --betting coming in, so it is an out of body experience when you feel that vibe and how technology makes it easier. lisa: it seems like you are having so much fun, and you are having fun with the tribe of sports but also with artificial intelligence, which is basically permeating every corner of this get together. you have invested in companies for many years. what proportion of some of these

ai companies and initiatives do you think are actually going to come to fruition and be valuable? steve: great question. it reminds me of 1999, where i was going out to california, and people come in with a term sheet and said, you have two hours to invest in this company that is going to sell products on the internet. is there a plan? no. it is internet. and valuation is no sales, so i turned many down. there are now in thousand artificial intelligence companies. if you walk around davos, i think they should change it to the artificial intelligence forum. everything seems to be ubiquitous. that being said, i think we are in the experimentation phase and ceos have not implemented this yet. the technology still has a ways to come, but i think it will be just as revolutionary as the internet was. right now, i don't think people realize the model x chatgtp because it is a group -- model like chatgtp that cost $400

million just in gpu to program it and make rings run, so with an ai company we have invested into, the thesis for ai's they have configured this offer more like the brain. they have 900 nodes versus 100,000 of chatgtp so you could program a large leg which model for probably a 20th or 15th of the cost. so you need that cost to come down because if you think about all these models, you take a path to power in the united states. i think we are still in the experimentation stage as ceos are looking at this and saying, where can i put it in my business, make it secure? if you build your own large leg which model, it is three or $4 million, so that's not going to happen, so they have to make it cheaper and more secure. jonathan: how did you become interested in all of this? steve: 30 years ago, i started a technology firm.

i wrote a presentation for a conference at aspen. it looks like cavemen now, but it was called convergence. i said what will happen is the telephone and the television and computers were going to converge so we would have a different experience. little did i know that apple would come out with that, but i have been interested in tech consulting for many years. i went through the internet boom. these term sheets were coming in in california 1999, which was crazy, but now it is happening again with ai. it is going to be great for the united states, and i think it will be the next productivity wave. i am not scared of it. to me, it is a supersized slide. i used to use a slide role to look at a table, and they said, the computer is coming in, it will ruin our minds. it is not.

it is a tool to expand our capabilities, and ai is incredible. jonathan: my expense said the same thing -- michael spence said the same thing. we talked to him about 40 minutes ago. is there anything about it that concerns you? anything whatsoever? if you got term sheets, how do you draw the distinction between companies you would want to work with and companies that do more harm than good? steve: i would compare it to anything else, like nuclear power. you have bad actors and it could destroy the world. artificial intelligence, if we have a bad actor, it will be a problem. you will have to have regulation , people watching the internet, punishing and thinking about security. again, i view it as a tool. but it is a tool that can be misused. so there will need to be a certain amount of regulation and more security and more watching what is happening. lisa: on the flipside, are there

any companies that you are seeing for any areas of artificial intelligence that you are seeing where you see the companies are becoming the next facebook or apple? steve: there are two schools of thought, one would be one company would merge and become the google of artificial intelligence. another school of thought is these models will come down in price, and ai could drive the price down, and you will get many large language models that are usable. secondly, you focus on groups. it will be artificial intelligence for medical -- it does not make sense for a medical system to go out and read the mozart symphony. it has no relevance to medicine. so i am in the camp that i believe there will be a hybrid system where there will be a few foundational models people use, and then there will be probably companies that can capture vertical markers, so you have a

number and a network effect that captures industrial, medical, etc. lisa: we cannot let that slide, if we are looking at another 99 internet bubble boom with artificial intelligence, or will there be some kind of bust? steve: there is always a bust after the boom. the good news is these companies are requiring equity and it will not have a system affect, but there will be a bust for people who invest in every single thing that had the word ai in front of it, and there will be a carnage, and then there will be companies that emerge, the best ones, and there will be several. again, different than a dominating search and companies that would dominate vertical markets. by the way, if there is a disruptor, think about at&t that used to dominate the phone business, and then everything became multiple.

google looks unassailable, but if there is a disrupter, it will be an ai company that gets you a better search, so when you say i would like to know what the best pasta is, it will not give you five articles. it will give you the recipe for the pasta, why it is the right one, the person who invented the recipe. that will be a big disrupter. that is like google is spending so much money into ai, microsoft, as well. they want to protect their position. i think we are in a great era, where they will be disruptors coming in and life may change, and it will not be all google but in artificial intelligence company that gets us better data. jonathan: there is only one answer, it is always not as. always. chatgtp cannot beat us. lisa: your grandmother made the perfect pasta. jonathan: there is no challenge to that. steve will say the same thing about his grandmother, and then we will fight over it. steve: my grandmother used to roll it out on the table and into individual pasta every sunday. lisa: what type? lisa: can i come over?

jonathan: they used to make sauces out of the back of the apartment building. annmarie: my family still does that. steve: she used to make it six a clock in the morning and make fried pizza morning for bric -- for breakfast. lisa: i do not have that. your food was so much better. jonathan: it was like a michelin restaurant. and steve had no idea it was that good at the time. you try to find it elsewhere, you cannot find it. steve: you have to get you this coat, the warmest code at davos. jonathan: coming up next, jan sun of trip.com. -- jane sun of trip.com. ♪ you're a messy one. cool, right? so cool.

