to the heart of what everybody is talking about today. an event that will take place in frankfurt and that is the ecb. welcome back to normal programming. this is "the pulse." that is the story, the countdown to qe. the spotlight moves from the world economic forum to frankfurt, where mario draghi is expected to announce a massive bond buying program later today. not everyone is convinced. the former bundesbank boss making sure that everyone knows he is skeptical. he told bloomberg the priority is to fix the banks. >> europe is not in an existential crisis. it is in an identity crisis. some countries, like germany, want long-term reforms. >> he is not the only one

talking about this qe policy. the u.s. hedge fund billionaire ray dalio weighed in on the eurozone. we seem to have lost that these of sound but we will be back with it later. my coanchor, francine lacqua will be joining us later in the program. she will be bringing us the highlights from that panel. easy money, tough questions. we will find that these of sound along with the other comments we had. christine lagarde giving some interesting thoughts on when the fed is going to be raising rates and we were hearing from larry summers making sure that everybody knows he thinks qe is a good idea and the risk is doing too little, not too much. how does this fit into the banking story? axel weber believes that the

banking industry is where the focus should be. let's focus on the banking industry. joining us now is anthony jenkins the ceo of barclays. good morning. the focus is very much on the central banks today. qe, the big story. will the ecb deliver and in what form? is qe the right solution? >> it is an important part of the solution. if you look at other economies that have pursued qe aggressively, it has helped them out of low levels of economic growth. it is an important element of the solution. the market is expecting a massive program of qe. i think it would be unwise to disappoint the market. it is in my view going to happen. it is not the only thing that needs to happen in order to improve competitiveness in europe. >> zxel weber. -- axel weber,

earlier on saying the best way of tackling the problem would be to fix the banks. is he correct in that train of thought? are the banks in need of more capital? is that where we should be focusing the story? the transition mechanism in europe relies on the banks. >> there is an element of that. i also think europe could learn from what is going on in japan right now. the three arrow strategy. the third arrow, which is about supply-side reforms, getting labor markets to work more effectively, promoting enterprise, that is an also very important element of getting the eurozone economies working. if you look at the u.k. and the u.s., we are relatively more flexible labor markets. they are able to absorb the impact of the recessions more easily. >> one of the things that does

seem to be generated is currency volatility. as you look at this from a barclays point of view, the swiss franc generated a huge amount of volatility. is the volatility story one that we have to watch more carefully? do you expect a lot more of fairly aggressive currency moves as we work out where all these central banks stand? >> absolutely. the one thing that's certain is we live in an uncertain world. look at the oil price. look at stirling-dollar. you have to get underneath. what is the underlying factor driving this volatility? it is a combination of short and long-term factors. the increasing geopolitical instability, a big theme here at davos. structurally low macroeconomic -- we are in a long period where gdp growth is going to be in the

2.5% range. that creates pressures and local economies. the other thing, which you don't see at all, is how quickly technology is transforming economies. what it creates is lots of uncertainty. i think we can expect in commodities, in currencies, and other markets, to see volatility continuing. >> that's going to make things interesting for investment banks. let's talk about barclays. you have said the universal banking model is -- i can't remember the exact quote, you said dead. when you look at this kind of volatility and you feed it back into your business model, is an investment bank something you want to carry on with? >> there is two thoughts. volatility affects everybody. some more than others. oil price affects almost everybody.

the point for business leaders like me is to build resilience into your business, which is what we've been doing over the last two years. much stronger balance sheet much more focused business model , all of those things. when i think about universal banking, if you go back a decade or so, and spoke to most people doing my job, they would talk about getting bigger. they would talk about doing everything for everybody everywhere. we are really good at retail banking in the u.k. let's do it somewhere else in the world. the reality is, today, the constraints on their balance sheets because of the amount of capital they have to allocate and the investment they have to make in technology means that you have to focus. that's what we've done in the investment bank. we've focused on those lines of business where we have scale and where we can generate returns. i think that's true across all

banks. unless you are good at what you do -- >> what i can read through that answer is, the investment bank stays a part of barclays but it is a more focused and smaller part of the bank. >> in fact, i would say the following. investment banking is an important part of barclays. personal and corporate banking barclaycard, all the investment banks have to be good at what they do. they have to be able to deliver returns for shareholders. that's what i require of all businesses. i'm very confident. >> you are chairman. do you get a sense that your new chairman shares -- do you think you will be more aggressive than you are planning for now?

>> i've known john for many years. i spent a lot of time with him talking through the strategy. i think he feels that we are pursuing the right strategy. the significant part of the transformation of barclays is already underway. i think he's joining at a really good time. i think his experience will be helpful to us in doing what i want to do, execute the strategy. >> we are in a year where we are going to have a u.k. election. we see significant fragmentation in politics in the u.k. we don't know what the outcome of that poll is going to be. people increasingly talking about minority government. the experience is not a great one. it creates huge uncertainty. is that increasingly going to be your base? if you look at your business, it is not great generally for any kind of business.

>> you are absolutely right. businesses and markets hate uncertainty. i would refer back to the point i made before. this is about resilience. having the resilience to whether whatever we have to encounter. if you look at what is really driving the fragmentation in the political sphere, not just in the u.k., but around the world, a lot of it is to do with how citizens are feeling. they feel more comfortable. they are less optimistic about the future. that is causing skepticism about the benefits and a currency -- benefits and efficacy of business. many businesses at davos are already doing that. we need more of that. ask i'm getting an even split with the ceo's i'm talking to. i'm heartened to hear you talk about the fact that the business

voice needs to be heard. >> i see this as about business doing what it is good at, satisfying customers, employing people, generating returns for shareholders. if we can help with things like entrepreneurship, youth unemployment, helping older people get jobs, that's going to help the issue. that is going to help the societies where we do business. >> thank you very much indy antony jenkins, ceo of barclays. earlier, i promised you we would get some news from the conference, from the panel that francine lacqua has delivered. we are counting down to the ecb president's announcement from mario draghi. we are expecting a 1.1 trillion euro debt buying plan. the hedge fund billionaire ray dalio weighed in on what europe needs. >> forceful qe and forceful structural reforms would be what

is required. >> stay with us on this big day in davos. we will bring you plenty of interviews as we build up to this big event. talking about some other topics that matter to people who know live from davos in 2015. francine will be back later in the program. she will bring up the highlights from her panel. she's been talking to christine lagarde, former treasury secretary larry summers, gary cohn from goldman sachs. we will also be speaking to a chinese ceo on the property market. as oil prices come down, what does that mean for the european auto sector? in a few minutes time, we are going to be talking about what is next for air asia. the ceo of that business will be with us very shortly. stay tuned for that after the break. ♪

