>> a global stocks rally y under potential for more central bank stimulus sparks a search very billionaire investor george soros tells bloomberg a hard landing is practically unavoidable for china but goldman sachs disagrees. dollars for diamonds. 35% to $27oss -- million. manus: you are welcome to "countdown" this friday morning

carry the cavalry are coming carry that is the news that we are hearing from a variety of sources in terms of mario draghi, the central banker reviewing his situation, the pboc will protect the little guy. draghi said all necessary instruments will be used to cope. how is that transferring into the market? get thats we information we will do that to you. let us check in on the fx market. the personification of risk. the rumbling of the currency, the euro and the yen. the biggest weekly drop of the year for both of these currencies. the yen is weaker against its peers. i love the line in the fx story, you need to respect the unanimity, the nature of the

unanimity and the volume of the bank of japan discussion. the knee guide bounced -- knee guide -- nikkei bounced. $30. --nikkei+++me guide

the form of the elixir of life, money will come from the bank of japan next week. the chinese vice president the house to look after stock investors so to that end, you are seeing a lot higher in the nikkei market. we are back touching, we have broken the $30 level. my posture is this. is this a short rally of which you could take advantage to sell. theman sachs reviewing forecast for the euro. confirms the operating proper will be 6.42 6.7 at at constant currency level. i can tell you that is the last time we had guidance from them, 6.32 6.7. operating profit of 2016. 2020 targets are unchanged. -- 20 17th total revenue was i will break into these numbers. we will have a conversation with the ceo. he will be joining the countdown dav s&p those -- in

raises its revenue and operationos. -- operating forecast for next year. find out where and where it is coming from. let us get to the first word news. nejra: asian stocks have rallied from a three point five year low from rising oil prices and the prospect for further central bank stimulus. mario draghi and chinese vice president have both hinted at further easing. george horace has warned that a hard landing for china is inevitable and already happening. he says while the world second biggest economy has seemed to resolve the situation, the slowdown has had a similar effect on the rest of the world. disagrees saying that investors are overwhelming. -- overreacting. ceo $20 gave its million in total.

he also got a $5 million cash bonus and a base salary of $1.5 million. the bank managed to increase profit last year to $24.4 billion despite revenue. david cameron says he is in no rush to do a deal on britain's membership in the european union. the u.k. prime minister says guessing it right is the priority. the righte is not deal, i am not in a hurry. i can hold my referendum at any time up until the end of 2017 and it is much more important to get it right then to rush it. nejra: meanwhile, cameron's brexitcounterpart says a would be a tragedy. >> just as i said, it would be a historic, mortal error for andce to leave the union

the same for the u.k.. i am saying this as a frenchman. these are has stored relations between our countries and we have to do everything we can to make britain's day. and jamesiah carey packer are engaged of according to a person familiar with the situation. packer who controls crown resort and has a net worth of $3.7 billion gave the singer a 35 carat diamond ring to seal the romance. that is your bloomberg first word news. terminal customers can head to the website. manus: let us get into the markets in asia. sticky acrossot the terminal. talked ofhe potential stimulus. you cannot beat that. juliette: you cannot carry everyone loves cheap money and those -- there is speculation

once again that we could see stimulus from the bank of japan. it has the nikkei 225 closing up. stop on the nikkei 225 in the red for the close. the best game that we have seen since late september when the nikkei rose. across the board. comments coming through from mario draghi as well which set the asian market for a solid session of rally. in hong kong yesterday, the index hit its lowest level in terms of net value asset since 1998. the hang seng market and 80% of it according to bloomberg fundamentals was oversold and putting that index in the same vein as markets such as brazil and egypt. a much better situation today.

the hang seng rebounding from those six-year lows, up right 3%. i will show you some of the energy producers that have been rallying as we see crude oil rebound from the 12 year lows. sydney is coming back after 11 year lows yesterday. was up 11% in australia and petro china still trading in hong kong, up by 6.7%. risk on appetite. you can see that when we have a look at the government bonds. what we are seeing on the 10-year note is in australia, people pulling their money out of government bonds. seeing those of emerging market currencies like the ringgit and the yuan all rally. we are not -- we are sitting out of this big fund well set off. -- selloff.

the raised the revenue and forecast for next year. the german software maker credits excellent momentum. isport revenue and business -- are driving the growth. euros increase 23 billion to 23.5 euros in 2017. operating profit will be 6.7. that is higher than the forecast they give -- they gave last year. mcdermott joins the team a little bit later on in davos. vices. china's president says authorities are willing to keep intervening in the stock market to make sure that a few speculators do not

benefit at the expense of the regular investor. >> we will speed up negotiations on investment agreements and tear down trade barriers. to improve thee environment for foreign investors in china and to participate actively in global governance. manus: however, george source told friends you look while -- eorge soros told francine laqua -- >> in the growth model that they investment -- a hard landing is practically unavoidable. >> you are looking at a financial crisis that would start in china when authorities also could not deal with it. basically the key

issue is deflation. the condition that we are not used to. none of us have lived in a deflationary environment. the last time we had that was in the 1930's. while i was around, i was not engaged in the markets. we just do not know how to handle it. it is a different environment. now, we have to face it. >> on china, do you expect the hard landing? >> it has happened. i am not expecting it. i am observing it. china can manage it. it has got resources.

it has greater latitude in using policies than most other countries because it has over 3 trillion in reserves. they have a way of ,nflicting their problems passing them on to the rest of the world. they can handle it even if they right,get the position they can certainly continue for 2-3 years on their own course. francine. us bring in she has woken up early to be on set. a great interview from you. interview,e up that

saidnating that dalio china will not spur global demand. he was praiseworthy of the chinese in terms of reform and currency. and you wake up this morning and goldman's tax counting down the yuan why 10%. what was your take away from this? we also spoke to the vice president of china. they were trying to assure the market. there is a step from the chinese authorities to come to davos and be more transparent. dark effort submit still believe there is a policy to evaluate the yuan which would spur inflation. great othersome interviews. market journal is playing in this. when i had that conversation before, i asked if people were too optimistic?