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>> there is a huge need.

i think revenge travel will ease out. i think elasticity on pricing is good. i think airlines are in a good position. despite all the geopolitics. there is a lot of supply. jonathan: that was tony fernandez, the ceo. that is what that was about. lisa: steve is going to troll you all day long. jonathan: he wanted the promotion for canada goose, live on tv. lisa: and the celticslisa:. jonathan: let's turn to financial markets and squeeze in price action. on the s&p 500, a day of games in new york city, up by .5% on the s&p 500, yields coming in by 4.09% on the 10-year. the story of central pushback, francine's interview with christine lagarde on the front page of "financial times" this

morning, pushback from lagarde and waller. lisa: not just economic data but some rhetoric we are hearing from ceos that actually have some sort of incentive not to live blatantly before they put out some sort of economic projections. all of them are talking with real positive kinds of tones about the potential for consumer spending to continue. jonathan: let's find out what is going on in china with jane sun, the ceo of trip.com. good afternoon. jane: good afternoon. jonathan: largest online travel platform in china, give us an idea of what is happening with the chinese consumer. what we are told in the u.s. is that confidence is shot and broken, not bouncing back. what do you see in the business? jane: our business is doing very well. we have four segments. the first is domestic travel. not only did we recover fully from 2019 but we exceeded 2019 i more than 50%. -- by more than 50%.

the second part is outbound travel, which is chinese travelers to the rest of the world. so we look at both sides of the search, as well as the supply-side. they already exceeded 2019 levels for the demand side, but on the supply-side, we have two major hurdles. the first are visa applications take too long, particularly to europe and the u.s. the second hurdle is the fight capacity issue. i am hopeful in 2024, we will have better investments. lisa: i am curious whether chinese consumers want to travel to europe and the u.s. in the same kind of numbers we saw in 2019, or has something shifted as some of the international relations have afraid -- frayed? jane: not really. confucius teaches us that it is better to travel than to read

10,000 books, so parents always want to use travel as a means to educate their children. when you are traveling, you are not only learning but working with people along the way, so chinese people enjoy traveling. lisa: i am curious to see how this pairs with some of the pc and economic data and some of what we see and official rhetoric that demand is not there. you look at loan demand, falling off the cliff, regardless of rates falling significantly. talk about the potential for further stimulus. where's the disconnecting the demand you are seeing on your site and what we are hearing about from all the other indicators? jane:jane: china -- jane: china is very big, and we need to look at different segments. for example, real estate might have some pressure. however, if people are not buying houses, disposable income is increasing, so the segments that are doing very well, travel

is doing well, entertainment is doing well. for example, concerts, music festival's, opera. these are doing very well. wellness products are doing very well. it really depends on segments. annmarie: you mentioned it is difficult for chinese consumers and citizens because of the bureaucracy abuses going to europe and the -- bureaucracy because of visas going to the u.s. and europe. what areas are doing well? jane: countries in the middle east offer free visa, and full flight capacity. so we have triple and double volume into the region. thailand does very well. the prime minister just offered five months of free visa and personally went to the airport and rolled out the red carpet to welcome chinese tourists. singapore does very well. so whoever grasps the opportunity gives freebies and doubles the capacity. in china, on the other hand, also, extending their welcome to the rest of the world.

the first batch we issued free visa for six countries, france, germany, italy, spain, netherlands, and malaysia. and then we added two more countries, switzerland and ireland. as singapore and malaysia and thailand are going to have neutral free visas and all these actions will promote bilateral travel. annmarie: chinese consumers are paramount to the luxury industry. do you find consumers are now more interested in travel and experience or going after some luxury goods? jane: i think china is very big. 1.4 billion people. you will find all kinds of customers. the most expensive tool, trip.com sale, costs about 200 sales in usd per person per trip. 18 days around the world, and it only took us 17 seconds to sell these packages. so we do have very varied

population, and there are also young people who want to have a good experience. they may attend music festival, so you can find different categories. jonathan: you went through a list of countries, but there was one i did not hear. you did not talk much about the u.s. i understand it is difficult to talk about politics being a chinese company and the ceo of one. i will talk about politics briefly, and you can walk me through the consequences. clearly, there is no love lost between the u.s. and china. it is a difficult relationship, and has been one for the president of the united states, right now, joe biden, and previously with donald trump. has that led to less traveled? what do you see? a chinese tourist traveling to the u.s. like they were before the pandemic? jane: from our data, usa is still the top three most traveled nation. people want to travel there, it is just the visa situation and deferred capacity are holding it back. i am hopeful in a new year, we