>> welcome back. you are watching "the pulse." we are live on bloomberg television, on the radio, streaming on bloomberg.com. welcome back. you are watching "the pulse." let's talk to our next guest.

it has been a tough month for tony fernandes ceo of air asia. welcome to the program. the first thing to say is, obviously, a very difficult time for the business. you seem to be working your way through it. is there anything you can update us on? any kind of news you can bring us? >> not at the moment. we've been led to believe that some of our guests have been pulled out of the hull which is important for me. the main drive is to get them back to their families. that was good news, that the divers were able to extract some of them. we are now hopeful that we can pull the whole hull out. i think there is word that sonar has picked up -- [indiscernible] the main thrust is to get our guests back to their families. >> when do you think you'll have

an understanding of what happened? >> the cockpit voice recorder is in good condition. we are provisionally asked to be on standby to analyze the data and hear it for the first time. i would imagine over the next three to four weeks. >> a number of questions seem to have arisen over whether the aircraft should have been writing -- should have been flying. i've seen that you said you thought that it was very clear that you did have the authority. >> some of this comes through many different types. obviously, we had approval to fly to singapore. we had approval from the airports, we had rights. it was just an administrative issue. in terms of the procedure, in

fact, 60 other flights were involved in that. >> but there will be no issue with -- there was some concern that from a financial point of view, that that -- >> insurance has been paid out already. our insurance brokers have done a fantastic job. it has already been paid. insurance has been provided for our guests and their families. >> walk me through how this does affect the business. this doesn't stop the business. you carry on flying. how do you change your processes? do you change your processes? does this have a meaningful impact on people's willingness to fly with you? >> i've gone on record and said the amazing amount of support we've had. the best way of quantifying that is from your pocket. sales are up from this time last year which is a remarkable show of support.

we haven't been advertising out of respect for the families. come monday, we will probably be making some announced once -- some announcements. >> want to give us an idea what those are? >> not yet. but we are moving back. even though we've been quiet for the last month, sales have been strong. we don't know what went wrong. it would be wrong for me to speculate. for me, safety is not something that you can say you are safe w. you become complacent. from the day it happened, i've been with airbus, with our pilots and everything we do is buy the book. we go through every authorized process. everything is by airbus' methodology. all the equipment we have on the plane is as good as you can get. as i said i'm sure there are things we can get better at.

until we know the full results -- but we haven't stopped. this is now a crusade to make sure we keep improving and provide the best service. >> does it change the way you position your markets? >> no change at all. we are malaysia, thailand indonesia, and philippines. we are now in india and we are about to start japan. >> [indiscernible] >> we have in the past cut back capacity a little bit. all the airlines have been a bit more sensible. for me, the next step is to try to get consolidation, to try to push beyond 49% ownership. as the region becomes an economic union -- and davos has been pushing those messages

across -- banks can own 100% of telecommunications companies. airlines are the next stage. we continue to push on infrastructure and on getting better infrastructure in terms of airports going forward. and obviously, oil has been a big plus. we didn't hedge very much. >> that is feeding through already? i was talking to tim clark and he said he wouldn't try and destabilize the market, but nevertheless he was unhedged. >> we are not fully unhedged but we are going to be affected at today's prices half of where it was before. >> and you use that tactically on the pricing side? >> obviously, we are a high-value airline. we are about stimulating demand.

obviously, when fuel remain where they are, i anticipate them going down. ancillary income has been a big plus for us. when oil prices were high, i saw that as a great defense mechanism. we are limited in terms of -- we heard more. so we are a bigger beneficiary than emirates when oil goes down. we built a very good ancillary income, which is now approaching 50 ringgit per passenger. >> you have some 320's anmd d 330's. does the lower fuel price change your plans for capacity? >> we put capacity in the show who is boss.

we are now beginning to say, we can go back to a normal rate of growth going forward. >> so you are not going to defer anymore. you are comfortable with where the plan is now. >> i think it is galway's -- it is always going to be cautious. oil gives an opportunity, but i'd rather take up a normal, steady path. >> we will leave it there. condolences obviously for your passengers. i think everybody is very eager and anticipating to find out what exactly happened. thank you very much. tony fernandez, ceo of airasira.a. we are going to take a break. ♪

>> welcome back. you are watching "the pulse." we are live from the world economic forum in davos. the big story today is what is going to happen in frankfurt later at the ecb. the ghost of mario draghi, very much stalking the halls of the world economic forum. the global elite waiting for the delivery of the ecb decision. earlier, we spoke to the chairman of ubs and the former bundesbank boss. he is axel weber.

he told us what kind of program he things will address europe's problems. >> acuity program -- a qe program in my view doesn't address the problem. it addresses the issue of market access and sovereigns. sovereigns don't fund small and medium enterprises. >> i'm up here in the cold because francine lacqua has been downstairs with a fantastic panel. really great thought leadership coming out of that panel. she has people like larry summers, ray dalio, goldman sachs' gary cohn. she is going to bring us the highlights of that. they've been talking about the ecb. some really great conversations taking place. we will bring that to you in a few minutes. we'll also bring you the ecb

news conference. that is live and in full at 1:30 u.k. time. if you want to follow the debate, please join in. we'll see you very shortly. ♪