we have a market in davos. it was always one side of the trade. was talking about hard landing. hans: the remarkable thing about the interview, was when he said markets are not yet mature. a startling admission of the vice president from china. you heard the vice-chairman talking about, we are trying to be transparent and communicate. it is a most like baby steps, a toddler trying to figure out how to cross the line. they are not there yet but they are acknowledging that. theoldman sachs, making point that if regulators made mistakes like that in the united states -- the mistakes we made in college because we did not have social media we were ok. >> central banks are really

driving sentiment. interview withng mark -- >> they will do what they camp but they are not willing to go all guns blazing to protect their currencies. the message from the mexican central bank leader yesterday. >> we think it is working. it depends on what you think the objective is. , it isnever been to fix more than anything to smooth out -- variations and to prevent in the market. -- afterthat market that interview, the peso hit another record low against the dollar. they are trying to smooth out the volatility. these guys are not silly.

lessonse learned their from the mistakes of other central banks. hans: you cannot bring the floor lower or you will be in a valley. or do these bankers have any firepower left? gets to talk to central bankers, while i am stuck with prime ministers. with the prime minister of ireland. we had this big debate about tax in versions. tim cook flies into brussels and has a conversation with regulators there. here is what the prime minister of ireland told us about in versions and what their countries tax policy is. we don't promote in versions. in that sense, while the tax rate was a foundation stone for ireland, it is not the key

issue. the key issue is the talent and ingenuity of young irish people. hans: we are waiting for a decision on that apple tax case. 6.5 billion euros. they say that the irish state says they do not want this and this is fair. manus: well done. looking forward to everything you bring to the table through the day. stay warm. an all-star lineup in davos. we will have the asian infrastructure and investment bank, and george osborne. and bank of japan governor, mr. juroda. we will speak to the chairman. that is coming up next. ♪

manus: it is 6:20 a.m. in london. let us get straight to the point of action in davos. >> thank you so much. a very cold day and we have to thank our guest because he is braving whening -- you look at the prices, there is no good news out there. when will we see prices stabilize? >> in our situation, i am in india. india is always important. i can see every growth. in copper.

in iron ore. aluminum. world.look at the >> it is very tough. vedanta has heart -- has had to cut costs. cost have reduced our about $67. copper, we are trying to cut our costs. have got to do more. stock is down 22% so far this year. investors are going through a lot of pain. what can you say to reassure them? --this is the only company the new government has, with a two thirds majority. this government is determined. >> that is good for the economy.

it is not good for the company's investors. growth, wewe have will be better off than the others because our costs are below. >> is there anything that producers can do now to try and get some of the oversupply out of the market? as far as india is concerned, we are not increasing our production but demand is so high in india. please understand. >> the demand in china is high as well. we are talking about price. what can you do about that with the balance sheet, for the bottom line given that cost have to come down to where prices are? cost have reduced our about 25%. we have an advantage.

the india government is very bullish. >> where can you cut more costs? we have done that. what else can we do? india's demand will catch up. china's demand will also catch up. they are going through a different situation. >> when? year, will be settling down time. 2017, things will be different. >> your company will hit a maturity all in terms of debt next year. are you worried about that? >> we have bought back the bond. every payment will be made on

time. we are buying our debt. we are making sure that every payment is made on time. >> can you give me some numbers? made an offeready for $500 million. that is going well. we are going forward. when theso looking at lending maturity will come. will prices for commodities recover and what will come first? >> zinc will recover the fastest. number to come i hear a lot about indian aluminum. -- aluminum.lumina i believe that aluminum will be next. you set a deadline for march,

can you meet that deadline? >> it will happen. no question. >> have you spoken to minority shareholders? >> yes. >> your message to us is that it is going to happen by march. >> absolutely. >> you're saying it is out of your hands. , that thenning is process is going on. shareholders are approving. it will happen before march. >> chairman, thank you very much. up next, we speak to the poland deputy minister. this is our third day of live coverage and we have plenty more coming up including the central bank governor of japan. ♪

manus: it is 6:30 a.m. in london. let us get bloomberg first world nejra: -- first word news. asian stocks have rally. prices and the prospect for central-bank stimulus. the ecb's mario draghi and chinese vice president have both hinted at further easing. has warned that a hard landing for china is inevitable and is probably already happening. the slowdown in china has spillover effects on the rest of the world.

disagrees saying investors are overreacting. hikergan dimon got a pay last year. he got a $27 million in total. dependent on the future lender's performance. he also got a $5 million cash award. the bank managed to increase profit last year. despite revenue. mariah carey and australia casino billionaire are engaged. packer who controls casino operator crown resorts and has a net worth of $3.7 billion a bit of a grammy award winning singer -- it 35 carat ring to seal the romance. manus: let us get straight back

to davos. francine: we are joined by colons deputy prime minister. thank you so much for joining us. there is a lot of concern about poland. we talk about europe and the fact that we are are not breaking up, but there are more concerned that we are not kosher. not cohesive.are >> he should not be worried about poland. of thewants to be part european union but we want to be very good citizen of the union. we want to cooperate on many policies like energy. that is one of our priorities. a six pack for the

european commission. the solidarity here is very important. many aspects of the macroeconomic policy. hans: your country is getting some criticism. hereyou heard much of that and how does that make you feel as a new member of the uric ian union?- of the european >> i spoke with many people yesterday and i have not heard any weston of this kind. hans: there are questions about this. >> i have not heard them. that there is is a first change in power over the last eight years. this is a new situation in poland. francine: you cannot deny that poland's image has taken a hit. the fact that democracy is dwindling down. dwindlingcy is not

down at all. however, the downgrade was a signal to us that we need to look at all of the macro and micro economic parameters. current opposition is making some point which are really not appropriate. also concerneds about the central bank's independence. how can you assure investors. >> the central bank independence is assured in our constitution. i am certain that the central and there willso be no doubts whatsoever that the central bank independence will be protected. francine: you are telling us the opposite. at the end of the day come you have to restore the reputation of poland if you are going to attract investors. >> i hope that our reputation