will do better. jonathan: how expensive is it to travel to the u.s. to china? jane: particularly in a major area, new york becomes very expensive. but people have been longing to travel after three years of the lockdown. i think they are ready. lisa: we talked about how there is the biggest allegation from china here on an official stature since 2017, but you mentioned there are not that many business members that are here from china. why do you think that is? jane: i think this is the first year without, you know, all the control measures. i believe more people will come and attend the meetings. lisa: you don't think it is because there is not necessarily we the interest or desire of investment from overseas? jane: not really, particularly during this time, we should stay engaged and really let people know what is going on in china, and government is taking or

trying to take a giant step to welcome friends from all over the world to visit china. i hope that you will come. jonathan: you have to arrange the trip, or based on prices, we would like a major discount. thank you, jane sun of trip.com, appreciate it. trip.com, the largest travel platform in china, so some insight into international travel. lisa: the point about visas is fascinating. the idea that they cannot get them, and that some places like the middle east are saying, come andbuy are luxury products, and we will make it super easy. annmarie: that is the point to hear from some of these leaders, they want to not just have an economy embedded with fossil fuels, but they would like to become tourist destinations. jonathan: we will catch up with the professor of trade policy at cornell university, and we will talk about international trade, international politics.

he things may be the mood is too gloomy and maybe we should be more upbeat on the global economy. lisa: honestly, we have been as upbeat as i could imagine. jonathan: you, relative to how you normally are. lisa: well, you tried to bring in skepticism around artificial intelligence. what i find fascinating is on one hand, you have policymakers talking about how trade is coming apart. and then you have business people like the qualcomm ceo saying they are increasing their business in china. and that businesses are looking across borders, like always, so where is the opportunity? that is the main story i have taken away. jonathan: one hour down, still want to go, looking forward to it. counting you down to the opening bell with equity futures on the s&p 500 slightly elevated by 14% and by 0.4% this afternoon, this morning in new york, the equity market pushing higher and yields lower, the bond market down to point basis point -- two basis points. this is bloomberg.

♪

>> you'll have more volatility going forward. returns will be lower in the

next decade. >> at this moment in the market tail risk is higher. >> i have no idea how to interpret the market. it seems very sanguine. >> there is too much broad optimism. >> we think earnings are growing. the street thinks 11%. we think half. >> this is bloomberg surveillance live from davos. jonathan: it is day three in switzerland and our three for "bloomberg surveillance." alongside lisa abramowicz i'm jonathan ferro together for the week with annmarie hordern. your equity market trying to bounce after two days of losses. here in switzerland, on the economy things are constructive. on the geopolitics, absolutely dire. that has been the story of the week. lisa: especially with armies of

police officers marching around. that adds to the tension. the idea there are officials that would be massive targets, the ukrainian president, the president of israel, the iranian foreign minister. that keeps this cloud over the optimism. annmarie: there is also a sniper behind your head. i do not think our viewers see it. [laughter] for me this is much more than a business conference. the cloud over is geopolitics, whether it is washington dc or the global cost to do business when you have the houthi rebels taking control of the red sea. jonathan: the inability of the united states and the west to restore order in the red sea. the fact that the houthi rebels have been able to disrupt commerce. the fact that even with strikes

in the u.s. and the u.k., we have still not been able to restore order. lisa: which is the reason there is a lot of gloom around trade. how does trade revive with these tensions between countries but also the freedom of the sea being fundamentally challenged. if the houthis get away with this, who is to say others cannot do the same thing. jonathan: on the s&p 500 we are bouncing back .4%. yields are a little bit lower on the 10 year of 4.09%. we have caught up with a ton of people in the financial service industry. take a listen to what the bankers have to say. >> 2024 is starting off from a banking perspective quite well. >> all of those investments will deliver for us later. the direction of travel is the same. >> the regulatory environment is

uncertain. the rules around liquidity, the rules around capital. >> regulators are looking in the wrong place. >> it is going to be a bumpy year, but more than anything else we have to be resilient and prepared to react. >> i am concerned about the small in midsized banks. they have several risks happening. >> today the regional banks are stronger. jonathan: it is all about banking over the next few hours. two big conversations coming up later. lisa: we are looking forward to having morgan stanley's ted pick will join us shortly. then bank of america's brian moynihan on questions around regulations and the competitive edge with the growing private markets. jonathan: the mood of the bankers is downbeat. our next guest things we should be more update -- we should be more upbeat. the professor of trade policy at

cornell university and former china imf had joins us now. why do you think we should be in a better mood? >> it is not time for celebration but there is some reason for optimism. inflation is on a downward path and the largest economy in the world is doing pretty well. china is not stable yet but most of the indicators are coming relatively positive and it looks like they can sustain decent growth momentum. india is doing well. overall as you look at the global macro economic position it does not look too bad. jonathan: ken rogoff from harvard set in your chair three days ago and he was much more downbeat when it comes to engines for growth. what is the engine for growth? >> the two largest economies are doing reasonably well and there is a question how much we can count on u.s. consumers. chinese consumers are trying to do so.