>> welcome back to "the pulse" and welcome back to davos. i'm guy johnson. >> and i'm francine lacqua. we are live from switzerland and it is day to. it is all about qe. there is one topic that everyone wants to talk about and one man everyone wants to talk about, and that is mario draghi. i've been moderating a panel. they were pretty explosive. and about 10 release -- ana

botin really sticking up for europe and saying qe is needed. >> i think ecb qe is a good thing. it will compensate what the fed is not doing. >> it was clear, we had five panelists. christine lagarde, ana botin, and then three americans. gary cohn of goldman sachs, ray dalio, and larry summers. there was a clear divide. it was actually quite good. who won? former u.s. treasury secretary larry summers was much less talkative about qe. he was much less positive about the european project as a whole. >> qe has already had a significant impact, but that's why i'm worried. we already had a set of positive developments and the economic forecasts are pretty dismal from

here. the kinds of policies we are seeing are already built into those forecasts. i don't think we should make the mistake of supposing that the situation in europe is in hand. >> my favorite part of the panel was when christine lagarde slapped him down, not really for his economic thinking, but for the fact that he was going on too long. we also heard from gary cohn of goldman sachs, president and coo. he was talking about the importance of the low euro as a way for exporters to have their impact on gdp. >> we are in a global economy and i don't disagree with this that the prevailing view is one of the easier ways to stimulate economic growth is to have a low currency to export against and hopefully create tourism and

imports. it makes sense. >> it was a pretty fun panel. we talked a little about regulators. >> one of their favorite subjects. ask they said, we need help from central banks, but maybe more help or more understanding from the regulators. >> axel weber was making it clear that the banking channel -- maybe a little hand from the regulators might make it work better. >> that is probably the key to what we are going to see. >> let's move the conversation forward. from davos to frankfurt. that is where we find our international correspondent, hans nichols. he is standing by at the ecb. i had a huge day. expectations in davos running very high for mario draghi.

>> expectations, and managing expectations, are going to be one of the challenge. at dinner here last night, the governing council heard about this plan to purchase 50 billion euros in sovereign debt a month. that gets you to a balance sheet through 2016 up to 1.1 trillion euros. that's much bigger than what economists have been expecting, around 550 billion. 93% of economists expect something to happen today. the question is, what are the rules going to be around the kinds of assets they purchase? one way is to say you are just going to buy aaa bonds. the other idea is they are going to have maybe the national banks

keep these bonds on their books. in terms of how many -- where they are going to buy, and what according to "der speigel," they've got a key readout of the rates. it is basically following the size of the national government. you tease that out, here is what you get for german bonds. you get 90 billion that could potentially be purchased this year. you could see the rate go below negative. that is one of the key things i'll be watching today. guy, francine -- i also heard some debate from last night. you have your heaters in davos. i'm out here with nothing. i've got a bike rack to keep me warm. >> you are giving our trade secrets away. >> let me just point out, first

in the morning, the heater does not operate. as it gets warmer, the heater goes on. it is counterintuitive. it was cold this morning. >> i'm sorry to say this on the air -- [indiscernible] >> breaking news, francine lacqua calls hans nichols, our international correspondent, a schoolboy. >> i'm still frozen. [laughter] >> ok. we will get plenty more later in the program. >> yeah. >> get yourself a coffee. warm yourself up and we'll see you later. hans nichols in frankfurt. >> the main focus of the day

being that ecb rate decision. hans nichols will be live from there all day. we will also take that news conference live and in full. >> the juxtaposition of those events, fascinating. the ecb is the big event we are focusing on here. the global economy never far behind. we are talking about china in a few minutes. we will be speaking to the ceo of one of the biggest companies in the country. >> this is on the back of premier li coming to davos yesterday. we have to get on with accepting that china will grow at a lower rate. we will be speaking to zhang xin after a very short break. ♪

>> welcome back. you are watching "the pulse." you are looking at live pictures of the swiss alps. today, a little chilly. davos still looks absolutely fantastic. >> we are talking about growth qe, which is maybe why it is more chilly. people are a little more focused. more work instead of hitting the ski slopes. we are excited about our next interview. the ceo of china's largest real estate developer. welcome. it was rather exciting listening

to your premier yesterday. what he seemed to say, this was the direct message for the western world was, sure, we are going to grow less. get used to it. >> that is the message he tells china and the world. we are getting used to the slower growth. even if we are growing at 7% with the size of the economy now it is still larger, or bigger, than when we used to grow at 10%. that's the message he's trying to send out. >> is that the new normal for china? >> definitely. we all need to adjust the the slower growth. >> do we realize -- we talk about it as a bad thing. we are talking about growth that here in europe we would dream of. what does it mean for the way.

-- the way we perceive china? a more stable economy? >> people in china, we used to grow so much. a slower growth does take adjustment. but it is true that we are still growing quite sizable. of course, when we used to grow at 10% trimming down to 7%, people are asking, will it be a hard landing? will it be a slope, gradual, gentle slope, or a hard black run all the way down? that is the kind of questions people ask. i feel that we are saved by our high saving rate. we, more than anywhere else, i see chinese save so much.

there is a huge cushion for government to ease credit. that's how we feel. >> you bring up the issue of the property sector. what is your sense of what 2015 is going to deliver? copper coming off seems to be an indicator that there will be less demand for electricity cables. maybe prices are continuing to soften. tell us what you think. >> it is softening. real estate is really going down. you look at china's growth over the last 20 years. property, what we call urbanization, building cities -- or exporting. the world factory machine is still running. although we are probably hindered by the slow growth, or

no growth in europe, but also encouraged by the strong growth in the u.s. the export continues. urbanization is really slowing down. we just built less. these days, developers are no longer going to buy -- >> give us a sense people struggle to understand the scale of these things. three years ago, how many properties did you build? how many are you going to build now? >> i don't office buildings -- built office buildings. last year, we finished four major developments. one had half million square meters. >> that makes perfect sense to me. half a million square meters.