will quickly be restored. by our investment story. projects lot of good to bring investment. we are talking to many international investors who want to invest in poland. they are serious investors. hans: reveal some numbers. >> 3.7% gdp growth. hans: numbers in terms of investment into poland. >> it may be premature. i would like foreign investment to come in acre numbers in previous years. we created some new special economic zones to make all of the conditions for investors as good as possible. i believe it is going to be higher than the previous time. it is a good time from the macroeconomic perspective,

stability, deflation -- francine: it is help -- is it healthy deflation? deflationealthy because it is not impacting the consumer behavior. it is very healthy. is coming at the right place and exports are a good locomotive for growth. a good combination of growth. hans: the you see deflation as stimulative? it is turning into inflation in the next couple of months. that is most likely. towards the end of the year, we will reach inflation at about 1%-one .5%. very healthy. this is assuming some recovery of the price of oil.

maybe in the 40's. francine: you must be worried about china. indirectly exposed to china through germany and particular. a significant portion of our arerts through germany re-exported to china. for instance russia and ukraine. entrepreneurial companies , and new ways of exporting new directions of exports. hans: in addition to these economic win-win we are talking about, there is the migration and refugee problem. poland is part of that. we heard yesterday from the prime minister of the netherlands, 6-8 weeks they need to get this fixed. what is: contribution going to be? --what is poland's contribution

going to be? we are focused on the refugees from north africa and syria however there is another war at the border of the european union which is the border war with the ukraine. poland was the recipient of 350,000 refugees of different kinds. they were not only were refugees in refugees from the ukraine 2014-2015. second-biggest after the u.k. francine: on this coming you do not see eye to eye with other european leaders. do you think the refugee crisis will break europe apart? i hope not. i hope solidarity will prevail. we will find a compromise like the prime minister of the netherlands was saying. i believe that all of the government's should actually

give up a little bit of their position to find an appropriate solidarity. accept moreyou distribution from north africa or from the middle east? >> i think we need to look at the refugee problem in its totality. we should look at this from a holistic perspective. francine: your currency. there has been a lot of market turmoil. will that stabilize or will the central bank have to intervene? >> the center back came in terms of -- the central bank, in terms the situation is

not the best very destabilized. over the previous nine months, it weekend -- weakened. the geopolitical situation around us. commodities which are impacting poland more. we do take the early warning signal seriously. francine: thank you so much. poland deputy prime minister with his first interview of the day. manus: well done. thank you very much. bank, theyn central held back on any stimulus in yesterday's decision. mario draghi directed our attention to the month of march.

>> as we start the new year, downsized risks have increased again. amid heightened uncertainty about emerging-market economies growth prospects. in financial and commodity markets. and geopolitical risks. we have the power, the willingness come and the determination to act. there are no limits to how far we are willing to deploy our instruments within our mandate to achieve our objective of the rate of inflation below are close to 2%. it will therefore be necessary to review and possibly rican hitter -- and possibly reconsider our monetary policy at our next meeting in early march. manus: refocusing our attention. breaking news coming in on the

stock side, phillips, the dutch lighting scanners, health company. they have been trying to re-craft the company. said thatlips splitting up its lightning unit to focus on the consumer side of the business. this has been canceled. billion dollars sale of its lighting components business to led by china. because of opposition by the u.s. regulator. we will see how phillips reacts to this on the opening of trade. we won't get some more market news now. looks like the deal is off for the $2.8 billion deal. more on that. it has to do with regulation

control. regulators getting sharpened teeth. we are seeing once again mario draghi riding to the rescue hence that he could be deploying more stimulus come march. jp morgan, rbs, both retracing their views thing we will not get that in june. it really adds fuel to the fire. we are seeing a jump in the nikkei right now. up 5%. a seven pushg back. the nikkei rises, the hang seng rises, there is a a rebound going on in global markets after 162 billion euros added to the market valuation.

volatility down 9% on the v stocks. let us look at oil. oil really pushed the markets higher or lawyer. oil is rebounding as well. we are currently above $30 a barrel on brent. even though we have seen such volatility, we are on course to have a rally in oil this week. here we have the world currency banker, this is a great function on the terminal. mexican peso is higher. new zealand is higher. on the downside, the japanese yen, the haven treat. the euro coming down substantially yesterday. 1.5ould see more than the trillion euros are ready deployed by the ecb in bond buying. could they up that even more in march? that is what is driving down the euro at the moment.

years currently running higher -- you currently running higher. looks like it is going to be a fairly strong opening in london. up next, where else would we be? we are going back to davos. sales are going to be higher year in 2017. operating profit and revenue. both going higher. the software business is doing jolly well. ♪

manus: welcome back. it is 6:48 a.m. in london. .hristine lagarde

she is speaking to french tv at the moment. she is making a statement regarding the proposed legal challenge. this arbitration. it ended with him getting a payment of over 400 million euros. she has maintained that she acted in the interest of the state. she worked in the interest of the state in the case. she acted legally. the court has been looking at -- erred.e aired in the meantime, let us get to the business flash. google is paying apple a hefty fee to keep its search bar on the iphone. court documents, show the search giant paid apple $1 billion in 2014. google has an agreement that

gives apple a percentage. starbucks forecast of second quarter profits under sharp estimates following a slowdown. the company is blaming that in part on the harris terrorist attack. paris terrorist attack. >> fairly strong performance given the dramatic decline in consumer and tourist activity across many of western europeans largest cities following the terrorist attacks in paris. nejra: phillips has canceled a $2.8 billion sale of its lighting component unit to a consortium led by gao scale of china. the dutch company says the deal was terminated because of opposition by a u.s. regulator. sap is predicting sales for next year to top its previous

forecast as it moves more customers to a new version of its business software. the company expects sales to increase to as much as 23.5 billion euros in 2017. manus: let us go back to fran. francine: we're now joined i the as -- ceo. we were going through the numbers that you put out today for next year's sales. they will top previous forecast. you're going through a huge transformation. what has been driving your thoughts that you will be doing better? >> we have a different business model then they do. a different vision regarding how a company runs its core.