one of the interesting issues is whether all of this promised productivity gains might come from new technologies and might start showing up soon. we've already seen some indicators in the u.s. data and it is possible we start seeing this in the data more broadly. a cloud hanging over all of this is dampen the mood in terms of where the economy might be going. lisa: there is also a feeling it is not just deglobalization. it is the u.s. separating itself from the rest of the world and putting up hurdles whether it comes to tariffs or other measures. i'm struck by the number of executives who say joe biden is not that different than trump when it comes to tariffs and other policies. a much does that put a damper on international trade, particular with the u.s., at a time of uncertainty with the election regardless of who wins. >> the uncertainty is a crucial issue because it is clear we

will not move to a state of dampen conflict, if anything conflict who get worse, the best cased is conflict will not get worse. we note economic policies will be driven by the political cycle and there is a broader theme of decoupling between the economies and how that translates into policies is never clear to businesses so they hold back on investment which winds up hurting growth and productivity growth. lisa: have you ever seen a wider divergence between business executives planning up trade routes and populations that are leading against it and the politicians who represent them, leading against it talking about nationalism more and more. >> the narrative that globalization has not worked felt for everyone has certainly taken hold. if you layer on top of that national security considerations , it becomes very important and makes that difficult to get around for a policy perspective.

the narrative that we need to protect ourselves and make sure we can insure ourselves against geopolitical risks, let alone all of the other risks, that is a compelling narrative and causes an inward looking turn to policies and that is not good for the world economy and especially not for businesses, which explains why you are hearing these negative sentiments from businesses. annmarie: the concern amongst europeans at davos has been the return of trump to the white house. can we talk about what his tariff would mean not just for inflation in the united states but also american companies that want to do business in foreign markets? >> america has been the trend center for globalization and free markets. a pullback from that has important implications for how the narrative plays out in the rest of the world. if america starts putting up walls that means other countries will find it easier to put in place restrictions of their own

and that could lead to a disruption in freight. businesses understand very well that if you do not take advantage of this book spectrum of globalization, having regional supply chains can be very beneficial. we might see a splintering of trade if not a complete pullback from trade. certainly it will add to costs in addition to the uncertainty and that is not good for inflation and economic progress and it is not good for growth. annmarie: if we were to see that, what countries win? does china win? >> i do not think anybody wins. the question is who loses last. globalization has worked reasonably well. it is not worked well for certain segments of the population. i think if the roots of the game are set then everybody plays on the level playing field and the gains to be broad free -- can be broadly distributed.

there are some countries that might benefit from geopolitical splintering. if you think about a country like india it is in the middle of different geopolitical alliances so it could get some of the benefits. by and large it is a net negative. jonathan: can we talk about trade policy theory meeting practice? we were all taught at school that increased trade, increased interdependence between countries leads to peace. isn't russia a fantastic of the last two years that disprove some of that? how do you fit in it reality over the last couple of years to the theory that we were all taught over the last few decades? >> that was the assumption, that economic progress would lead towards a movement towards liberal democracies because they are seen as the a bit of me of economies and civilizations and that has come under deep question. the notion that democracies would be self-correcting has

been put to the test in the u.s. and will again be put to the test in a few months. it has caused a disillusionment among liberal values and now you have a very important player in the world economy, china. that is a very different set of values if you think about economic organization, political organization. leaders of those countries that find a few very compelling because it allows them to maintain their power. they are seeing a conflict not just in terms of trade policies but a much broader conflict in terms of fundamental values. jonathan: we are combing through history so it is not helpful, but you think it was the arrogance of the west that china would want to become more like us as they became wealthier? is that the misplaced view all those decades ago? >> that is proving to be misplaced. it seemed like a reasonable view that once people had their necessities met they would

aspire to higher values and that is not seem to be happening. people seem to be willing to trade off those liberties for economic progress and that is something we had not quite anticipated. lisa: we also did not quite anticipate why there were not be some sort of interference with the policies of xi jinping that have hampered the economy, that there would not be more measures taken to invite in foreign direct investment that we have seen turned negative. have we gotten any answers to that from china whether they are committed to bringing international business investment into the country with stability in their policy? >> the premier speech a couple days ago and my meetings have sent a uniform message, trying to send a message to the world that basically china is on the right track in terms of its economy. there are risks that can be managed and china remains open

and welcoming to foreign investors and businesses. foreign investors and businesses do not see it that way. they see a much more hostile environment. the regulatory environment has tightened and the applicable environment has tightened. it will be difficult for china to market this message that remains open, that it should be a place foreign investors and businesses should look to. jonathan: this has finished gloomy. the mood should be better. it was good to catch up. lisa: turns out we can make anyone gloomy. jonathan: bramo's back. for those of you who missed the first two hours lisa was overjoyed and constructive. the bloom and doom of bramo drained away. annmarie: too many davos parties. lisa: there is this feeling i am listening to people and if you take them on their face they are optimistic.

i am not saying you're not listening, i am saying you have to take that into account. there is a lot of bloom out there. jonathan: you have not changed. lisa: i have not changed. there's just some reason to think there might be some optimism. jonathan: no one wants you to change. lisa: i want. -- i will not. [laughter] jonathan: coming up, ceo of coca-cola. lisa brahma once -- lisa wants to know, your biggest competitor. that question, up next. ♪ how am i going to find a doctor when i'm hallucinating? what do you think, fever monster? what about zocdoc? zocdoc? dr. castell has a great bedside manner. so many options.