how much do you think it will be in the future? >> much less. >> will the government put policies in place to stimulate the property market? >> it is already. every time i see to you, it is about government trying to control the red-hot real estate. all these policies are designed to control the growth. >> but it is reversed. >> dramatically. although, china is a big country. some cities seem to be growing strong. prices continue to go up. a lot of cities, prices drop very quickly. >> investors seem to be worried about some chinese developers the cut of -- because of what we saw in the provinces. what is your message to investors? >> kaiser group came as a shock to the market. the anti-corruption

investigation resulted in companies being frozen. investors are used to having the chairman being investigated but the company being run by somebody else. i think it is a chilling effect on the market. investors are now very suspicious and nervous of any company. we tell people, don't be too nervous. it is not like every company is going to end up like kaiser. >> will it affect the ability to raise money? >> absolutely. instantly, the debt market is gone. nobody wants to lend money to real estate developers. >> what does it mean for you? >> the good thing about us is that we get better, cheaper credit in china. we are trying to raise more money from international markets. because of stimulus, interest

rate in china is going down. what better option, not have exchange rate risk, and go for a lower interest rate? not lower in actual terms -- >> in this environment? >> in this environment, because we have strong credit. a lot of developers are relying on international market. >> what does it mean for the local governments? there has been concern about the read across into their finances. lacks -- >> local governments don't borrow from the international market. >> there has been an awful lot of growth and they have been at the core. >> i think the government will find a way -- >> don't worry about it basically. >> every time people worried about the chinese government they seemed to manage. >> home prices were a little bit

better. is that going to continue? >> that is the result of the stimulus. >> so you are expecting a little bit more? >> i expect this year, the whole real estate market will be relatively stable. you can see december already getting better. it should be more stabilize this year. >> we had some great interviews and we all ask them, who is the one person they would like to have a drink with. a lot of the westerners here said jack ma. >> that is easy for you. >> who do you pick? >> i had a late night drink with jack ma today. >> exactly. >> that is the story everybody else wants. anyone you are not seeing that you would like to see?

>> i don't know. is mr. bloomberg here? >> very good answer. >> the last thing i will ask is, can we come? >> you are invited. >> perfect. >> jack ma, you met him to talk about davos? >> small private drinks. so lucky, right? >> zhang xin, great to have you in davos. thank you so much. >> ok, what have we got next? we are back very shortly. we are going to continue the conversation on the ecb. we are also going to talk about oil prices. what does cheaper crude mean for the global economy? that's a story that everybody is focusing on, along with the ecb and the politicians here. we will too after this break. ♪

>> welcome back to "the pulse"

live on bloomberg tv and streaming on your tablet, your phone, and bloomberg.com. we are live in davos for the qe day. >> it is not just qe day. ok, it is just qe day. the other subjects people are talking about are what is happening on the geopolitical front, and a lot of conversations about oil. what is the implication of the lower oil price? what does it mean for these businesses? what doesn't mean for the global economy? we talked to a whole range of people. >> what about the oil price -- i think the price of oil will fluctuate between $60 to $80. that will be acceptable for the russian economy. i don't expect that the prices will be above $100. >> it is very difficult to predict. it is not really supply and

demand -- [indiscernible] >> it is hard to know. i think they probably touched bottom for a while. >> oil prices are having quite a complex set of implications. i've mentioned a few of them. on the negative side, low oil prices affect oil profits and the impact capital expenditures in that sector. >> we are not targeting russia. we are not targeting anywhere. it is a new economic decision. >> the price of oil will remain down for some time to come. i wouldn't suggest that it would ride much above the $50 to $70 band.

that is the point i've always said in the past. the natural settling point for oil. >> as oil prices bottom, and perhaps recover, we expect consumer prices to start to increase eventually. we think it is possible to reach 2% price target during fiscal year 2015. >> it is really a fair treatment. we have not increase our production for the last 10 years. if there is a problem in the market we have to fix it together. >> oil certainly front and center in many people's minds. everybody is trying to stick around. we will be talking to the boss of nissan. what does it mean for his business? >> i think the timeframe is crucial. when i spoke to the opec

secretary-general, he was saying that his biggest concern is that people stop investment. the concern is that if prices stay at this level, then the oil companies will stop investments in projects. from $34, $37, it shoots up to $100. >> tony fernandez was here from air asia. they think it is going to stay around the $50 to $60 mark. that is going to have big implications for the economy. the other thing is what is happening with qe. we have been talking to antony jenkins, the ceo of barclays. here is what he had to say. >> an important element of the solution. the market is expecting a massive program of qe. i think it would be unwise to disappoint the market. it is, in my view, going to happen. i think it is important that it does happen.

it is not the only thing that needs to happen to improve competitiveness within europe. >> he said it. >> we will be covering the event live on bloomberg television. we will take a break. a second hour of "the pulse" up next. ♪

>> countdown to qe. the spotlight moves from davos to frankfurt, where mario draghi is expected to announce a bond buying program. >> former pundits bank -- former the despite -- former bundesbank boss axel weber spoke to bloomberg. >> europe is in a crisis of purpose. there are some countries that want reforms. >> u.s. hedge fund managers weigh in on the eurozone. >> qe and structural reforms

would be what is required. >> welcome to "the pulse," welcome to davos. i am guy johnson. >> i am francine lacqua. day two most of the conversation on mario draghi and the ecb. >> everybody is waiting in anticipating the announcement we are going to get later from mario draghi. >> we have a nice bloomberg story about how much he is going to unleash. this is part of the discussion we had with christine lagarde and others, will it be enough?

because he has talked it up so much, will be market be disappointed? >> there is a potential for that. the question we want to ask as well is will it work? >> that is what everybody wents to know. if you are someone looking at it from the sidelines. let's have a listen at what the panelists said. >> if europe is going to grow business has to grow. i love make a quick point. if you look back at the u.s. and what got it going, we had cheap energy, low interest rates and a competitive currency. we used that to create jobs. can europe create jobs? business has to create jobs but you need structural reform to begin to create jobs. look what we did in silicon valley how many hundreds of thousands of jobs we created over the last 5-10 years. >> they need to pull their year

