>> welcome to countdown in london. >> these are the headlines in -- headlines. >> drahi's decision day. >> the ecb is active to unleash a program of debt i -- buying. >> let's talk about what we are focusing on, we are live at the world economic forum at davos where the spotlight's post on -- focused on economic policy

makers. >> the debate begins right here on bloomberg, we will talk to various people ahead of mario draghi's decision. >> it has just gone 6:00, the stage is set in frankfurt and expectations are so high. the financial savvy will be glued to their smartphones telephones and televisions as mario draghi will probably set up a qe plan. >> the ecb is not the only central bank coping with deflationary forces. high drama from india to canada and many places in between the mario draghi takes center stage

today. >> he does. it is all anybody is talking about. everybody will be glued to what exactly mario draghi has to say a little bit later on. plenty of central bankers are here. plenty of finance ministers. >> we walked around yesterday and it was amazing we asked them, who is the most wanted man at davos, and they said it is a ghost of mario draghi. he is not here but he usually comes and this is what everyone is talking about. it will make a difference to everyone here. >> angela merkel is here as well which is fascinating because she is due to speak at 2:15, what happens at 2:15?

that press conference with mario draghi. it all kicks off at the same time. you wonder whether or not it was deliberate. the whole scheduling story around today is fascinating in itself. >> it is the first time that the ecb is meeting on the davos day. this meeting was brought forward by one week. a happy coincidence. >> let us hope it is a happy coincidence. expectations are incredibly high and people are thinking we will see something delivered today and in big form. it is a question of how much the germans have held them back. >> when you speak to the attendees here, some of them say that because there is so much enthusiasm and because the central banks have taken so much on, they are concerned it will push back reform.

>> we spoke to a range of people about what their expectations are and what they see happening. what is interesting that while they agree on a terry holocene is needed, there needs to be -- they agree that monetary policy is needed, there needs to be a push for mario draghi. there needs to be a push for monetary reform as well as stimulus. >> what is necessary for the eurozone particularly is that it is about coming together around a proper stimulus, combined with the profound structural reform that is the only long-term route. it is the only way to give credibility to any macro measures. >> the co-ceo of deutsche bank says it is a double-edged sword. >> qe mean stability or europe

which is good and a better provision environment and fewer ancram sees and a stable european landscape. equally, it means very low interest rates and the destruction of net interest margins which will be a huge challenge. so we don't want our franchises to suffer. we have to adapt to the demand and it is here to stay. >> that was anshu jain, he wasn't the only loss speaking here -- boss speaking here. while there is an expectation that we will see a push from the central bank, this line is a little bit too much for some. >> there is too much dependency

on what the financial system and what the central banks will do to solve problems. they can buy time and create the environment where things can improve what if that time is not used wisely by political processes that we lose the opportunity. the next stage of qe is even less empathic and people begin to have a lack of faith. >> one of the things that is unclear to me is a lot of ceos say we need to keep a leash on the politicians but at the same time, the market is expecting it and it is unclear how we will achieve growth in europe if you don't get that financial cushioning. >> there is a real sense that this need to happen, that europe needs to figure out a way to get itself going again and monetary policy will play a big part of it, this is a huge day for the eurozone. we will take a break. >> in just a few minutes, the

view of another big hitter. the chief executive of wpp. ♪

>> welcome back, you are watching bloomberg television. we are live from boss -- dave us -- davos the world economic forum. >> i bet you are delighted to be here to talk about qe. >> why am i doing this? >> we should talk about your party last night. talk to us a little while you're here there is so much focus on whether it will change anything in europe, what is your feeling? things will get better or we are at risk of putting reform in jeopardy? >> i think we are living in a slow growth world that we don't want to see. maintainable growth is less in definition and we have in free labor.

the level of growth was unsustainable and so we have to get used to this 3% or 4% -- well 3% or 4% real and were percent or 5% nominal. the growth market is 2.2%, led by america which is over 3%. i think we just have to get used to that. it is not great for us because it means our growth last year is what the budgets were this year. it is the same again this year and maybe a little bit better. things like qe and europe might make us feel a little bit better but the last figure, sitting on the company's balance sheet would be reduced? i don't think so. >> what about yours?

>> we will see like for like growth and acquisitions ad 2%, we are very active, but nothing big to get you excited about. currency headwind last year when currency was strong against the dollar and currency tailwind this year because the dollar is much weaker. but the dollar outweighs because it is almost a third of our business. so it is doable but clients -- lower growth than they want to look at some of the companies that have ordered, lower growth, cost down and no pricing cap because there is no inflation, it drives costs down and makes life for people like us very difficult but it is something that we wrestle with. the 3% real growth worldwide is

something we have to live with and this is the sixth year since lehman. >> central banks are punching huge amounts of money into the system and i think everybody knows that we need it but my question is, why is this liquidity not feeding through into inflation. how can we justify it? >> the first night we were here we had a dinner -- i think it was off the record but ruffini was giving his usual speech and i said, what is the way out of it? no solution was offered. i think it is a sort of war of attrition that we have to keep on going. e-commerce will respond. my hope is in relation to the eu issue that britain might have a conservative led coalition that by 2017 or whenever the referendum -- i then -- by then

we will see signs of growth in western europe. france italy and spain are merrily. -- primarily, showing son signs of reform. they have been making a little bit of progress still not growing. germany is in a good position, the german exporters are licking their chops with the weak euro but i think it is unrealistic to believe that companies are going to be aggressive in their expansion plans when they're faced with fast code markets slowing and slow based markets that are still very challenged with whether mario draghi does enough today and in the future or not. >> i'm surprised you haven't mentioned china because we had the premier here yesterday who said growth is slow, get used to it. >> the fact is china's economy

is a $9 trillion economy, the u.s. is 16. it is growing at 7.4% some people say that is not the real number, but even 4% or 5% we would give our eyes and teeth for an europe. the world economy will depend on two economies, the u.s. and china. 16 and nine. those economies are key. i am bullish on china. what you heard from the premier will be heard this year and it makes you feel more confident we were told by experts before the changes in the euro that it would take two years and that the incoming leadership would not an equally criticize the

previous leadership by rapid measures and that is what they have done with the corruption agenda. we had the planem policies last year that will be revised. it is a higher quality growth and the president talked about the savings propensity to save. they have the health care safety net, that is why they save and last but not least the growth and services economy. the chairman of it lack -- iblak in shanghai and that is a group of ceos committed to stimulate growth in the shanghai region. i am bullish on china. we don't like in a way -- the west is sort of two faced about it.