but dr. xichun will take your sketchy insurance. xi-chun! xi-chun, xi-chun, xi-chun! thanks, bro! you've got more options than you know. book now.

jonathan: two brits in the studio to level things out.

a bit of balance. we will get to the second in a moment. we are higher on the s&p 500. up one third of 1%. yields in by a single basis point. down to almost 4.1% on the u.s. 10 year yield. let's get straight to it. fantastic to catch up with james quincy, chairman and ceo of coca-cola. fantastic to catch up. we gave away the first question before the commercial break. james: i heard you laughing but i did not hear the question. jonathan: here is the question. biggest competitor? pepsi or novo nordisk? james: definitely pepsi. the beverage industry depends on where you are in the world. we have 70 multi national and regional competitors around the world. the drugs are something certain

segments of the financial community got focused on, but when you break down the data i do not think it is a big thing for us. if you want to make it super simple, we sell a range of beverages. at the end of the day you can eat less calories. you cannot have less liquid. jonathan: let's talk about products. about 40% of americans are obese. if the gop -- if these drugs really kick on and this is the solution to a monster problem, to have to change the products? two things start to shift? james: the product mix has been shifting already. the zero calories are continuing to grow steadily over the last couple of decades. it'll be another piece of the puzzle.

lisa: who is your main competitor? james: we face a range of competitor. lisa: who is the person you wake up every morning and you look and you say what is that guy doing? james: that is not how i wake up in the morning. if i just chase my competitors i do not do something new. i have to chase my consumers. i need to think about what the competitors are up to. they are very creative and talented, but at the end i'm trying to satisfy the consumer. if i focus on the person drinking the drink, what would make them happy, what would make the retailer happy? lisa: how much our consumers willing to pay for caffeinated artesian water? whatever it is that is popular for consumers in different segments. you see your pricing power so much stronger than before the pandemic? james: our focus has always been

to earn our pricing. we do not think about pricing as a markup versus the commodity pricing. it is about earning the pricing. whether that is marketing, innovation, it is about earning pricing. unearned pricing is a pet past -- is a catastrophe about to happen. jonathan: are the tailwinds proving to be more durable and are the headwind starting to fade? james: we are in the closed period ahead of earnings. no comments on those. one thing i tried to say last year was there always going to be headwinds. sometimes there economic, sometimes there wars, sometimes pandemic. one of the things we have underlined is we have an all weather strategy. there will be headwinds. something will be a headwind this year. we are focused on our weather strategy to see it through and

deliver through the consumers to the shareholders. jonathan: i want to know about china. it has been hard to get a read on what has been happening in the world's second-largest economy. we spoke to someone who looks at tourism in china. she said things for the chinese consumer are pretty decent. things are picking up again. i hear consumer confidence has been shot given the pandemic and the extended lockdown. what is your feel on that? have things improved? james: things are improving in china. when the openings have happened in the u.s. and europe, different sectors moved at different speed. you get weird noise coming out of china. it depends on which sector you are talking to. from our point of view chinese new year is a very big thing for us. it is effectively their christmas. it happens in the first few weeks of the year. trying to gauge what happens is very difficult for consumer

businesses until chinese new year finishes at the end of february. for us the test is where we stand post chinese new year. one has to gauge the numbers based on which sector you are talking to and the chinese government is focused on managing the property sector but also keeping consumption alive. lisa: i want to go back to how jonathan began the issue with novo nordisk or pepsi. i want to sit on ozempic. we have all of these analysts talking about how much that will decrease demands for certain goods. evie already changed your product mix in into the -- have you already changed your product mix in anticipation of a lack of demand in certain areas? what are the products? james: we have the products. we have been working to give people choice based on the need to reduce the amount of calories. almost every brand we have we have a low or calorie option available. it does not matter how you want

to take your balance of calories, we have an option for you. all the time, the total mix has been shifting to the low and the no calorie products, but the products already exist. lisa: how much you expect the traditional coca-cola brand to be a smaller part of your overall business in 10 years? james: we see the coca-cola brand including all of the variance. lisa: the original from the 1960's commercials. james: i think it will continue to be a big part of the business. annmarie: there is a delicate moment and it is being talked about a lot on the sidelines of the conference with israel's president. how are you navigating the gaza war given the fact turkish airlines got rid of coke on their flights? james: there's a lot of tragedy. we have an israeli bottler, we have a gaza bottler come employees on both sides have been killed and wounded.

it is a very painful moment. our focus has been on supporting our employees and supporting those with losses and trying to look after the people who make that happen. annmarie: is it incorrect that turkish airlines comes out and says they are getting rid of coke because coca-cola supports israel only? james: i will not get into one situation. we have an israeli bottler and a bottler in the gaza strip. we are in the business of being in every country. people who buy our products get to make their own decisions and at the moment we are focused on the humanitarian issues. jonathan: let's broaden that out. there is a reason you have a bottler there and a bobber in another place. you have had experience for decades. is it getting harder to do business everywhere given what is happening? lots of questions about geopolitics at a forum like this one. hot wars.