-- they need to pull their weight. there is a big climate deal that would fuel anxiety but a lot of opportunities. there are development objectives. those are key agenda items. in the world of central bankers, regulators, policymakers, business, all of them have to rally around jobs and growth objectives. >> the central bank is doing its part and is doing as much as politics will allow. business leaders light -- business leaders are ready to go up in the question is whether there's going to put a dynamic framework that has got both demand and supply in place for growth. >> banks are ready to lend. we are the transmitters of monetary policy to the real economy, to businesses and

people that want to buy a home. we need a balanced approach to regulation that takes into account broader public policy issues have discussed today. >> certain diplomatic answers, certain answers a little less diplomatic. i was asking if you had to choose who had to pull their weight, central banks, politicians, or business, they had slightly differing views. >> axel weber absolutely disagrees with ana. he says banking is broken, qe is not going to work through the banking channel, it is going to work through foreign extra. the banks still have so much work to do. >> she would argue, if you read between the lines, she does not disagree but that is maybe because she is burdened too much. that is what she intimated.

>> let's bring in simon kennedy in davos a man with his finger on the economic calls at the world economic forum. read between the lines for us. >> the panel sums it up. the importance of banks in europe, banks are so vital to the european economic system. 80% of corporate lines come from banks. in the u.s., the market is more important. if the asset markets go up with qe in the u.s., that is good news, corporate go into business. in the euro zone are more dependent on banks. mario draghi has to work out a way to get easy money through two banks. >> once there is easy money, how do you grow? it was interesting on the panel you had the americans pushing europe to do more. saying the project is flawed as a whole. the europeans on the panel

saying it is not how it was designed. what does mario draghi need to do to deal with design flaws? >> it is out of his control. he has the design flaws of the euro and the political paradigm that janet yellen in u.s. and kuroda in japan did not have. kuroda was in lockstep with the government, bernanke in yellen were able to do it. he has to compromise. that has been the story since day one. europe has found itself having to compromise. at the end of the day, if he does $1 trillion that is only 10% of your gdp, compare that to the fed. the result is, he might have to do more later. >> the sense of the conversation

is that people are worried. if we do not get debt neutralization, he centralizes this purchase rather than solving it out to individual banks, it could be destructive. it makes qe less effective. >> it reduces the punch it has if he says 19 of you are going to do buying and you are going to sit on the losses. the theory goes that it gets around legal obstacles and makes nationstate more responsible. the reality is it is a reason for investors to say you are 19 nations on your own with only talk backing you up. had he taken the approach of risksharing that would have been a demonstration that we are in it together. some investors are going to think that is not there. >> mary sammons was making the point on whether qe in -- larry

summers was making the point on the panel of whether qe and the fed worked. it only works in the beginning do we need more today? >> maybe. research from within the fed shows that qe worked. they had to change tactics too. at the end, it was only qe3. mario draghi 6 years since the fed started and bank of england started the ecb is coming around to qe. look at the bond yields, bond yields are lower in the eurozone than when qe began in the u.k. and the u.s. >> thank you so much, simon kennedy. there's a bit i'm missing. >> sounded pretty long. >> there you go. >> we were mentioning the fed.

that is something everybody is going to be focusing on. when the fed hikes rates is going to be a massive story. >> we talked about that on the panel. christine lagarde and gary cohen of goldman sachs disagree. christine lagarde is expecting a rate hike. >> be fed is going to raise rates this year. our expectation is it is more likely to happen midyear then the end of 2015. the fact that the fed is going to do that is good news in another itself -- in and of itself. >> this has to do with central-bank divergence. we are not focusing on the fed today. it is clear from what economists are saying and a sense in the markets, the world as a whole needs easing.

>> the bulk of the world does. the fed may be tightening. it highlights how different the economic experience as he and we will carry on that conversation. we will be back talking about the ecb. monetary policy is the theme in davos. ♪

>> we are in davos at the world

economic forum. the big story is in frankfurt. let's bring in hans nichols. hans, give us a sense of what we are expecting from the ecb. >> i will be looking at the headline number. $1.1 trillion in sovereign debt through 2016. after that i will look at the number of dissensions. $1.1 trillion is the number presented to the governing council. did that get whittled down? how many dissensions are there? how will they make sure you cannot have greece or cyprus benefit from this by having their debt being sold. finally, what sort of losses

will individual member countries be forced to observed. you look at some of the key rates and you look at the way the breakdown may happen. you could have some 90 billion euros in debt but by the ecb from germany this year -- by germany this year. you look at the total debt germany expects to issue this year, they will roll over another 155. almost 2/3 of potential debt issued by the german government could be bought right here by the ecb in frankfurt. or if they do it through local banks, the bundesbank. >> hans, you bring up the bundesbank. you talk about the germans. angela merkel is going to be here later on. she's talking about the german economy just before the press conference in frankfurt with mario draghi. axel weber, former boss of the bundesbank was here earlier.

he was saying the germans are going to be one of the beneficiaries of all this. is merkel on board? how do the germans feel about this? >> the germans are opposed. their opposition is grounded in the view of inflation. that is that the deflation in europe has not been counted in for lower oil prices, which is going to stimulate the economy. give it another couple of months to see what the low price of oil does for the economy. it was a unique moment the other night when she had an audience with mr. draghi. draghi preview the plan for her. merkel has given tacit blessing. we will see what bundesbank president young's vitamin and others will do to signal if they are opposed to the size and the scope of asset purchases.