someone china to succeed and some don't. when we get to the areas of technology, we say china is still in technology. alibaba is the sixth largest company on the planet. >> the website doesn't look that good. but the technology is strong. >> what will it take -- you bring up the corporate leaders, what will it take for them to change their minds about private sector investment? oil prices have have -- halved. >> we had a huge discussion with some competitive media outlets, but there is 2 -- too much emphasis on the short-term. the average life of a chief marketing officer in america is two years. it is unrealistic to believe -- nonexecutive directors don't want to take inordinate risks.

it is unrealistic to believe there will be major changes and told become more long-term oriented. interestingly, the companies that we work with, where you have control and we see high-tech companies ipo, it goes against the governance fundamentals. those were companies that make their decisions -- in the long-term -- we had a discussion last night, larry think has been talking about increasing short-term capital gains. the role of iss, whether it should be more sec controlled it has inordinate amounts of power. i think short-term capital gains taxes are fundamental and i think analyzing people for short-term trading is important. and the role of activist investors, some of whom are more constructive than others has

gone way down on decision-making. company ceos see what happens the activists -- raids that are done small pieces of equity. >> you think that is not helpful? sometimes it makes the company better. >> they do. but it is very short-term. it makes ceos and boards unwilling to take the risks. >> like politicians. across the board. >> their frame of reference is a five year term. we forget the impact of lehman on corporate. we say what was the impact of lehman on consumers? but what it really had an impact on was it made corporate innately cautious. so buy back stock maintain

higher dividend -- for all of those lack swans, the big issue here is when you are asked, what is the thing that keeps us up at night, it was not answer identified risk, it was the black swan geopolitical risk. >> things we don't have control over. thank you so much. >> we will be bringing you plenty more of interviews with big hitters throughout the day's, stay with bloomberg as our dev boss coverage continues throughout the day. ♪

>> welcome back to london, you are watching "countdown." fighting has continued in the east of ukraine and pro-russian rebels have been bolstering their presence. the ukraine president has warned situation is in danger of escalating. what is the latest? >> fighting has intensified, not

just at the airport, but beyond that on the front lines, ukrainian troops retreating in a couple places and it had a very important rail junction. meanwhile, the ukrainian president was at all those where he said -- davos, where he said -- the ukrainian president told us there is a grave danger of this escalating. >> the situation is getting worse because we now have information about the 2000 additional russian troops crossing our border with more than 200 tanks and we understand this creates a great danger for further escalation of the situation and me as the commander of chief should be in the country. >> and leave for his country he

did, but not before he told delegates that russia had attacked a bus killing several civilians in the last couple of weeks, before he sat down with christine lagarde and before separately in berlin the foreign ministers of ukraine russia germany and france sat down for talks. germany's foreign minister said produced tangible encouraging results. >> where are we when it comes to imf aid for ukraine? >> they are he had $17 billion worth of assistance and yesterday, lagarde said she will support ukraine getting more money. there are estimates how much money a need, some say they need 15 billion, what we don't know

-- what we do know is if you look at the bonds yesterday, anyone who left the ukraine money in recent history is now expecting there will be some kind of restructuring. either there will be a nominal your cut -- care cut -- >> they want to try to negotiate more favorable borrowing. >> if you look at the yield for the 2017 bonds, it went to 41%. everyone knows they are coming but it is a question of whether it is restructuring light or something more severe. >> thank you for the latest on that ukraine story. interesting that the man from dubya pp was telling us -- wpp was telling us that the chief geopolitical risks are the ones you don't see coming. stay with us. ♪

>> you are watching "countdown." time for the fx check. there is only one currency to watch, i chose euro as the currency and you can see it has fallen by 14% against the dollar over the last 12 months. as we await news from the ecb a little bit later, the euro is very close to the level it reached on tuesday which is the lowest since november 11. look at the peak on that chart.

that was march 18 of last year a peak of 1.3934. since then the euro has fallen by 17% against the dollar. the median forecast of analysts of bloomberg for the first -- for the fourth quarter is around 1.16. so pretty much around these levels are the most bearish forecasters, with a 1.05 forecast. the most bullish is santander there with a 1 -- santander with a 1.28 forecast. >> i am anna edwards, the bank of canada has unexpectedly cut its main interest rate by .25%. they say the falling oil prices will drag down inflation and weigh on everything.

the finance minister highlighted the impact of the oil price drop when he spoke to bloomberg in davos. >> oil prices are having a complex set of implications and i have mentioned a few of them. on the negative side, lower prices affect corporate profits and the impact on capital expenditure. >> meanwhile, the opec secretary-general says he does not see oil falling much further. >> i think the price will not go to 25. i think the price will stay where it is now -- the big picture will be clearer in june after the first half of 2015. we will know exactly how this low price affected the supply. >> the ceo of emirates says he

sees oil prices staying low. >> at the moment it looks like the price of oil will remain down for some time to come. i would not suggest it will rise much above the $50 line and that is what i have said in the past, it is the natural settling point in my view. >> away from the oil story, morris johnson has agreed to pay a capital gains tax bill to the u.s. government. johnson was born in new york and carries a u.s. passport making him reliable for the state of claims. he previously described it as outrageous. after months of sent -- speculation, mario draghi is expected to commit to a 1.1 trillion euro program of quantitative easing to combat