we have in memory real-time database. and our new business suite. we are in the early stages of a big adoption cycle for a new innovation that is fundamentally changing the way companies run their business. in the past, we were not in the cloud in 2010. today, we are the number one enterprise cloud company with 85 million users. we made that transition but we also have the core business. if you combine those and expand it into the business network, you have a complete division that no one else has were a real-time enterprise. hans: you have spent a lot of time in china. what does it feel like there on the ground? >> it is exciting. hans: is there a disconnect? look at the people on the ground, the companies, the state owned and rises, their

ambitions, the way the chinese government is very strategic. they are focused on the industrial revolution 4.0 and how they want to digitize everything. there is growth, ambition, and drive. 5.6%,growing at 6.5% or it is still a lot and it is more in aggregate terms than others. people should be proud of china. of course, there is growing pains. francine: the economy is so complex. made the mistake six years ago that it is tougher in this environment to make those mistakes and get away with it. >> exactly. but what i see in china is young people in university with dreams , ambitions, and hopes. is this is want to change. they want to be best in class. and you have innovative

technology, our action in the cloud and the network, you will do things in the global economy like no place else. hans: you are reaching your metrics. 6 billion in -- $6 billion in profit. what can you expect on the dividend? because of our strong business results, we will continue to support a strong dividend. there -- ompanies out hans: stronger? that at theo decide meeting in may. the most important thing to remember is that there are very few companies that i am aware of that have sap's topline growth, bottom-line leverage, and commitment to shareholder value with a commitment to a strong and sustainable dividend. if you look at the risk profile,

that is a strong argument for sap. francine: you're getting your customers. they used to pay a big of frenzy and now you're trying to move them to a subscription model for the cloud. that must have an impact on margins. >> if you think about an erp system, it runs the core operations of a company. your supply chain. how you build and manufacture your products and customers. this is a big investment. sometimes, people will want to capitalize that investment and continue to buy it up front because over years, that gives them the best value and how they spend their money. if you want to do that, continue to do that. a lot of times a will by a narrow slice of the clouds. you're likely to rent that. sap, there is a hybrid

licensing model. the customer can have it any way they want it and we manage it as a portfolio. and that is why i educate the market -- don't look at margin rates but look at income because you have to margin -- manage a portfolio to stay competitive. hans: you went through a bad accident. you lost an eye. when you look at what you want to do next, tell us about the book and what you hope to accomplish. >> thank you for your kindness. anything fromake you without giving something better in return. wisdom fromot of this experience and i'm excited about life and the difference i can begin the world. you really get a service attitude for doing good things for people when something bad happens to you. i wrote my first book -- it was the memoir of the year in 2014. the next phase will go to the

winner that rises which will be the theme of the book. francine: you will send us an advance copy. toing up, we are speaking another ceo. that is next. ♪

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manus: global stocks rally as the potential for more central-bank stimulus passed the search. tellonaire investors bloomberg a hard landing is practically unavoidable for china. goldman sachs disagrees. and dollars to diamonds. leappmorgan boss sees it to $27 million. welcome to "countdown." madame lagarde-- the dalgaar

is running for a second term. francine lacqua was asking her yesterday, the rather demure madame lagarde, that there were many members to be consulted, but she is running for a second term, the woman with the most powerful hermes handbag in the world. let's talk about markets. if you want to understand the power of markets you need to understand the turnaround. futures are trading higher, the paris market up by 1.8%. all these futures are pointing to a higher open. in the capital, if you haven't had the message yet, the pboc went to davos to tell the world things are under control. saying to gets ready for a potential for march action. what you've got here is the vice

president of china looking after stock market investors. let's look at the market. oil absolutely running away. magicd nymex above the $30. march wti has rallied 5.25%. the volume of trade going through, march brent rocks away. three times the average, run higher. the currency markets are on a tear. the biggest drop in the end this year, the aussie dollar moving higher. as goldman sachs does the u-turn -- yes, you heard it here first. goldman sachs makes a u-turn on the euro forecast after six weeks. they miss read the tea leaves of december 3 meeting. it takes a big man or woman to admit they miss read the tea leaves.

one woman that never misreads the tea leaves and really stirs the pot is francine lacqua. fran? francine: we are really, really cold this year, but are pleased to say that we are joined by the credit suisse ceo. great to have you. european banks are really under pressure. what exactly is driving that? >> a number of things, but if you would like to start with a positive, investment in capital -- we made enormous progress. if you take switzerland, we are the second country to have a capital regime, political intense, and a system that means we could withstand anything without going backward. i think america got there first. new you look at the

regulation, it will break all over european countries to meet that standard. about $4 trillion of capital means we can take another ups, while not being able to raise any capital. the good news is that the banking system, mark carney did another great job. the banking system -- francine: on the negative side -- again, maybe i am going to surprise you. on the fundamentals, i am positive. the economy is recovering. there is no way one can say that the decreasing oil prices a good for the u.s. economy. it's giving into consumer demand which is vital. europe -- we don't really exclude --ce to

francine: there is concern about brexit. >> right, but we don't have a life crisis. for me, it's in the best position since 2010. we think that after disappointing every year since 2010, emerging markets have a bit of an upside. fundamentals either. are fundamentals there. bute may be a few failures, i go back to my initial argument. francine: are investors banks,ing and punishing or are they looking at the fact that they are concerned central banks may not have enough ammunition to these inflation costs, which means volatility and turmoil? it depends on your long-term view of oil. i think the consensus is that it will come back, but the current price is unsustainable.