how do they signal that? a simple dissent talk of resignation, do they stay on board? the question i have, does mario draghi want full consensus? in december he said he did not need full consensus. if consensus is the goal, we might see qe a little bit more hemmed in than if he had had a few dissensions. the first thing i will look for, were there dissensions or is this unanimous? unanimous might not be the way qualitative easing would be the way some, especially in davos would like to see it. >> i've always read between the lines that he germans and presently -- implicitly gave a court. -- implicitly gave accord.

germany will suffer as much as richer countries. >> you can make the argument that germans are talking about how negative qe could be and how it could violate the eu treaty. they have funneled it in a way to suit their interest and their political ideology. that is that you do not have wealth transfers and shared risks based on other countries' fiscal situations. because of the german opposition already, mostly publicly in newspaper interviews and public statements, you had the situation where the central banks may be observing 50% of losses. the germans could see bunds going to negative territory and they still get the benefits of an expert driven -- an export driven economy of a euro that is down 15% on the year. it could work out well for the german economy. >> yeah.

they have played their cards well, potentially. we will wait to see what the story is later. if the scenario is one we end up seeing, the germans seem to have gotten the better end of the stick. >> more of the top business leaders from davos. we speak to the ceo of europe's third-biggest carmaker. stay tuned. ♪

>> welcome to "the pulse." live on bloomberg tv. we are in davos. >> some conversations happening. warming up towards the key ecb announcement later. one man paying attention is sitting next to me the ceo of europe's third-biggest carmaker renault's carlos ghosn joins us. are you hopeful we're going to see a big announcement later? what does it mean for your business? >> i am hopeful and i think it is going to happen. quantitative easing is not anymore a possibility, everyone is wondering how much, etc. i think it is going to have good consequences for the economy. it is going to maintain interest

rates low and make liquidity more available. which means, particularly for carmakers who are big consumers of liquidity's because we all have financial companies lending to the consumer. the consumer is attentive to interest rates paying for cars. it is going in the right direction and it's going to help the economy in general and particularly the car industry. >> we need growth, ecb qe is not going to give us growth. what will? >> ecb qe is going to prepare for growth and give time for the painful adjustments taking place in different countries in terms of putting countries on track to solve deficit issues make different transformations and changes that are needed country by country. it is going to buy you time. so you are not under the gun of

i have a recession, i had to deflation, there is not liquidity and interest rates can pop up at any moment. it is not a solution by itself but it is going to support you finding the solution. >> is the biggest impact the reduction in value of the euro on the cost of credit, where does it manifest itself? >> depending on the industry you might have different impacts. the fact that the euro is going down is going to help exporters. most carmakers in europe export from europe. that is number one. number two, interest rates. companies with financing arms also the case of carmakers. depending on how much you export from europe and how much you lend money to the consumer you are going to have one or the other being more important. it is all in the right direction. >> what does it mean for renault ? >> it is good news.

we are not very big exporters from europe. somehow, the decline of the euro is positive but not a big positive for us. the liquidity and interest rates are important. >> do you take advantage of the cheaper euro and decide you are going to make a bigger push into exporting? >> i don't think it is going to change the business model. it can create opportunities we were not considering before. when the euro is at one point -- 1.15, there are decisions you would take that you would not when it is at 1.35. >> does the low price of oil change the way that you see electric cars? does that impact your strategy? >> no. it is unpredictable. i know what it is today, i do not know what is going to be tomorrow. it might continue to stay very low, it may go up.

it is a fact that nobody predicted where the price of oil is today. there are plenty of analysts and specialists in the sector. because nobody was predicting where the price of oil is today, i think nobody can predict where it's going to be tomorrow. there's another element to be thinking about in the decision. if we cannot predict the price of oil, we cannot predict the fact that emission regulations are going to get stricter. i think zero emission cars are going to be important. >> regulations are going to be tighter and there's going to be more demand. is it going to be enough to offset? in europe and certainly the u.s., i can continue to drive my big car. in order to close the arbitrage gap regulations are going to have to get a lot tighter. >> it is true.

in 2014 if i take the u.s. market, the large pickup truck segment grew a lot. but the percentage of electric cars grew also. it is not one denying the other. they can grow together. the slowing growth may be due to factors like the price of oil but the trend is here to stay. >> what is your take on china? you want 3% of market share and will begin producing cars locally. given what we heard from premier li is this the new normal? slower growth but you are confident? >> 7% growth with the second-largest economy. i would love to see other countries even approaching 7%. i'm happy because the u.s. can in vision 3%. we are happy because it europe might see 1% or 2%.

i'm puzzled by the fact that 7% growth in china will be considered a disappointment. >> there's a lot of competition. >> said it is not going to stay double-digit. it is going to slow down. in china it is a new normal. a new normal that was predictable and for which many companies have already started to adapt. i think china will be still good news in 2015. 7% growth is still a very good number for the economy in general. >> despite the competition there, you are confident this is a real market. >> yeah. 7% growth in china is 1.4 million additional cars. >> a big number. let's stay in asia. wear two hats at the same time. europe and japan seem to be

adopting the same kind of strategy to weaken the currency aggressively to help the export market. how does that interplay work? japanese carmakers and european carmakers, there is a race to the bottom on the currency. how does that resolve itself? >> i don't think anybody has any illusion. when you have a weak currency it is not a solution to the problem. weak currency buys you time to make adjustments for what comes after. what is valid for companies is also valid for countries. prime minister of japan said clearly that the weakening of the yen is here to allow the third arrow. the third arrow is the transformation of business and the reform taking place. he knows that he is just having some time by the help of the central bank in order to make reforms. >> is japan and head of europe?

there is a race on the currency and structural reforms. >> it is a different situation. japan is facing the issues of a different nature. in europe you need more consistency between the different countries. igermany is not in the same situation as france. in japan you have one situation for the country. i do not think you can put them in the same place. obviously they are going in the same direction using the same tools. the benchmark is what happens in the u.s. in the u.s., the economy is growing and in good shape. we are today at a level better than before. japan and europe are still behind the curve. there are some benchmarks, some practices. it is not the same situation but you know what the tools are and you know what needs to be done.