inflation. he does so against strong opposition who say that qe reduces incentive for governments to make structural reform. >> let's get to hans nichols who is in frankfurt. a big day for the germans. >> it is a big day for mario draghi and a big day for reaction. what we think we know is that quantitative easing will be 1.1 trillion euros. this is according to two people familiar with the matter and maybe in march, this will be 50 billion euros a month in asset purchases all the way through 2016. behind me that is the ecb building and they will clearly have to market -- meet market expectations 90% of economist

believe it will happen. the previous expectation was for 550 billion euros per month. so when we take a look at the lobby expectations of how they are going to do this, take a look at the capital key. these are the bonds they may end up purchasing. this gives you a sense of what everyone owns and how much is out there. germany at 18% italy 12%, spain 9%. here is where we stand. last night they had a dinner with all the members if the governing council has this plan out there that is what is likely to be presented with a still have to agree on it. it is awfully cold outside and i hope it is warm in the new headquarters. there may be some heat if there is disagreement between the germans and the rest of the council. >> elaborate on that, the

germans have been opposed to any form of bond buying from the start. how is consensus going to be reached with such opposition from the germans? >> it seems like mario draghi is bending over backwards to try to bring the germans along. he briefed on the merkel last week -- angela merkel last week. what seems to be a dividing line -- we don't know what they are talking about and have not received a great read out, but it seems to be along the lines of -- the germans went to isolate the debt and have the national banks put it on their books and they might be responsible for 50% of the losses. at the same time, countries like italy and spain might not want that debt on their national bank books. they really aren't as powerful

in many countries as they once were. that is one line of debate we will be looking at. and we will be looking at the total overall number. if it is close to that 1.1 trillion number, that will make mario draghi's goal of drawing the balance sheet to 3 trillion euros a lot easier. he won't have to rely on that refinancing operation that had been disappointing. >> we will speak to you later hans nichols in frankfurt. >> and he is cold. fran and guy even colder at davos. let's see what is going on with the business community across the eurozone. >> i was just commenting how hans looks as cold as us. we are pleased to be joined by mario greco thank you for joining us. give us a sense of how much

importance qe has in the conversations you are having at davos. is there a concern that reforms will be delayed or is there relief that the central bank is expected to announce something on qe? >> it is definitely expected, qe has to come and it is needed and europe needs to have the support of the central bank. it is not sufficient and will not finish the need for political action or government intervention. qe is needed and it is very good that the ecb is stepping up and doing their job. >> there is a debate that it is quite destructive. some say that maybe what he will announce is the credit risk with national sovereigns and that seems like a step backwards rather than forwards.

it is pushing the problem back to nations rather than the eurozone operating. >> i would agree on this. europe needs to be more cohesive and it needs to understand that the destiny of europe needs to be in europe itself and not the nation states composing europe. i don't know how qe will be structured but if it moves back -- the responsibility for the assets to the nation states that would be a mistake and move in the wrong direction. >> are you confident that central banks will get it right? we see what the central bank just did last week, what does it mean being in the markets nowadays? as a become more dangerous or are they realizing just now? >> there is a lot of activity in the markets. the market is expecting things.

there is qe here and the impact of rates next week and then the elections, markets are nervous. volatility is out there and we have not seen so much since many months or many years. >> is that a sign -- we were talking before and you said we have been here the last few years and roughly having the same conversation, do you feel at the moment that maybe things are beginning to change quicker? the volatility, you talk about oil prices moving down aggressively, and as francine said, some big news coming through the currency markets. i wonder whether the tectonic plates are beginning to shift a little bit. >> it is that let me stress the point that governments are starting to do what they were supposed to do some time ago. france is taking action and

spain has taken action. the southern european countries are doing what was expected. the world is shifting and that moves me not to be too pessimistic. when i hear people being pessimistic on 2015, they missed a little bit these movements that you referred to happening and i expect a possibly better year than last year. >> doesn't mean there will be good valuations and possible targets? are you on the market for anything? given what we have talked about is the landscape perfectly right? >> generally, it is not in a position. we still want to develop our business and to strengthen our capital business and develop our profits and improve the business.

but the market is looking more interesting. >> you have an update that you will be announcing, given what you just said, do you think he will be more optimistic in that strategic plan? >> it will be a strategic plan generally. -- in generali. in a sense we restored our market reputation and now we are back to the markets and so the plan is to journey act to the market and growing with our own capital and improving our product, and services, and having much better quality. >> you sound optimistic. >> i am. >> there has been suggestions in the past that you have not been as optimistic but what i am hearing this morning is fairly bullish. >> yes i am.

at least for generali the worst is in the back. the markets have been resilient and generali has been resilient. i think with the extraordinary effort of speed and quality in taking our decisions, i am looking ahead with more optimism than i had before. >> does that mean there will be more ambitious targets unveiled? >> they will be very different. we call the turnaround of the company and the changes will be called off. it is a completely different plan where we grow the business. very different from the past. we entered into a different race. >> more aggressive? >> different. we go back into the market and it is focused on customer opportunities in the market and

it is much more enjoyable and interesting. it is competition in the market and competition with customers and i think we can be successful in this. >> one of the great advantages of davos is you get to meet so many of them and have the opportunity to take their temperature. which at the moment is quite cold. [laughter] what are they talking about what are they looking forward to? you just said what you think will happen in 2015, is it what is happening with the ecb this morning? is it politics in the u.k.? greece? is it what is happening with the terrorism story? what is top of the agenda? >> there are a lot of concerns, the year started off with the worst geopolitics and now they are much more relevant and they

were a couple years ago. in january you feel out what will develop through the year and you are not sure that you do not have enough to make sure you will achieve the end results. lots of worries but companies and economist today -- econo mists today are much more prepared to confront the market issues today. >> we talked about the advance of technology, digital, internet, cyber security and driverless cars, how much time do you spend worrying about how to ensure ends like that -- insure things like that? is that something in the back of your mind are you actively working to understand how the world will change? >> we recently announced a joint venture with a south african

country to connect humans and to get information on human behavior, to improve their style of life and healthy behaviors. we are the market leaders for connecting cars. >> driverless cars? >> not yet. that's the next one. but connecting cars is important because the better price we can give to customers, the more we can gain the trust with the customers. there is no better system for customers to see how they drive their cars. technology is an enormous opportunity for us. >> thank you for joining us on the program. >> so, we have to part ways now because you are going off -- >> we have a cracking panel

starting about an hour from now. i will be speaking with these people. we will be talking about qe. i have been speaking to them the last couple of days and they have quite diverging views. not only about the world economy but when the fed will start raising interest rates. can they start when the rest of the world is easing? >> i look forward to finding out. that is coming up later on bloomberg television. when we come back, we will continue to hear from some of the most influential thought leaders here at the economic forum. bill gates after the break. ♪