markets tend to take to project things forward. we think things will recover, and then people are rem about-- we are very clear reducing volatility. the history of banks is to lever age in a volatile business. we are working very hard to translate the business model so we bring it back to this volatility. thee still being hit by market. francine: if we look at the restructuring plans -- let's say we start with the bonus pool. how much will that shrink by? >> i'm afraid of going to get the same answer. we pay for performance, fundamentally. i cannot talk about our performance. whatever it pays, it will be consistent. end, you are caught

between two objectives. you need to protect your franchise, keep your best people, and protects the economics of the business. pay can go up and also down and profits up or down. we're showing the profitability of retail in the u.k., and it's mostlybanks -- the caused by the issue of pay. francine: talk to us about litigation. what is coming next? when can we put it behind us? >> i cannot comment. francine: job cuts? anything? >> i'd rather talk about productivity gains. it's clear we need to improve our productivity. 3.5 billion cut costs and we're making progress.

i'm really focused on that, absolutely vital, to reduce the cost. there are a lot of fixed costs. it's a top priority to attack the costs but also to invest. we also believe it is important to invest. francine: given the market turmoil, what does it mean for the bank? >> banks are always market dependent. built our plans -- we're taking that into account. in the end, you always depend on the markets. we will only be able to do it if markets -- francine: the timeline is -- what? two years, three? >> 2017. francine: do you expect a lot more market volatility? willll, market volatility be quite significant until

expectations have reset. we have been for seven or eight years in a regime where interest rates did not move. the market doesn't like inflations. i think we have to test the fed it will bit to see if make the fed blank oink or not. i think they will continue to rise. i think it is the right thing to do. there are also some issues around structural liquidity in the market. it amplifies the same news flow. it is just more difficult to unwind positions. francine: you are expecting two or three rate hikes? you are saying -- janet yellen probably needs to slow down, markets are pricing in to rate hikes. >> that is what our economists believe, yeah. but you know, economic forecasts -- francine: i know. [laughter] >> i will spare you the jokes.

francine: what is your take on china? >> i'm positive. i don't see a hard negative. francine: no financial crisis? >> it has issues. its economy has been growing at an incredible pace and that's not good for the economy. yes, grew that much -- 6.9% is their worst performance in 25 years. i think that is something every country in the world would love to have. i think the diagnostic is correct. one of the biggest hindrance for consumption growth is the precautionary savings. the chinese need to save because they are very underdeveloped in terms of social safety nets. what i like about the chinese government is that generally, they are ready to execute. the government needs to

identify the real issues and have a plan to attend them. the plan is to put in a proper pension reforms so the chinese don't need to save that much. they can consume and continue to improve the world economy. francine: and you believe this will happen in a somewhat orderly fashion? will they be able to become with the u.s. was, and be one of the major growth engines? >> yes, of course. but the market has to accept that volatility. it's impossible in such a big economy without from time to time a problem in the asset class. that is part of the functioning of the market. francine: when you look at all major european banks, there is a clear retrenchment from the investment banks. are you concerned that we are giving away free lunch to the u.s.? >> well -- ok. what is going on is that, in the short term today leverages our constraints for european banks,

and that is bad news, because leverage is necessary, a want to measure of risk. it has forced a lot of us to retrench. the way regulation has been developed means that leverage is not a constraint. butcan gauge activities -- europe andtely for the economy that banks truly confront the economy, provide credit, and help grow. the banks, i think, are doing a very necessary and tough job. but i think there is light at the end of the tunnel. francine: do you think swiss banks have an advantage over u.k. banks because of the brexit talk? together and iws never -- francine: [laughter] it's in a good

position. we have a good position on asia, and we are confident we will continue to do well. we're here in switzerland, the richest country in the world for capital. we have a good banking business in the u.s., in the middle east. we have a number of interests. francine: you're bullish -- are you concerned about a lot of the emerging markets in terms of oil? >> i'm bullish long-term. you cannot have an economy that is high-growth a low volatility. with high-growth comes high volatility. that is something the market is very comfortable with. as it becomes bigger, they will continue to be quite volatile, to have successfully merging markets to have the appetite for volatility. we treat these as investment

opportunities. ien numbers are retrenching, would never withdraw 70% of the world population. i don't see how i'd become a team player if i gave up on 70% of the world population. medium-term, long-term view has to be to continue to progress. francine: do you know when there is a floor of the commodity price? you look at your business model, do you say -- in five or six years this will be sorted, or do you think it could come sooner? >> well, the way we planned tongs is we tried to be able even if things don't improve. i never make a bet on the direction of markets. --here's what we see now things aren't difficult, we need to cut costs progressively, to make sure that if there is no improvement we can still continue to function.

there is an improvement in that becomes an upside. francine: were you surprised by this market volatility? it seems that they are looking for something -- here there is a little bit of angst. they are saying i want to have -- what our markets looking for? do we need to find some kind of bottom? >> they are testing and -- it was going to be some kind of event. francine: but is this -- >> every time you have a big change in economic policy, the current environment is unknown. we have tightening, the ecb gasing, and switzerland -- amon the emerging economies you will have a bifurcation. some countries can afford to ease and others cannot. you have a lot of moving parts. the markets will settle, because

it can operate in any set of macro circumstances, but it will return from scenario a2 scenario to scenario b. francine: final question, because i know you have to get to a meeting. christine lagarde was saying she would be interested in a second term, because she has quite a lot of support. in the french press, your name came up as a possible successor. >> you know that i'm a fan of christine. i think she is a fantastic leader. she is a fantastic woman. mobbed by everybody -- everyone wanted to take a selfie. i've been very discreetly campaigning for her. francine: you were not going anywhere? >> no, i have a job. i need all of my energy to do that.