i do not think it would be fair to compare japan. >> russia is struggling, brazil is struggling. where do you identify key growth areas? >> it is easier for me to tell you the three struggling areas. you mentioned 2. russia, brazil, and japan is going to be the third. china's going to be good, north america is going to be good. most of the latin american countries -- >> how much can you grow there? >> in europe, the market has grown in 2014 by about 5%. we have grown i'm talking about double of this. we done the same in the u.s. with nissan. the car market has grown by 6% nissan has grown by 11%.

the carmaker can hope he is going to gain market share. i'm optimistic for 2016. we have a lot of product offensives and development taking place worldwide. that makes me positive about the market in general. the market is going to grow between 1% and 2% globally, a record level in 2015. we have some good perspective of getting market share in our main markets. >> do you think the operating environment in france is going to get better? from a manufacturing point of view? do you like the political in our main markets. >> story? is it an opportunity for the hollande administration to do more? >> i think we are moving in the right direction. france's competitiveness needs to be reinforced. no more debate on that. the only question is what is the speed at which you implement all the reforms necessary.

i am optimistic that it will be implemented. >> the speed needs to be faster? >>. absolutely. any business person is going to tell you i want to faster. >> is the government listening? >> they are but they have their own constraints. it doesn't forbid us to ask for more and faster. >> do you worry that politics in france will lead to a lack of consensus? it's too early to talk about the 2017 elections, people are becoming nervous. >> i think there is a consensus in france on what are the directions that the country needs to take and what are the priorities. the debates are more into the measures, but on how speedy and how far you implement each one of the measures. it's a debate on technicality

more than direction. >> thank you for your time carlos ghosn ceo of renault. >> interesting insight. talking about the oil price, one of the big issues everyone is facing. trying to figure out what it means for business. a big topic of conversation in davos at the world economic forum. let's listen. >> what about the oil price? i think the price of oil will fluctuate between $60 to $80 that will be acceptable to the russian economy. i don't think we should expect the price to be above $100. >> it is difficult to predict the market. a lot of speculation in the market. it is not supply, demand and fundamentals.

>> is hard to know. i think they've probably touched bottom for a wild. any time anybody says oil prices are not going to go higher or lower, you are wrong. >> oil prices are having a complex set of implications. i've mentioned a few on the negative side. lower oil prices affect corporate profits and the impact capital expenditures in that sector. >> i'm not targeting the u.s. shale oil, i'm not targeting russia, i'm not targeting anybody. >> it looks as though the price of oil will remain down for some time to come. i would not suggest it would rise much above the $50 to $70 band, that is the point i have always said in the past is the natural settling point for oil. >> as oil prices bottom and

perhaps recover, we expect consumer prices to start to increase eventually. 2 we think it is possible to reach% -- we think it is possible to reach 2% price targets during 2015. >> it is fair treatment. we have not increased oil production for the last 10 years. they are increasing production by 7 million. if there's a problem in the market, we have to fix it together. >> the conversation on oil. coming up we speak to bill gates and find out what the world's richest man things can be done for the lives of the world's poorest. ♪

>> welcome back to "the pulse." welcome back to davos. >> we've been having great conversations, live from the world economic forum in switzerland. it is easy be day -- oit is ecb day. >> let's look at another major figure in the business world. not at davos. a man on a mission to improve the world. my collie, erik schatzker is sitting next to me. he sat down with the founder of

microsoft, bill gates to discuss growth and innovation of his foundation. >> we've learned a lot in the 15 years. maybe that has been the most valuable. the biggest impact has been an childhood health. we created in the year 2000 a group that saved over 10 million lives. a lot of kids who would have been sick or not fully developed if they had survived the vaccines have made a big difference. that was the best. everything else has to be measured by that kind of breakthrough success. >> it is hard to top saving 10 million lives. what was the biggest mistake? >> and lot of things required us to get in and try out pilot programs to see what would work. in education, the structure of high schools. we saw some benefits but the

loan was -- that alone was not enough. how you get teachers more feedback about how they improve, letting them be exposed to other teachers. that has gone through many iterations. we have some pilot sites that has gone really well. the secret to how you raise the average teacher is not yet solved. yet, so valuable in some places where we have that result that we do want to figure out how to scale it up. and a lot of things take more time than i expect. >> how about the most viable lesson? >> in our early years we thought we could work on our own, not try and team up and influence joint strategies. as we got further down the

learning curve, particularly in health, we saw that we needed to come together with governments and groups in the field. how you develop those partnerships, whether it with you u.n. groups like unicef, country groups like usaid nonprofit groups like msf or save the children, building on our strengths. we understand the need better than these groups, they understand the field better than we do. how you make that come together. that kind of partnership model has been a huge learning curve. i do think we are better at it now than ever. >> great interview. well done. he was talking about what they have done since the year 2000 with vaccinations. >> the bill and melinda gates

foundation has been operating for 15 years. of course given the fact that he is investing all of his wealth his tens of billions of dollars of wealth until he runs out he is looking towards the future. the big idea in this year's letter is that in the next 15 years the world can, with the right focus on philanthropy and investments, improve the lives of poor people more than at any other time in history. he's trying to rally people around that idea. >> did he give you a sense of what is going to require? >> it is going to require money smart policies and smart investments in four areas. health incorporating vaccines, agriculture, better seeds and farming techniques. it is going to require investment in banking. bill has become a big believer in the digitization of currency

and mobile banking as a way to lift people out of poverty. they can transact in ways they were never able to the four the cost of transactions was prohibitive. finally, in education. there are huge barriers because education is so fragmented particularly in a market like the u.s. where there is no national regulator. it is very difficult to get multiple jurisdictions to do the same thing at the same time. >> erik, you spoke about philanthropy. this is a huge issue. he weighed in on qe. >> you cannot look at philanthropy and the opportunity to change economics of industries without looking at the macro economy. i want you to listen to bill gates. i sat down with bill gates and seattle. there is a natural connection to the monetary policy and the