>> back in london. while davos is an annual fixture, they spoke with bill and melinda gates in enter interview. the cofounder of microsoft has been speaking about schools and taxation in the united states. he says he's in favor of a more aggressive system. >> if you look at the world as a whole, it is less in equal or more in equal now than in the past. that is because poor countries like india or china have had

growth rates way above that of the rich countries. within individual countries, the inequality has gone up in almost every country. and i think everyone believes in a balance, that you should have progressive taxation that as you get wealthier, your consumption and income and your estate ought to be subject to much higher taxes than the middle class. i personally think the u.s. could be even more progressive in that. the thing most people would emphasize that is critical is the equal opportunity that if the inner-city schools are really good and that is not holding people back, or social services -- and that is strong enough so we can say every kid

has a near equal chance of becoming a lawyer or doctor and going to a good school, that is even better because that is about freedom and developing capacity as opposed to a zero sum transfer. you have to be able to fund that opportunity and taxes are absolutely necessary. those two operating together taxes to fund it and the execution -- to have equal opportunity. we don't have equal opportunity, it is what we aspire to but education alone and so forth -- if you grow up in the inner-city compared to the suburbs, we are not being true to our basic creed. >> bill gates speaking to bloomberg. >> the e-commerce company ebay announced job cuts and a restructuring of the business

which gave shares a boost despite lackluster trading over the holiday. here is more with -- here, with more is caroline hyde. >> it is getting ready to be split apart as carl icahn has been pushing for, to separate the jewel in ebay's crown. interesting that people are liking what ebay announced because is this ain't looking pretty. if you're looking at the marketplace, the slowest holiday quarter growth was 2010. a 9% increase in sales but all of that sales growth seems to have been from the pay unit paypal and their enterprise unit. december sales much slower than other rivals. ebay eked out just 6% increases.

clearly the fact that the auction marketplace only eked out growth and cyber security and the foreign exchange interests actually hit and the dollar strength hurt them a bit. and their algorithms in google, they blame the fact they are not coming up high enough on the search engine's. but you have paypal showing 18% growth and ebay showing 1% growth, suddenly you see why marketing is liking that element. >> but the shares rose why? >> this is what they like, the split. by the second half of this year we anticipate paypal will be split off. they say we might even spin off the enterprise business. they can sell it and do an ipo that is another way to realize value and job cuts are often

like making it more efficient. mainly in the core marketplace area, but a few in paypal and enterprise. and a $3 billion stock buyback that will help investors. >> caroline hyde with the latest on ebay. it is a big day for the ecb of course. >> the man who handed up -- headed up the bundesbank, he resigned because of the ecb going ahead and launching a bond buying program from countries like reese. -- like greece. we will be hearing his views today. >> we will see if we get any insight into that fraction -- friction. the headline, we're expecting

1.1 trillion euros in monthly installments of 50 billion euros per month. that has vigorously been a prose -- been opposed by some. >> this share is very important, how much will national central banks take on to their own allen street? -- balance sheet? or how much will the eurozone as a whole share the balance of fear. who pays the bill? >> there are a lot of politicians weighing in on the subject, that it is not for the central bank to decide how much those risks are shared and others say something different. we will look to see whether they use those interest rates to incentivize banks to getting involved with quantitative easing. quincy will be on the ground in davos with guy a little bit later on this morning. it is 6:56 in london.

see you on the other side. ♪

>> hello. welcome to "countdown." i'm mark barton. >> i'm anna edwards. >> draghi decision day. preparing for an historic step to fend off inflation in the eurozone. >> the e.c.b. is expected to unleash a program of debt buying worth more than a trillion euros. >> and here in davos, i'm guy johnson. we're live at the world economic forum where the spotlight is firmly focused on monetary policy makers ahead over the e.c.b. announcement. the german chancellor merkel expected to speak this afternoon just minutes before the news conference in frankfurt. and the debate begins right here

on bloomberg. in a few minutes, francine lacqua will be speaking to christine lagarde and larry summers. that is ahead of draghi's decision. >> so let's talk about what everybody in davos is going to be focused on today. that is of course what is happening in frankfurt. potential is interesting here. questions are being raised about whether or not actually this is going to be an excuse for maybe politicians not to deliver. whether or not actually without mutualizeation it is going to exacerbate maybe some of the risk that the eurozone faces. let's talk about this in a little more detail. my next guest -- well, i think

his pedigree speaks for itself. he is the current chairman of u.b.s. good morning. very nice to see you. we are waiting to hear what draghi is going to deliver a little bit later on. there are risks and there are rewards associated with delivering q.e. for the eurozone. how finely balanced is this decision? >> first of all, you have to ask yourself what do you want to achieve with the policy? and the policy is usually -- the central bank mandate. it is to achieve price stability where inflation is close to 2%. at the moment with oil prices coming down very, very strongly, inflation is going to go nowhere near 2% for the next 12 months. the bigger issue is has europe got a dynamic economy that given demand and supply constraints will ultimately lead to inflation? the answer to that is no. europe is in a very weak

environment. the periphery, the core countries have big output gaps. there is no inflation pressures almost globally at the moment. moving closer to a target is the right policy to do. central banks have done that by lowering rates. some have used q.e. , buying outright purchases of assets in the market. others have used discount policy like long-term ltro's. that only works through banks. that's why we have this debate. >> the transition mechanism is not functioning. therefore is this q.e. policy likely to work by the fx channel? >> there is a number of channels. we're seeing them play out in our client base. the first one is and we have already seen a lot of that given to speculation in the market about this program.