she's a force for good. francine: thank you so much for your time today. the ceo of credit suisse. up next, the portuguese economy minister. ♪

manus: 7:20 in london. let's get straight to dat vos. jonathan: thank you very much. by are joined first w portugal's economy minister. greg to have you with us. the remarkable thing about the selloff over the last month has been the peripheral that he has done ok, with the exception of

perhaps portugal. 10 year yield spiking, what do you make the move? what do you think is behind it? >> i think there is some speculation in some agents in the market that have been unhappy about the solutions that t, but iral bank go think in the end it's an awfully speculative movement. we have had issues in the last week, and we got negative interest rates for short-term debt, and we got the lower spread when compared to germany for a public that -- was three times the amount in the market. jonathan: this spread over 10 years is still about 250 basis points, so there is still clearly some concern about the credit of portugal. i wonder if city bondholders -- what can you do to reassure investors? >> whatever number there was,

the authority of the bank of portugal and the central bank is independent. it was a decision that is in line with what's going to be the decisions in europe that senior creditors are going to rescue banks. it is something that we may agree or not agree but i don't think we are going to need more of these operations. it stabilize the bank. it was positive, but more positive for the investors. we are looking into that to guarantee the confidence. jonathan: for investors watching this morning worried about portuguese banks and whether they need more capital, do you think they need additional capital? >> i think there are specific cases where reinforcement is positive, but i don't think

there is a widespread problem with portuguese banks. there was a problem with the adjustment process. some of them were taken by foreign capital, and that was a positive move, because it gave more stability. jonathan: can you rule out the need for extra capital for portuguese banks? >> i would rule out the need for more capital. actually, i would welcome investors to use the opportunity and lower prices of assets in the banking system, to reinforce the capital. jonathan: the other issue is the budget, a decision by your government to reverse the spending cuts. do you think that has anything to do with the bond moves, and can you reassure investors that you won't o undo the austerity? >> we are not going back to austerity. a process that is

important to the country. it's not that we are facing pressures from abroad, it's that we have a strong commitment with reducing our debt and putting the public accounts in line. this is our strong commitment. the possibility that we made in the budget to reduce the deficit for the coming year is a positive one. jonathan: if you were going to reverse some of the spending cuts, explained to me how the budget deficit narrows. where does that budget deficit narrow? >> we have seen stronger growth -- and the reduction in energy prices is also important. in portugal is a very strong commitment for new investments. new investments by big firms are volkswagen or siemens coming to the country. arrow notments in arrow no

eronautics. in the coming year, what we have is positive. jonathan: for some of our viewers, the economists are scratching their head, wondering why he is so optimistic. what indicators are you looking at that gives you the optimism? >> if you look at the last year, we are among the strongest growth in the european union. in the market. we are gaining market share. positive -- if you look at real estate, we also have a very positive move after the oil prices came down. it's very interesting movement in the portuguese economy, and we are going to get new meetings forncrease the help

investment to track more, to simplify the work, to improve conditions. these are i think going to bring -- yes, i am very positive about the prospects. jonathan: you turn up in davos and everyone is concerned about what's happening abroad, in china. what are your concerns about what is happening abroad? do you see a hard landing in china or do you take the more optimistic way? >> i don't see a hard landing in china. decelerating china a bit this year. it still has very good growth. so we are receiving a lot of investment from china. it as an engine for

growth. jonathan: we will leave it there. the portuguese economy minister. more from davos after this short break. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. manus: welcome to "on the move." we are counting you down to the european open. i'm guy johnson alongside jonathan ferro. whatever we got? -- what have we got? jonathan: global stocks and oil rallying at the potential for more ecb stimulus, sparking a certain assets globally. millionaire investor george soros says a hard landing is practically unavoidable for china, but goldman sachs disagrees. we are live from davs. -- davos. an all-star lineup, including henrico kuroda,

and the new argentinian president. less than half an hour to the european open and draghi has done it again. equities are searching, brent is trading higher. this is what we expect from the european open in 29 minutes. dax stocks up, caca and opening higher as well. the nikkei was up over 5% and brent is trading a similar number. it has been an incredible session. and the shanghai got in, the ruble is trading back down. some big moves around the world seems to be generated by druggie. let's get you up to speed -- here's caroline hyde. caroline: thank you. asian stocks rallied from a three-year low on rising oil

prices and the prospect of further central-bank stimulus. the topix jumped the most since september. mario draghi and the chinese vice president have both hinted that further easing. david cameron has said he is in no rush to do a deal on britain's ever shook the european union. the u.k. prime minister said getting it right is the priority. >> if there isn't the right deal, i'm not in a hurry. i can hold my referendum up isthe end of 2017, and it much more important to get this right down to rush it. caroline: meanwhile, cameron's french counterpart says a brexit would be a tragedy. it would be aaid, historic mortal error for europe to do this. in the current situation, it would be tragic, and i am saying that as a frenchman, that our re historic and we

have to do everything we can. caroline: let's get more with jon. jonathan: thanks. the sun is coming up and looking beautiful, and i am pleased to say we are joined by the chairman of bae systems. great to have you with us. let's talk brexit. it's a favorite topic is yours, so let's do it. it'on the cardss, more than it was -- it's on the cards, more than a was. your fox more broadly on what is happening, and the risk as far as you see it? >> i don't think we can take it casually at all. there are plenty of issues being discussed. i think the fundamentals still are there for all to see. they are our closest neighbor, our major trading partner. seven of our largest markets are in europe. part of our economic fortune is still linked to europe. the business community has got to stand up and make that argument clear for people so

that they can make a balanced judgment. jonathan: the other argument is that britain's trade partner is europe and they need each other. even if the british people vote to leave, you will get some kind of trade agreement off the back of it anyway. >> i don't dispute that. i don't like the extreme arguments, that it is the only solution or a total catastrophe. is the rightis thn solution. what we should be casual about is if we decided to come out, although trading they continue, every single trading relationship will need to be renegotiated. if we move into, let's say two or three years, the renegotiation and dislocation, that is not going to go for the british economy or the british people. jonathan: the gap in between, waking up and no longer in the eu, everyone knows it doesn't

work quite like that. but what does it mean for bea systems? >> not too much. europe for us is a partnership of manufacturers. we produce the euro fighter. our partners are the production, in europe. there would be dislocation at the highest level, but it is a business. we would continue to produce. it is in the longer term, i think, that the separation of britain from the family of europe would ultimately adjust government thinking as to the depth partnership we should be having. it is not only about economics, but security of the country, and the long-term strength of our security, and the intelligence that we share with your as a real partner. jonathan: there is an argument that written with half -- that britain would have to beef defenses.its