not just in gaza but ukraine as well. is it harder being everywhere than 10 years ago? james: i don't think so. in the end every political leadership wants to deliver jobs on the ground and improvement in quality of life. the great thing about the coke business is it is an incredibly local business. all the cokes in country a are made there and all the cokes in country b are made there. it is a local business and jobs prosperity and a better life is something every government is trying to deliver for their people. jonathan: this was fantastic. one final question. my producer amy has died coke for breakfast. do you think that is ok? james: quarry trying to tell her what her choices are? jonathan: diet coke for breakfast? james: diet coke is making a comeback. did you not see the saturday night live.

lisa: what did you expect him to say? jonathan: and tried to convert amy to start the day. james quincy, good to see you. coming up, ted pick, the morgan stanley ceo is just around the corner. taking the helmet morgan stanley two weeks ago. lisa: you put your photos up, put your feet up. jonathan: get one of those boxes out for james that say thank you. that conversation is up next. ♪

jonathan: live from davos, switzerland for audience worldwide, it is day three at the world economic forum and is our three. ted pick, ceo of morgan stanley, joins us. i did this with james quincy of coca-cola. i'm not sure if you heard it. what does day one look like? you know you're taking over from james gorman. you kick them out of the office and tear the photos down? how does it work?

ted: james is still the boss. it is a great question. your member that robert redford movie, the candidate? he gets elected and he says now what? there is an element of that. there is -- it is like going back to school. 31 years at the firm i loved, they hired me out of college, they took me back out of business school and now i get to represent the team. it is an awe-inspiring moment. you are carrying the culture of a place that is been around for almost 90 years, place that looked at the abyss in october of 2008. now we are flourishing. my job is to keep going what james has done so brilliantly. we are spending a ton of time together, it is a blast. i learned something with every interaction. super psyched. we've been doing these dinners together with clients. it is a thrill for me.

jonathan: i think of the bank that goldman sachs took over is very different from what you are in hiring today. if you can fast-forward another timeframe, 10 years, let's talk about what you want morgan stanley to look like in the future. a lot of people has taken your recent comments on a continuity candidate at the top of the bank. do you see any changes? ted: what james did is late the seeds. he not only transformed the place but he reclaimed the best of the culture. my job is to take the transformation in wealth and asset management, you know we have about 6.5 trillion dollar assets under management, tough to compete as a global investment bank. there are only three or four of those. he would claim that culture, now to press on integrating the two, one ecosystem, individual institution, institution needs

hedging expertise that requires capabilities individuals do not have. the migration of financials. i think it is incredibly excited and we like to think we are differentiated from our competitors. to bring them both together is something special. the reason i think we can do it is born of the experience of the financial crisis. when you make it, you are imprisoned by that forever or you say we made it, let's keep the good stuff and be something more. i am focused on integrating the firm across those verticals. lisa: you grew up in the investment bank and yet you are really leaning into the wealth management. on the earnings call you talked about how wealth management is in your blood and your father-in-law and father were in the business and you said this will be the engine for further growth. do you have a place in mind were further acquisitions will transpire in terms of the wealth management? >> i want you to know you've

made at least 180-year-old very excited -- you've made at least one 80-year-old man very excited. i just want you to know. listen, i think the reality is inorganic opportunities will come across the transom. the danger of acquisitions, they are asymmetrically against you. first the financial proposition has to work, than the integration has to work. we did it twice in covid. we did e*trade which gave us enough size. it was deluded but that did not matter. it gave us enough size we will make it. than the aftermath in europe. stuff will come across the transom. i am not sure we need to be in a rush. we do not have the victory curse. we just do these things. i am glad you mentioned it. when you talk about five or 10

years and you think about the amount of aggregation and transparency of wealth outside the u.s., particularly in asia. we are 22% owned by air france and mitsubishi who saved us during the financial crisis. we have doubled down on japan. imagine a vision thought. imagine wealth in japan five to 10 years from now when you come up zero barrier. asset allocation, wealth opportunity, investment banking is one example of a place we can do extraordinary business. lisa: does that mean you are deemphasizing the investment bank? that it does not matter as much to compete head-to-head with goldman sachs? ted: sure. what i love is we have a business strategy you can do in the elevator. wealth and asset manager, big scale, investment bank, big scale. increasingly there are synergies between the two. it is important that the

investment bank is actual enough that when the markets are speaking to early cycle behavior, which is where we are now, cross-border m&a out of the u.s. election, folks wanting to deploy capital. you want to be in the core investment banking industry. you sponsor assets have gotten big. how many underwriters can be used to take these companies public? how many people will be acting as advisers on cross-border large-cap m&a? the reason it is so important is it is the tip of the spear. it is the intellectual capital the firm has been known for. was informed by our history, the 1997 merger and the human capital crisis in 2005, the investment bank has embraced wealth and vice versa because what james did for these 14 years, he migrated people around

the firm. you have people who understand these businesses. one of our copresidents worked in the investment bank. dan simmons is running the investment bank. it is not that i'm trying to sell you. i have been there. it gets people motivated. jonathan: you alluded to it. we had a bank ceo that said it out loud. investment banking has been in recession. it has been tough. i hear you communicating the end of it. i hate to be the guy who asks about the federal reserve. can that end without rate cuts? ted: i hear you talk about this every morning. we don't know. i think the path is probably that inflation has passed. there is a tale, there is a 5% or 10% probability they do 50 in march. 40% to 60% they do 25 in march.