it came down over the last half year. we have seen the same thing in japan. when q.e. was announced there we have seen the exchange rate effect. we have seen it in europe. there are many concern turnovers weak economy and risks in the economy. i would expect once this program gets announced, there will be a very muted dimension for fixed income interest rates. that will rotate investors from bonds into equities. i expect the equity markets in europe to pick up as a result of this policy and we'll move to an overweight of european equity as suggested by our clients in the investment portfolios. that is not the purpose to have policy. the policy purpose is not to lift equity. eck city a sidefect and it will help financing of large

corporates in europe. >> so how on earth, consider that most small and medium sized companies and the -- you want to get wages going. how do you target that part of the economy? >> we're back to square one where the banks don't yet fully do their job. before you actually can reach small to medium sized enterprises which you won't reach through q.e. unless you buy corporate bonds. moves them don't issue corporate bonds. they live on credit. you have to fix the credit channel. the q.e. program that focuses on buying sovereign paper doesn't address the problem in my view. itards the issue of market -- it addresses the issue of market access. >> so i'm beginning to wonder as a result of this conversation whether or not europe actually

need q.e. or whether we need a different policy? >> europe needs to fix the banks. and we have fixed our bank by raising capital and moving to a more solid balance sheet and that is in the handor banks, but the central bank can help. it can provide liquidity to them. at the moment, what we're seeing is the whole banking regulation is being phased in this a period where europe needs strong banks to lend. at the same time, banks are not focuseon lending. they are focused on reducing lending and raising capitals. >> back to the question, though. that's true and i think a lot of people would agree with what you said. back to the question, does europe need q.e. ? it is the wrong policy at the wrong time for europe? >> i've been skeptical of this policy all the way. i still think that the e.c.b. has not reached with the policies they have done, their objective, doing more of the same just because it hasn't worked so far is not necessarily

a good recipe. maybe you should try a banking policy. they need to fix the banking channel. >> why are they doing it? why is the governing council thinking this is the best solution? >> i think the majority think that moving to q.e. and having some of the side effects like a weaker exchange rate and propping up of equity markets that that will help fix the problems in europe. it will help with the banking problem. it is a very far away from leading to the inflation target. you can't expect inflation to be at 2% in a weak environment. it will go back there at some point. the program doesn't address the real issue. >> if you want to get the exchange rate down there are other ways to do it. there are other ways of targeting it. you don't have to do it by the route that potentially q.e. could be. >> and the u.s. has a very deep capital market.

if you buy, as the fed always did. they always has a policy of intervening in the fed funds market. reducing the interest rate basically helped bring down the prices on any asset that is traded in the market including bonds and many banks don't finance investment in the u.s. it is done through capital markets. it fixes the issue of forcing investment and helping small and medium sized enterprises to grow. >> we have the wrong structure for q.e. ? we have the wrong financing mechanism? >> we have a bank base system. in the bank based system, the capital market part is growing. access through capital marks is through banks. even in the european capital marks. they have been in europe. you need to focus on banks. it doesn't go away. and doing what the u.s. or japan has done won't fix the european problem.

>> nevertheless, you can buy equities. it is going to generate better upside on the equity market? >> we are recommending to our clients to diversify their investments and once we have an underweight or a neutral, so far, this policy, we just replicate what we see in japan. fast forward two years has not fixed the issue. in japan, they are still doing q.e. . they have doubled the size of the balance sheet. a very bold move. the real issue is do they have the reforms to fix the growth of japanese economy long-term? so far they haven't. we'll probably be here in two years and talk about the e.c.b. has fixed that problem and they probably won't. >> i'm looking at your sense of the need for structure reform and the fact that that is not going to happen or it is going to happen too slowly and the q.e. story, boosting equity

prices. at some point, european companies need to become more competitive and spend money on the balance sheet and do all of the things that get private investment going that kick start the economy. is the rally in equity markets therefore false? >> no, either way look you can gain competitiveness two ways. reforms within the corporation. you restructure and become more efficient. the other one is you take the tail wind s of a weaker exchange rate. many have profited from that. but they have not done enough on the structural reforms with the corporations. europe, the political environment hasn't done enough political reforms for our countries to grow. this is not reflecting the current -- monetary policy can play a role. all of these reforms in the short-term have neagtive impact on the economy. a long-term gain but a short-term drag on the economy.

that is how monetary policy can help bridge that gap and buy time for these pollses to work. just building the bring and not seeing the reforms, you're buying time that is not used. >> how long can monetary policy keep going? structural reform takes a while. in some peems minds we haven't started being as aggressive as we should be. you a long-term reform story and monetary policy that is continuing year after year. year after year in davos. we have been talking about this subject. here we are still talking about it once again. monetary policy doing even more. you wonder how much long snerp is this the end of road? does monetary policy in the eurozone have any further to go than where we are? amp up q.e. a little bit under? is that the only thing that is left? >> q.e. was successful in the u.s. because it is a different economy. in europe there will be somefects quite clearly but the

real thing is when do politicians step up to the table and do their job? that is being discussed. europe at the moment is not in an existential crisis. europe is not in an exsense the rble crisis. it is an identity crisis. some countries like germany that want long-term reforms. and are willing to accept it. that was the signal that the german chancellor gave that monetary policy plays a role. there are others that say it has to be easy. it would be a substitute and a complement to the reforms. that is the wrong view in my view. being german, i would say that. the german economic view is you need these long time reforms. >> does the cheap currency

actually help -- helps in the short-term. germany delivered structural reform at a time when the currency was expensive and in order to be competitive, it needed to deliver, etc. etc., etc. you just wonder what is the incentive? to deliver this? >> i'm fully convinced that strong currency is in the interest of a country. i have always been of that view. you never gain competitiveness on the fx market. if you want to be competitive, you to do it. having a hard currency, a country like switzerland is a country that is very competitive. and germany always was. we have been very competitive, but at the same time, we had a strong currency. germany was braced for its strong currency. there is no tradeoff. >> does germany become less

competitive as a result? compare switzerland and germany. many manufacturers compete directly with their german counterparts that will benefit in the near term. will switzerland benefit in the long-term? >> they have had three years to adjust to a very strong appreciation of the swiss franc at the time. the central bank bought that time for corporates to do their reforms. most of the swiss corporates have done those reforms. u.s. talks to us with clients it has been a hard jalm. they have -- hard adjustment. they have done the reforms. this policy is -- so it does influence competitors and the exchange rate doesn't do away with the distinction between the core and the periphery country.

