>> this big problem to do with holdouts and the issues of the bonds. can you tell me two things? to what extent -- what is the >> we want to solve it now. we have to have an agreement with them and submit the agreement to congress. showing our willingness, we went to new york in the first 15 days of our government to start talking. we asked for a meeting in new york with the mediator. he postponed from the 25th two the first of february. we will go on the first of february to find a settlement at the new york courts, a realistic, reasonable settlement.

>> how do you see them? some people in argentina see them as vultures. others see them as unpaid creditors. >> let's say they have something in which they have the right to claim. we don't accept the level of penalties the judge has decided, but we want to discuss that. we want to finish all the conflicts of the past. we want to think in terms of the future. argentina has learned. argentina wants to grow. i'm looking forward to improve the quality of my democratic society. i need a better alternative. go over all the conflicts of the past. do you have any idea how much

money is waiting for that agreement to heaven? how much money is sitting there in terms of foreign investment that would come in? >> huge. argentina is maybe one of the best alternatives in the next 10 years for investors. -- we have been talking about energy, food, but we can also talk about sustainable mining, tourism, software, many other things. argentina is a place in which we are going to surprise in the potentials that we have. we have gigantic potentials. >> imagine i'm a skeptical outside investor and i've seen your promise to bring the budget deficit down, but you are prepared to let it grow in the short term. when people look at that from outside, do you think they are worried? >> we are not increasing the

deficit in the short-term. we are going to reduce it 1% even though we have got taxes -- t taxes.cu we have removed barriers to trade. we have removed taxes to export. the decrease in exports and we want to boost our exports. especially i'm talking about agribusiness exports. compromised to reduce annually the fiscal deficit as soon as possible to a one digit inflation. country, it should work. >> what will you do to get all this through parliament, through congress? you have this inevitable problem in argentina. you have a lot of people without some interest in regulation.

>> things have changed. i brought here to demo's -- to d avos the most important leader, showing that we are sharing this view. it is not something that is pushed by the new president. it is something that is understood by a new generation. all the ones involved in politics have started in democracy. they didn't live in these previous processes we had in argentina, dictatorships and all that. we are viewing the future the same way. that's why i'm so enthusiastic and optimistic. >> take me through your relationship with america. it seems to make a difference to the way that argentina is viewed. >> i spoke on the phone with

president obama. very nice talk. yesterday, i met with joseph biden, the vice president. i told him also that we are ready to have more intelligent and pragmatic relations. we want to work together against terrorism, climate change, drug trafficking, corruption. there's room to cooperate. i think that in the future years, we will build trust among both communities and we are ready. we are ready to welcome their company, their citizens. >> the free trade part of that agenda, is it possible to imagine having a free-trade area of the americas? work with our idea. we can present the world a whole continent, a peaceful continent.

in argentina, we have the most important muslim community in america, the most important jewish community of latin america, and we live in a peaceful way. leis is a chance for who america. there is a big chance. strengtheningin towards the pacific alliance and the whole continent. this will be a process, but we have to start working in that direction. >> i have to ask you one thing. everyone in davos is asking one question of me. what would a president trump be like? you are one of the people who has known him for a long time. how would you describe him? >> i was 24 years old when i closed a deal in new york. i was too young.

tough new york city, i remember. very particular guy. ame of his proposals are little bit extreme under my view, but it is part of the democratic debate. >> so you could get on with a president trump in the same way you would try to get on with all other forms of foreign leader? >> my commitment is to have relations with everybody. not ideological difference standing in the way of the best solution. that is something we apply. firstmestic and foreign -- it is a long way to go before we know who is going to be president. i'm willing to host in argentina the actual president, barack obama. >> when do you think he's going to arrive? >> it is not confirmed, but we would be happy to host him in