there is also a 5% to 10% probability we have another hike in us. we did that check thinking of you guys because it is possible. every time the fed talks about it as they did in the teens, it tightened up and they did not go. now they talk about it and it loosens up. now we do not wanted to get away from us so we will do it when we are ready. the big picture is they are going to start lowering at some point when they are ready. they will be prudent, they will be thoughtful, and that kind of predictability is good for the investment banking business because you have these financial sponsor portfolios that need to be liberated. some can go to continuation funds. some have to go public or be sold. the corporate dynamic is folks are ready to get going. there is always going to be an election, there is always going to be macro.

the core investment banking activity we have known with a real cost of capital in the mid-1990's, it will come back. lisa: we have been hearing from bank executive to bank executive , it is time to ramp up hiring. ted: we have our team. lisa: so no more hiring? ted: investment banks are notoriously procyclical. if you believe in what the culture represents you do not want to be too herky-jerky. especially in the world of higher fixed compensation, longer tenures in the stickiness. will we hire specific banker for a specific space who want to come unto our platform? we have been hiring in paris, in tokyo, we have been picking up m&a bankers along the way. i like the partnership right now. i like the team and they are fired up to go. jonathan: there will always be a range of views on your stock.

10 buys, 20 holds, no sales. let's talk about one of the holds. jp morgan said we see acquisition benefits discounted and limited stock specific catalysts in the near term. we have to deal with analysts now and again. what would you say back to that? limited stock specific catalysts in the near term? ted: we are right at the midpoint of the 7800 range, trading 85-ish. reality is it continues to be a great capital return story. we have two growth businesses. the strategy is unchanged. the james gorman premium has been real premium and i want to make sure i have credibility with the marketplace. it is 728 weeks and i've done

two so the score is 728-2. he said it is only 527 trading days. the reality is some people want to note we get to 30% wealth immediately. there is always going to be that knee-jerk. one of the things james said brilliantly is your team knows he always did the post and beat durably. these firms have been marked on price-to-book. what we want to do is get people to look at the pe multiple, which means they can run the dcf. that is important that there is predictability and durability. lisa: is it true you can multiply any numbers in your head in a second? ted: who knows? lisa: 563 times 300? jonathan: i will run the numbers after the show. it is great.

fantastic to have you. the ceo of morgan stanley. he has to run a knife to check in on the markets. equity futures have been positive all morning in new york city. jobless claims just moment ago. michael mckee has the data. michael: you might want to check that two year yield after jobless claims come in extraordinarily low, 187,000 last week. this could be a seasonal effect, down from 203,000. it has gotten the markets attention. we have seen trimming of bets on a march rate cut. housing starts down 4.3%. that is not as bad as the -8.7% forecast. building permits up 1.9%. the philly fed interesting numbers, -10.6 from -12.8. here a number to keep an eye on that should catch wall street's attention as well. prices paid.

11.3. it was 24.3 last month. inflation coming down very rapidly. no change in the job market. you have raphael bostic out with headlines on the terminal suggesting it seems they are making progress but he is still a higher for longer guy. jonathan: thank you very much. let's return to that number before a commercial break. 187,000 jobless claims. we start the year talking about rate cuts in march. you just get this trip feet of data that says what rate cuts? it started with payrolls. then we have had retail sales, we have jobless claims, you throw in the munication for the federal reserve, it is no cuts anytime soon. lisa: and we just heard from ted pick of morgan stanley who

thinks we are early cycle. you get that feeling from business executives we have been speaking to. a certain point it comes back to the question, can we get ongoing growth without inflation? can we allow inflation to gradually go down? jonathan: the economy looking decent. the geopolitics looking terrible. coming up, bloomberg's and reorder and back with us and we will -- bloomberg's annmarie hordern back with us and we will catch up with ukraine foreign minister. that conversation is next. ♪

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>> everything changes if trump

wins, mostly in bad ways. we took trump seriously in 2016 and we are undertaking that same exercise now. if he puts up a 10% tariff. it is a tax increase on all consumers in the u.s. and it probably increases the inflation rate 1.5 points. jonathan: it is a hot topic at the world economic forum. it has been a hot topic all week. the future of policy in the united states. economic policy and foreign policy. that was adam posen. we can now talk about foreign policy. there are two hot or is taking place right now. one is in gaza. the other has dominated the news cycle for the last two years. the war in ukraine between ukraine and russia. joining us is the ukraine foreign minister. good afternoon. it is good to see you. it has been a difficult time for

you and your government and your country. you've had a series of meeting with foreign leaders. just give us an indication from your conversations how close we might be to getting that a delivered to the united states? >> we received reassurances the eight is on its way. during a situation where the u.s. citizens are as interested in passing this law to fix the border issue. annmarie: did secretary blinken or jake sullivan give you any indication what that timeline would look like? >> the specificity of the moment is it can happen on any day.