it benefits everyone. germany will take more advantage of that. i think what we're seeing here is a policy that is not neutral. it has winners and losers and unfortunately that is not what monetary policy should be about but in the crisis, we are. that is a usual sidefect and it is unavoidable really. >> we're cooling down. one of the ways that you can warm up is by charging around davos at high speeds. you're wearing one of these fitbits. how far does -- do you walk in an average day? what did you do yesterday? >> it was my second day. i walked around 16.5 kilometers. so that is pretty good. >> it is a fitness exercise. >> we're doing this to donate bicycles to children in africa that have to get to school

sometimes by walking six kilometers every morning to school and by the time they get there they are tired. we would rather have them get there quick on a bike and concentrate on scooling and education. it is great thing. i want to thank everyone in davos for doing this. if you're close to these questions where you can synchronize, go there and synchronize. that will get the bikes going. >> congratulations. i wish you the best of luck with this. we hope it really delivers here in davos. i think we're all full of anticipation. thank you very much for your time this morning. >> thank you very much. >> chairman of u.b.s. now as i've indicated, everyone in davos waiting to hear from arguably the most important man that is not here. the ghost of mario draghi, that is stalking the halls here in davos. angela merkel will be here a little bit later on. we're looking forward to hearing what she has to say. a big day in davos and

frankfurt. anna, mark, back to you. >> guy, you said it. thanks a lot. what a great interview. q.e. doesn't work. why? you need to fix the banks first flt we have heard that before from many germans. he said it provides a bridge. monetary policy. the bridge to structural reform. >> weak currencies is not how you win the game. but they give you a tail wind. how far did he say he walked in one day? >> about nine miles. >> as guy was saying there is one man who is not there of course. the man who is being talked about a lot today. mario draghi. he is expected to commit to a 1.1 trillion euro battle against deflation. hans nichols is there. we just heard from him. he doesn't work at the e.c.b. anymore. what are you hearing? >> well, here is what we know about that 1.1 trillion euro

number. that is what the executive committee is going to present or has presented last night at dinner to the overall governing council. here is what it would mean. starting in march, you're of asset purchases. you're talking about 50 billion euros per month through the end of 2016. columnists just a few days beforehand said 5050 billion is what they were -- 550 billion is what they were expecting. 3% of all economists expect to see something happen today according to those surveys. the question is how do you make sure you get the germans onboard? don't have them a walk. don't have them resign. they are talking about fit -- filtering this thu the central banks. they would lieable for 50% of

losses. draghi has briefed angela merkel on just how this may take place. they may follow in term turnovers asset purchases capital keys. 18% of the bonds would go to germany. 14 to france and further down the line. these are percentage s of what these national banks hold at the european central banks. one final thing. 1.1 trillion was the number. you saw the euro just tumble. you saw bond rates especially in germany drop as well. they came back a little bit. the danger -- the danger on this beforehand was that it would not be big enough. now it looks like they will be big enough. the question is how much consensus and how much dissension will there be on the

executive committee . >> one of the key questions then is what the debt is going to look like. what are they going to be buying? >> one way you can get around the greek and cypress issue is buy just the bonds that are triple-a or triple b rated. that allows you to skirt the issue of buying greek or cypress debts. how do you allocate it among the different banks. they are going to go after mostly sovereign bonds. remember the assets-backed securities they started doing earlier or later last year? they only bought about 30 billion. with sovereign debt, you is have a lot of it and can buy it pretty quickly and can inject money into this economy. >> thank you.

join the conversation on twitter. we have been putting out tweets many of our fantastic intersfruse davos this morning. you'll find it at anna edwards news and mark barton tv. he said i walked 16.5 kilometers in davos yesterday. really? >> that is very -- >> that is some achievement. >> there is a lot of ground to cover. >> lots to come including a chat with ryan chilcote, poroshenko of course had his place in the sun yesterday. ♪

>> we're back in london. time to get a check of the currency markets. >> peace talks have resumed. pro russian rebels have been bolstering their presence in the region. you can -- russian television reporting that 13 people were killed waiting for a tran. dozens more injured in the attack. i would caution that wesht verify that. it is important to pay attention

to who makes what claim in this conflict. it has often been the case that such claims are followed by further military action. we have the ukrainian president in davos who sat down with francine lacqua and said that russia has more than 9,000 troops now in the ukraine. 2,000 more prime to come into the country. that is a claim that russia says is complete nonsense. the ukrainian president also saying that he is very concerned that there might be more of an escalation and meanwhile in berlin we had the foreign minister s of ukraine russia, germany sit down and said that he saw some tangible -- in those talks. they agreed yesterday to pull back heavy weapons so you don't have these kind s of incidents like i was just talking about. however, clearly, if this report

that we're getting from russian television proves to be true, it just gives you an idea the obstacles that have been preventing peace in ukraine for almost a year now. >> those are the peace talks that took place in berlin. poroshenko was apprised of that in davos. there were talks between him and the i.m.f. going on. >> he sat down with christine lagarde after that. she came out and said she is going to call an meeting of the i.m.f. board and she will voice her support for more financial assistance. have a listen. >> at this time, i would like to say that it really is a demonstration over the determination of the ukrainian authorities to conduct serious long-term structural reforms in addition to also adjusting the fiscal policy in order to make is that your the ukrainian economy is in a position to recover. >> ukraine already has gotten

$17 billion from the i.m.f. $15 billion more is what the e.u. says they need. lagarde will be on fran seen's panel. >> in 33 minutes. stay with us. "countdown" continues after the break. ♪

>> you're watching "countdown." time for your foreign exchange check today. thought we would look at the euro. this is a one-year chart. in the last year, you can see very clearly here the euro is down almost 15% against the dollar. the low on tuesday, which was 1.1550, we're nearly there was the lowest since november 11 2003. as you can see, i said down 14% in last year. that was on march 18 last year.