>> what is important is that we are able to produce the right product using the right technology to defend the realm. that is exactly what we will continue to do, whether we are part of europe were not. jonathan: one of the consequences of all this exit conversation has been a depreciation and sterling. that is good for you, isn't it? >> the whole movement of currency is something that fluctuates all the time for many reasons. at the moment we are seeing a lot of movement, the price of oil go to unbelievable levels, the fluctuations in sterling. few people project it. we don't build a business on the short-term spikes, we build on a long-term projection. jonathan: the outlook for profit must be looking good based on what's happening in the fx market and the geopolitical tension. at a time when people have been

cutting defense budgets, do you think they will increase over the coming year? >> as you know, in the last year or so, there haven't been cut the defense budgets. people have recognized that it is very high on the public agenda. governments have recognized that the world at large is in some turmoil, and therefore defense must be a priority in spending. we have seen more money allocated in america, which is 40% of our business. we have seen the recent strategic defense in the u.k., the commitment to defense with the 2% david cameron promised being delivered. our business is strong because governments recognize that the world is a dangerous place. jonathan: do you think that can continue, that trajectory? arei think what we see long-term contracts. once they are secured, we can look many years into the future in producing the goods that are required. of the technology that supports

them of course is something that is evolving all the time, and that is driven by the contracts to get today. jonathan: let's wrap things up and look to the technology you are developing. what are you most hopeful the growth will come from? >> well, we have strength in a number of areas. our electronics capability, rooted in the north american market, i think is a strong growth area. not just in the military sector but in the commercial part, where we have a small foothold. in thes a big vote u.k. on submarines coming through, and assuming that is supported in passed, for us we make that summary. i-- that submarine. it is a remarkable piece of engineering and that will be the best part of 40 years work. there are big things in the pipeline which we hope to see convert into orders that will secure jobs for the long-term. jonathan: there is some political resistance, some conversation that you can have

submarines about nuclear weapons. i'd love to get your thoughts on that. lose some think you of the sense of it being the real defense when you have no product that people are fearful of. their is a combination required deliverer and missile for it to be a real deterrent. jonathan: based on the conversations you are having, your hopeful everything will go through. so it won't develop into not happening at all? >> a case has to be made, but i think the british people and government really understand that we need to be part of the real defense structure. for that, you need trident. jonathan: final question. you came up to davs -- back in the u.k., the market participants are incredible he negative. i keep asking this to everyone and i want to ask you. do you think some of the davos delegates are being unrealistic about 2016? you talk about a dangerous world -- i can get that sense. what is your sense of baton

here? -- of the tone here? >> i think it moves around. in the course of this week, we have seen huge changes take place. we have seen the oil price go down further. we have seen commodity prices continue to shrink. we have all the concerns expressed reflected. there have been days in davos where people have been rather depressed. i think the thing about davos is it that defies everything. i we take a longer-term view, am not at all relaxed about the need to keep working harder, but i don't think we are sitting right on the edge of calamity. jonathan: richard carr, always great to get your thoughts. still to come, live from davos. they talk europe with the dutch finance minister and eurogroup chairman. join us for that discussion, coming up next. 20 minutes away from the open. european markets looking to get that after japanese equities of

storm higher. we will discuss that and more after this very short break. ♪

guy: good morning. welcome back to bloomberg television. i'm jonathan ferro, alongside my collie cons nichols. -- alongside my colleague hans nichols. we will be joined by the dutch finance minister. good to have you with us. a many schengen -- how does that work? >> i talked about thit in this is i don't want it. i want the board is under control, improve the conditions for refugees in the region, working with turkey, basically getting this under control. what happens now is that one country after the other individually are taking

measures, closing the borders, and that is the way i don't want to go. if necessary we will work between countries to stop the negative spiral, but i prefer the 28 route. jonathan: no one wants it, but is that where we are heading? >> where we are headed now is even worse, which is individual member states taking their members and closing borders. hans: so if a five-member many schengen rescues some free trade and commerce, with everything breaks down? >> i don't want it. i will keep saying that. the reason why i brought the subject up is to say between where we are now, countries individually taking measures and what we really need, that could be a midterm solution that i don't want it. hans: they floated this idea of an upper limit, trying to spur an upper limit, to spur other countries into having the conversation. where are you on this, and is an

upper limit something? >> there is a joint interest for countries now taking in the largest numbers. sweden, denmark will no longer -- germany, austria, the netherlands. those are the main countries, and they have a strong common agenda, to get it under control, to manage the numbers, to control who comes in and with what motive. there is a lot of ground. hans: does that mean you are for or against an upper limit? >> i don't think you can use an upper limit in the end. we need to get it under control, get the numbers down. i can't fix the number. i know that the current numbers we are taking in cannot go on. it's becoming disruptive at the local level. a very complex operation, so let's bring those numbers down. jonathan: a very bold decision by the german chancellor angela merkel to reopen the gates and let everyone in.

was that a mistake? >> i don't think that's what she said. jonathan: that is what happened. >> she literally said we can manage it. and germany has managed it so far. sweden has managed it. as much as they can do, the same goes for the netherlands. we don't want to do this year after year and we certainly don't want it to increase. that's our main challenge. adequate job of managing the greek crisis over the summer. where are we now, and do you get any sense that the ins is going to participate? >> i think they will, but the imf has been clear what they want. we need a good pension reform, because the pension system is not sustainable. it ekes out of the budget very large sums every year, and of course that budget has to be balanced. the first thing is the pension refund, the second one is fiscal sustainability long-term,

primary surplus, and if the greeks can deliver that, that is what we can talk about. i think that is the right order. i think the ins has a good point. hans: on the pension issue, it looks like they are going heavy on the contribution side, not the outflow side. >> that's not quite fair. i think they put a serious proposal on the table. it seems to be sustainable in the long run but there are fiscal gaps. they're pushing down the pensions for next-generation, but there is a short-term issue that has to be resolved. that's about how to fill those fiscal gaps. we are doing work on that institutions are talking to the greeks. that may take a couple weeks, but we will keep pushing the process. jonathan: a couple days ago, it seems to revolve around the pension. is that the only real sticking point from here? >> it's not the only one but it is the logical order.