it depends on the moment when legislators make a deal on the border. it can happen today or tomorrow. no one can tell you. annmarie: the elephant in the room has been the return of the former president. how is kyiv preparing for another trump dependency -- another trump presidency? >> how can we prepare for anything that is not based on us? the american people will make a choice. president zelenskyy and president trump know each other. first the elections must take place. we have been through so many things in our life, especially in the last few years, we are ready for any scenario in any part of the world. annmarie: i know you have to wait for americans to go to the polls and make that decision but there must be conversations happening at the high level of government in ukraine about what

would happen if trump did become president, how that might shift your policies. >> we are inquiring into how the potential team of president trump could look like. we are looking at these names. i think it is not certain, not obvious for the u.s. and people in the united states. whatever happens, we are ready for that. we have worked a lot with president biden and his administration. they did a great job helping us and will be grateful for the people of america and divided administration for helping us to survive -- and the biden administration for helping us to survive in difficult times. i am confident that irrespective of who will be the next president of the united states, the victory of ukraine will be in the best interest of america

and the american people. lisa: we have seen president zelenskyy meeting with bank executives trying to drum up support. have there been any meetings with any chinese policymakers have been here in dabo's? -- in davos. >> no, because president zelenskyy speaks with president xi. there been two phone calls. this is the line of contact they are upholding. we have our prime minister and we have nothing against the chinese prime minister and ukrainian prime minister speaking to each other. we are now working on organizing another call between leaders of china and ukraine because there are things they can talk about. mainly a peace formula proposed by president zelenskyy as a way to restore a just and lasting peace in ukraine. annmarie: how are the business leaders -- lisa: how are the business leaders in places like the united states instrumental for ukraine?

>> the president had two excellent sections with business leaders and this is the added value of davos. you cannot go skiing but you can go business skiing with the business leaders who gather at davos. i was impressed with the positive atmosphere. it is very different from what you read in the news and different expert comments published widely. business is focused on helping ukraine. business believes in ukraine, and business is on finding solutions instead of endlessly discussing problems. annmarie: what we see in america with the stalled money, we also see american consumers worried about inflation. there are questions is why is this money being sent abroad? there are questions of vladimir putin putting out feelers, potentially sowing doubt that the u.s. would do some sort of agreement with russia and trying to get ukraine to the table. what you make of that?

have you discussed these reports with your counterparts? >> ukraine does not steal any money from the american taxpayers. if you compare the overall budget, it would just be defense spending of the united states at the money allocated to ukraine is to say the least a very little part of the overall defense spending. a vast amount of this money stays in the united states because it is invested in the production of weapons that goes to ukraine. it needs to be explained to the american taxpayers that communities benefit from it. new jobs are created. everyone should understand one simple fact. whatever the price of supporting ukraine today is, the price of fixing the mess in the world if ukraine loses will be much higher. most importantly, ukraine is

probably the first country in the world that is fighting a war against another country, has the united states as an ally, and is not asking american troops on the ground. you save the most important, you save the lives of your soldiers. we offer the best deal of the global market of security. give us the weapons and the money and we will finish the job. annmarie: 2022 was all about coalescing around ukraine, all hands on deck, 2023 was a counteroffensive that did not go as planned. what is 2024 about? what is the plan? >> 2024 will be about throwing russia from the air. the one who dominates the air defines the timeline of the war and the terms of peace. it will be about filling the front line with drones and other sophisticated technology because the counteroffensive taught us

an important lesson on how war changed and how drones and software and artificial intelligence becomes the real masterminds of warfare. 2024 will also be about keeping the black sea under ukrainian control. we made the russian black sea fleet invincible and hide on the eastern side of the black sea. that will allow us to keep exports and food prices under control. ukrainian economy has a fresh breath because experts are finally working. this is a very important thing. another goal for 2024 is russian frozen assets. they must become available for ukraine. jonathan: that is highly

controversial. why do you think that is the case. do not think there is a risk around establishing a precedent on that issue? >> first, how much bankers and lawyers in the west were thinking about the rule of law, harboring dirty money of russian oligarchs and helping them out. second, to what extent russian money should be protected by western rules as long as russia attacked western rules and wants to destroy them and build a world that will. when politicians make a decision , bankers and lawyers find solutions. we can engage with discussion about unities and legal repercussions. we just need to make it. jonathan: the foreign minister

of ukraine. from davos, this is bloomberg surveillance. ♪ (jennifer) the reason why golo customers have such long term success

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>> from new york city, a very good morning. i'm manus cranny. what you have is tech on a river as the rates market timbers it's ratchet higher. countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is bloomberg: the open with jonathan ferro. manus: coming up this