1.3934. since that date, the euro has fallen by 17% against the dollar. a lot has changed since then. the median forecast by analysts for the fourth quarter this year is for a euro/dollar rate of 1.15 pretty much where we are today. credit agricole credit swiss and s.i. brmbings the most bearish with a 1.075 forecast and the most bullish is san and the ar. -- santander. >> the bank of canada has unexpectedly cut its main interest rate by a quarter of a percentage point. they said the fall in oil prices will drag on inflation. canada's finance minister highlighted the impact of the oil price drop when he spoke to bloomberg in davos. >> oil prices are having quite a

complex set of implications. i mentioned a few of them. on the negative side obviously lower oil prices affect corporate profits and the impact on capital expenditures in that sector. >> meanwhile the opec secretary general says he doesn't see oil falling much further. >> i think the price will not go to 20 or 25. i think the price will stay at where they are at now and maybe -- the picture will be clearer in june. of 2015. we will know exactly how this low price affected us. >> but the c.e.o. of the airline emirates said he sees oil prices staying low for quite sometime. >> at the moment it looks as though the price of oil will

remain down for sometime to come. i wouldn't suggest it will rise much above the 50-75 band. >> johnson was born in new york and carries a u.s. passport making him liable for the related to the sale of a home. he describes it as outrageous. >> i'm not lonely at all. sitting next to me now is the executive editor for global politics here at bloomberg news. he sits at the center of the web. we have a whole team of

reporters on the ground and we're covering every angle at davos but today the focus is on one thing. that is what is going to be delivered a little later out of frankfurt. we talked about this over the last few years. the eurozone that is progressively seen the deflationary story gathering momentum. the train is still on the rails but it is beginning to wobble. today is a big day but the train will carry on after today. it is just another big day of a number of big days. >> that's right. today is a very important day in the history of european politics european policy and monetary policy. as you said, it is important to step back and take an historical per expective. -- perspective. the eurozone has been in crisis for years. today will be a hugely important day for the future of the eurozone but we're going to have a lot more important days like

this in the future. once deflation sets into your economy, it takes a long time to wring it out. so we're going to be here for a good few years yet. >> the most interesting point in my mind today is whether or not we have mutualizeation of risk because if it is the lers, you will have to wonder about whether everybody everybody's commitment to this project is as solid as it needs to be. >> one of the problems that is almost coded into the d.n.a. of the euro project is there has been this reluctantance from the beginninging to mutualize risks. the governments were reluctant to chip in and bail out the government. we see that problem coming up again with the beeks q.e. program. a lot of people -- with the e.c.b. q.e. program. unless you have a centralized face cal authority in the euro

done zone, there will be question marks. >> the timing is interesting. the big decisions seem toave caveats and politics stuck around them. that highlight the thets and the risks. this time around sitting side by side with the greek election. the two are really important. they flebt the two extremes that we're looking at here >> that's right. we have the greek election sunday. we're going to get a left wing leader most likely. who is making a lot of demands to cut, loosen austerity, to cut some of greece's obligations. there seems to be little willingness to move on behalf of the northern leaders here. i think there is a bit of a standoff over the next few

weeks. politicians expect the new prime minister to blink. >> pretty interesting. we'll see what happens. angela merkel is here. she is going to talk at 2:15 about the german economy. my opinions later, mario draghi is going to be making his big policy announcement in frankfurt. that is probably an accident of scheduling. but nevertheless, what do you think she is going to be saying and do you think she is going to give out some hints about what she needed demanded, required in order for the q.e. story to proceed? >> i think it is fair to say there will be a big elephant in the room. clearly the germans are not particularly happy with the notion of q.e. there is a lot of talk about german opposition and merkel

opposition. if you listen to what she is actually saying in her speeches recently she is basically saying i'm not very happy about it but i'm not going to oppose it as long as q.e. does not give a free ticket, a free lunch to the countries in europe that she sees as needing to have further researches. that is a key problem. how do you resolve that? i guess that is the question. if there is mutualizeation, then she is triking a blow to the heart of the nation of the eurozone. >> you could argue she is striking a blow to q.e. itself. it works fast when inveastors are scared and feel it is too dangerous to taken to monetary authority. you bend the knee to what they are demanding. if there are question marks about how committed the monetary

authorities are, that is where you get -- that is where the markets might sniff down the line, maybe not today or next week but down the line. it might depict a weakness. >> we have had guys, and girls talking to everybody around davos. aggregate it all down. >> certainly if you -- talking to the e.c.b. officials yesterday, and we had a big story about this yesterday, about the size of q.e. 1.2 trillion euros. i think people will welcome that. the really important thing later on today is to listen to the details, the nitty-gritty of what the e.c.b. tells us how it will work. and the risk sharing to its. it is very possible won't get that and will have to wait another day.