once we have worked out the pension plan, you know what the budget will look like from now on. see whether that is sustainable. we need a primary surplus in the budget to deal with management in the future. as we have all that, we can do the numbers. what does the debt burden look like on an annual basis? will be spikes, and we need to see whether we can do something to take away those spikes. there is a logical order and that is how we will do it. jonathan: have you spoken to the imf managing director this week? i have your conversation with her -- is it promising? >> she has been very clear from the beginning what she needs for the imf to step back in. they are involved in the day-to-day work, in the talks right now, but to formally be part of the program again, they need to get the rest of your's, and i think they have a good point. hans: the single resolution mechanism -- very tense

negotiation's. they need an srm. how crucial is it and how will you parse the differences? >> they have started as of the first of january, and that means tough rules for the banks that need resolution. those tough rules are now in place. hans: there are still some areas that haven't been quite settled. >> there are two issues -- one his legacy, the way the balance sheet of european banks are structured is very vulnerable given the new rules, so that will have to change. banks will have to deal with how they are financed. , there are open issues still to deal with in the banking union. one is about the common deposit guarantee system, which is a backstop to the backstop to deposits. we need that. we have always said it we part of the banking union. there are a number of issues about the quality and quantity of capital in banks. we are going to work on that, resolve them.

there is a strong connection between the two. one is about risksharing and the other is about risk reduction. there is a political deal to be made and that is what we will try and do in the dutch presidency. hans: on the backstop to the backstop, are the germans living closer to some sort of unified -- >> it will require the germans to move and other countries to move. the germans are hesitant to talk about the, deposit insurance. other countries are hesitant to talk about risk reduction, to look critical at bank balance sheets. but we won't have to do that. if everyone sticks in their positions we won't make progress. i am going to try and push both sides of the debate and keep them aligned. jonathan: brexit. can the u.k. do a deal with europe? >> i think so. jonathan: what does it look like? it is not clear to me at all. what does that do you look like? >> well, it would be up to david cameron to define the deal. jonathan: would you agree --

>> the key issues are how efficient and effective does the eu run. why is europe not more competitive? how can we work between the euro and the non-euro? those are fair issues. they are not just a concern to the u.k., but to many countries. i keep saying to my friends in the u.k., you're on your own. you are not the only ones worried about how we function. let's have a good agreement. the open issue at the moment is still the labor migrants and their benefits, but to be quite frank, that is a debate going on in a number of countries. i think it is a fair point to say that migrants need to pay in and contribute before they take out. let's look at the way to design that in a way that is valuable for all of our member states, and that doesn't discriminate between eu members, between eu citizens. that is the key issue.

i think it can be done. i don't have the final design. i think it is of great interest to the netherlands. we have always been close partners to the u.k. we were one of the countries that pulled them in, come and join us. -- when wehan said look from davos, it looks bleak, the markets are reacting strongly. what do you see in terms of market reaction versus the reality on the ground, the financial structure of the chinese system? is this just a communication problem? >> i think the chinese economy has structural it financial issues, but if you look at the reform program that the chinese government has, which is i think now two or three years old, those are the right issues to address. it is allowing the markets to really price investments, to price the currency right . that transition process, getting

those reforms in place, that is key. they need to push it, they need to finish that agenda, manage it well. hans: is the current -- does the currency end of the year lower or higher? >> i don't do that. [laughter] jonathan: we will leave it there. the dutch finance minister and eurogroup chairman. ahead of the open, six minutes away, the draghi bounce continues -- is it just a short squeeze? jonathanguy: i think a started d now the squeeze is on. we are looking for a cac left. a a few minutes away from the open. let me show you some of the numbers you need to know. this is how we think europe will open, the fair value out of the bloomberg terminal. a 2%+ bounce on most of the main european markets, the cac up, the dax up, ftse lagging a little, but euro stocks up.

let me show you some other numbers you need to be aware of. 5%, thatby nearly obviously part of the story, back above 30. the nikkei had a roaring session today, up by nearly 6%. and wei got in by 1.25%, are seeing some of the big moves in the currency market coming back in. the dollar versus the ruble has come back down, so we saw a big move over the last couple days. but the main moves that everyone is focusing on this morning is what is happening in oil, which is back above $30 on brent. big moves and equity. still to come, don't miss our all-star lineup coming out of davos. we will state to the asian infrastructure bank chairman and later on today, the bank of japan governor, kuroda will be

on bloomberg television. will he have to move forward? draghi signaling, will kuroda follow-up? we will find out in sunny davos, switzerland. ♪

guy: good morning. day three of the world economic forum. a warm welcome. i'm jonathan ferro. moments away from the european trading session. rallying.cks and oil the potential for more ecb stimulus sparks a surge. the billionaire investor tells bloomberg a hard landing is practically unavoidable for china. goldman sachs and templeton disagree. life from davos, we have a lineup, including the u.k. chancellor george osborne. withn exclusive interview the new argentinian president

macquarie. right. japan had a cracking session overnight, up 5%. how is your going to open? let's find out with caroline hyde. caroline: we had it wanted to 60 billion euros to the stoxx 600 yesterday. he managed to talk up the market. seeing stimulus to come in march. jpmorgan and rbs saying there ringing all of their expectations as soon as march. you start to see the worrying of the equity markets after such sensational falls. we can start to eat back. 2%. up 2% -- cac up only one falling in