macro economy. this is bill gates on quantitative easing. >> when you have the aftermath of the collapse of a credit bubble, part of what you are trying to do is get people not to be too conservative. encouraging them to spend. you even want mortgages to be cheap again. the world economy is coming back somewhat the euro zone still has a challenge because of their ability to manage very different economic results within the framework of a single currency and no, fiscal policy. the u.s. is exhibit a that spending has gone up, job markets have gone up. it was slow. if financial bust is much more likely. it is going to be slower than a business cycle bust. people are starting to feel pretty good that if nothing else comes along we will be on an upward growth path. >> there are lots of people who say that the cure is as bad as

the disease. quantitative easing, in particular disproportionately benefited the wealthy and did not do that much for the poor or for the middle class. are they right? >> quantitative easing is a technique used. when you want to stimulate spending -- business and consumer investment -- and you have gotten interest rates to zero. if you want to bring down the price of assets going out into the future. it is a tool that has been used. it actually helps debtors at the expense of savers. in general, if you have a savings account, you are getting very little. a debtor, you can roll debts over at low interests.

it tends to make all caps off assets like -- it tends to make all capital assets like houses stocks, relative to the real interest rate. you get the stock market going up. is not done to favorite one level of wealth. only tax policy can take your level of inequality and be, in particular causing some adjustment there. >> how has the unconventional monetary policy affected what you can do? >> the wealth of the foundation has continued to increase the various investments made have had good returns. other parts of the assets some of it in microsoft stock and other stocks. the general level of the stock market, there have been ups and downs the investment policies

have allowed us to go from about $3 billion a year that we were giving away six years ago -- now we are a bit over $4 billion a year. >> bill gates weighing in on qe is a rare event. you asked if qe helps the poor. he said it does not really benefit one class ever the other. it is kind of a level playing field. >> it is pulling such a big lever that it is no way to target any one particular group. he said the only way you can do that is through tax policy. a lot of economists would agree. what i found interesting is that he did not subscribe to the view that because quantitative easing had inflated the values of financial assets that it was necessarily a bad thing. as we've heard from many people, the unintended consequence was that served to make the wealthy wealthier. >> on a date when the ecb is

going to be announcing this for europe, people are wondering whether you could relate the u.s. experience to what is going to happen in europe. it was interesting in the panel the sense from christine lagarde is it is a different place. maybe policies that worked over there will not work over here. i got a sense that this was bill gates as well. >> you heard him say that the european market is different. even though the ecb is operating within a single currency zone, there are other countries that are going to be affected and will play a role on what happens inside the ecb. that is an experienced the fed did not have to deal with. >> catch erik's interview on bloomberg.com and ""market makers." >> the biggest names in davos weighing in on mario draghi's deflation dilemma.

when we come back, hear what they had to say. ♪

>> welcome to "the pulse." >> we've been having some great conversations, live from the world economic forum in switzerland. about the qe and ecb. mario draghi hanging over.

>>. as in frankfurt. axl weber thinks qe may not be the best solution. >> a qe program that focuses on buying non market, sovereign paper, does not address the problem. >> earlier this morning, i moderated a panel of ces, policymakers and former u.s. treasury boss larry summers said he supported qe. that mario draghi should aim big. >> i'm for european qe. the risks of doing too little exceed the risks of doing too much. deflation and secular stagnation

are the macro economic threat of our time. >> he was on good form. >>i asked about the swiss national bank but did not get much of a response from any of them. >> very much focused on the ecb. jonathan ferro is looking forward to this. he joins us. you've been talking to people. >> let me give you some insight into discussion. i do not necessarily subscribe to it. the 50 billion that has been leaked is that pure sovereign debt or including the tltro's, if that's it, it is going to be disappointment. when the u.s. started treasury

yields at 4% in 2009 50 basis points on bunds, people are saying we've had a lot of it already. >> people are saying it is not going to be about the cost of borrowing. the mechanism by which this is going to work ia -- is by dragging the currency down. >> you hope that stimulate demand and gets businesses to borrow money. it is a discussion we've gone back-and-forth on. if it is an internal demand problem and in internal competitiveness problem france italy and spain, a weaker currency is not going to make them more competitive against germany. >> jon ferro's trying to crash some parties. let's see if he's successful. >> it is party time.

i'm going to do my best to get you inside one. yes i'm taking these with me. the things i do for bloomberg tv. turn that music off. a couple parties tonight. one at the belvedere hotel another at a piano bar, and another at a hotel. i will do my best to get you into one. here we go. no invite,no entry. it is kind of being like 14 and trying to get into a pub. you know you look like harry potter but you try anyway. now for the belvedere. that's a no -- off to the piano

bar. piano bar behind me, let's do this. hi, i'm not sure my name is on the list. jonathan ferro. thank you. look there. i'm off to find the bar. >> was it fun? were they talking qe. >> if i saw anyone in google glass, i would heckle them. hard to wear them myself. >> tonight, no glasses, let's see how far you get. >> we are not taking the cameras. >> in the meantime, all about the ecb. will the central bankers party? >> the decision is out shortly.

we will cover it on bloomberg television. "surveillance" with tom keene from davos is next after the short break. see you tomorrow. ♪

>> good morning, from the 44th annual meetings of the world economic forum in davos switzerland. history made at the european

central bank. we will have complete coverage include in a conversation with christine lagarde of the imf. distracted by the european central bank, deflation, negative interest rate, all of that in europe. first, let's go back to our world headquarters in new york and brendan greeley and olivia sterns. >> time for our top headlines. we have to start with the ecb. european central bank on the verge of taking its boldest step yet to fight deflation. ecb president mario draghi may announce massive bond buying program that could exceed $1.2 trillion. it is in that boosting consumer prices that are now falling on an annual basis. not everybody is on board. the plan is been criticized as too little, too late. the head of germany's central bank said it is not needed. in eastern ukraine, the balance is getting worse.