1.2 trillion euros, people are reasonably happy with that. this figure is just a proposal. a lot can actually change today. it is not -- yet. i think that will make the press conference a much watch events. >> on that note, we'll leave it. thank you very much indeed. it is a must watch event. mark and anna, of course that means that we will be showing it. must see means we will be doing just that. you'll be able to catch it later on bloomberg television. back over to you. >> and before that of course in 20 minutes you'll be able to watch francine's debate christine lagarde, all of that taking place on the ground there in davos that, bloomberg davos debate come up at the top of the hour. you can follow up on twitter as well.

we'll be tweeting out. we'll take a short break. >> q.e. isn't trending yet. >> national hug someday trending. missed that one. davos is trending. we'll be back with more from davos. ♪

>> welcome back to "countdown". one other topic that is under discussion is something to do with robotics. i understand the future of robotics in fact. it looks like 2015 could be the year for artificial intelligence and when it really starts to take over. >> robots can first of all have access to that amount of dats. as they are moving through an environment, they can access data from on demand figuring out what they need to download . remember in "the matrix." how to put programs together. how to interact with something. now robots are sharing information. when one robot discovers a better way to pick up a -- it can share it with other robots.

that is what google is doing with the robotic car. the advantage that google has is they understand the nets work. that car is constantly download ing maps and traffic and weather conditions and sharing it with all the other robots. in the future, it will be able to be performed by the robots like autopilot. autopilots are better than human pilots for landing in foggy conditions. there is something we will trust them with. it is a very real fear. i think the one thing we have to worry about is jobs. i think this is an enormous issue that technology is changing jobs and removing them in the short term. there will be a lot of disruptions. what we should start thinking about is the multiplicity. it is a very positive idea where you have group s of people, humans working together with groupors machines. we're already seeing it in some degree.

think about how the google search engine works. taking input from many humans tame with many machines. all the commercial activity and in particular, google buying the robot company. amazon is very interested. there is really a real sense of excitement that we're at an inflection point for robotics. >> it helps give shares a boost in after hours trading despite that trading after the holiday period. here is caroline hyde. >> when you look at it from its earnings in the fourth quarter it is not looking to pretty but many liking the restructuring they are doing. carl icahn calling for it to be split up. if you're looking at the numbers, slowest holiday quarter for ebay since 2010.

they call it a disappointment. december sales didn't do very well in particularly the marketplace. that is the auction marketplace. paypal doing very well, up 18%. but overall, this is not going anywhere what amazon did. they posted a 22% gain. it is really not doing as well as the rest of the market. >> is that this what carl icahn wanted? >> by the second half of this year we will see paypal separated from the rest of the business. that might be spun off. could be an initial share sell. could be sold in its entirety. beginning to realize value in assets. investors tend to like this. getting more efficient.

all of that is ringing in investors' ears. that is pleasant. what icahn has is showing the power. he has someone on the board. he has his own man in there who he can choose whether he stays at paypal or ebay. he has managed to enforce changes to corporate governance. it will have more control from the shareholders. the board won't be able to dictate when it is bought. the shareholderer can. if offers are made they want it to be a decision over the shareholderer. the whole board can be changed over at paypal in an entire year. they have hoverlsd 20% of shares that can call special meetings. overall he has managed to get more power to the shareholder.

it has been a hard pill for them to swallow. >> shall we move from online auctions to cognac? >> remy numbers not pretty again. china not drinking. not knocking back the cognac like they used to but remy is seeing sales improving. better than have been expected. organic sales not looking very nice. they have slipped. we'll keep an eye on that one. credit swiss. keeping an eye on equities. we will take a short break here on councel con. when we come back, more details of that debate that francine is going to be hosting out of daver owes in -- davos in the next half-hour. stay with us. ♪

>> welcome back to "countdown". it has been a busy morning. plenty of opinion from key influences. the chairman of u.b.s. told us that european banks need to be focused on lending but are being hampered by regulation. >> europe needs to fix the banks. and we have fixed our bank by raising capital and moving to a more solid balance sheet and that is in the handor banks but

the central bank can help. it can provide liquidity to them. at the moment what we're seeing is the whole banking regulation is being phased in this a period where europe needs strong banks to lend, but at the same time, banks are not focused on lending. they are focused on reducing their lending and raising capital . so you need to fix the banks. we're back to that. >> meanwhile, the chief executive of generali stressed the case of quantitative easing. >> q.e. has to come. it is needed now. europe needs to have the support by the central bank. it is not sufficient. it will not finish the need for political action for government intervention, to relaunch the demand. committee -- q.e. is needed. >> the founder and c.e.o. of the

advertising giant w.p.p. told us why he was still keen on china despite slowdown concerns from others. >> i'm bullish on china. in a way, the west sort of is two-faced about it. when you get into the area of technology, what do we say? alibaba is the sixth largest company on the planet. >> fascinating. on the day that the e.c.b. has to make these tough decisions, you get the minds of them firmly disagreeing on whether quantitative easing is the right policy. >> italy versus germany. i have two wonderful quotes for you. i know you're aware of one of them. my favorite from douglas flint.

mario draghi is the most important person in the world at the moment. >> no pressure. >> my second favorite quote. a lesser known person, eric green, head of u.s. economic research in new york said never ever listen to a central bank because they will use you and abuse you you. you'll always anticipate where they have to be. is that someone who has been hurt from the move? >> lots of conversations going on now about just how much faith people are put in central banks and you must hang on their every word and recognize that they are speaking within a context and the context can change. that is something those in the markets have been reminded of many time turnovers past few weeks. we have been surprised from a number of angles. >> canada cutting rates.

brazil raising. it is not just about deflation for some countries it is about inflation. >> "market movers" is coming up next -- "on the move" is coming up next. this debate will be hosted by francine. ♪ .

>> welcome to "on the move." i am manus cranny. we are moments away from the start of the european trading day and that's what we are watching. decision day for draghi. expected to announce a qe program this afternoon that could involve $1 trillion worth of sovereign bond of buying. the top questions, how big will of the program will? what will be the case and how long will it run for? the devil is always in the details. will buy the bones? -- a bonds?

bloomberg tv will how full coverage of the press conference at 1:30 p.m. u.k. time. in a few minutes, we will get to davos for the easy money hama with some of the most prominent names in the business world. first, the markets. let's check in with caroline hyde at the touch screen. >> let's check in at where the optimism is. 5.5 hours to go will we get a full scale sovereign bond of buying? could it be up to $1 billion to avoid deflation here in europe? to stimulate the economy? u.k. trading day little higher on the optimism. the honest is if it will be individual to do the buying? will it work? we will speak to chairman at ubs.