argentina. >> thank you very much to bloomberg. pleasure meeting you. good luck with the vultures. back to london. guy: fascinating conversation. we will carry on with those in just a moment out of davos. in the meantime, i need to tell you what is happening with the data out of the eurozone. january manufacturing pmi down to 52.3. maybe some indication that the slowdown in china is having a meaningful impact on the data out of europe. services pmi data, 53.6. 54.2ast, something for the world to think about. interesting to listen to that conversation, talking about his aspirations for his economy. to see aghi would like turning point in the eurozone

economy right now. that is a real struggle. let me show you what's happening with euro-dollar. we have seen a fairly busy two days for this chart. the ecb press conference yesterday, really a key driver of this pair. here's euro spot against the dollar. 108.52. draghi effectively said he would do whatever it takes and the march meeting is live for changes to monetary policy. another interested observer on what mr. draghi is doing joins us now on bloomberg television. let me take you back out to davos and francine lacqua. francine: thank you so much. i'm pleased to welcome george osborne, the u.k. chancellor of the exchequer. what's so much about going on in the world. china is slowing down. we have economies on the brink. is going toent it be a tougher year?

mr. osborne: definitely a tougher start to the year. i would look a bit beyond the markets and say, what's driving these things? china is moving to a consumption-based economy. energy is cheaper. that is a good thing for most families, businesses, and countries in the world. not everyone. got here in europe, you've the eurozone and the european central bank acting like a central bank does in the united states or united kingdom. i would look behind the volatility. there are some pretty positive transitions. francine: china is transitioning and it might take five years. there's going to be a bumpy road. we might look at valuations impacting world deflationary pressures. this cannot be a positive. mr. osborne: if you take the

5-10-year view, we are moving from an unsustainable model of growth in china to this consumption-based economy. i would say we should all be in organizations like the g-20, giving support to china and urging it to stick to that course of reform. the most difficult thing in china is if policymakers lose their nerve because it's volatile in the financial markets, back off the reforms, and then you would see a real economy effect. francine: you are meeting with world leaders around the world. how worried are they about brexit? mr. osborne: many people here would like britain to stay in the european union, but that is not their decision. what we want to achieve is reform in the european union. reform to protect countries like britain that don't have the euro. reform to make sure this organization works for member states like the u.k. if we get those reforms, we will

be able to say, let's stay in this reformed europe. francine: are you not risking the stability of the u.k. for the next 8-12 months for a renegotiation? mr. osborne: it's very important to britain's future that we are in a reformed european union, that our continent is not priced out of the world economy. it is important that if we're going to be in the european union, we can coexist alongside a eurozone that is creating a political system that we don't want to be part of. i don't detect that it's deterring investment in the u.k. we are one of the bright spots of the global economy. we are getting the lion's share of inward investment. jobs are being created. i don't think that uncertainty

is putting off that investment. francine: ceo's are not more cautious? instead of pulling out inv estment, are they just going to wait for a little bit? mr. osborne: there's no evidence of that at the moment. there are signs you might see if businesses were pulling back. francine: do we need more business voices to show the pro-europe stance? mr. osborne: prime minister cameron was making this point yesterday. we want the business community to have its voice heard in this referendum debate. we don't want them to be on the sidelines. i think their perspective is going to be very useful. not just big businesses, but small firms as well. francine: what it not be counterproductive? mr. osborne: one of the debates we are having is, where our economic advantage lies. what we want is the best for our country. the business perspective is very important. you are often told in my line of work, don't do things that

support business, and don't try and court the business community. i would say, the business community is providing the jobs, the revenues. i'm unashamedly pro-business. point, one ofhat the main issues we are talking about is hsbc and whether they changed headquarters. you did a levy on bank cuts to address this issue. do you think they will stay in london? mr. osborne: it's a decision for hsbc and their board. i think the u.k. is a great place to do business. increasinglyn is the center of global finance, with things like the renminbi being traded in london, the commitment to issue a rupee bond in london.

francine: how much are you concerned about declining pound? mr. osborne: we don't target the currency. it's a free-floating currency. when british politicians try to target the currency, it ends in tears. francine: quick question on interest rates. you've told the bbc that when interest rates go up in the u.k., it is a sign of a strong economy. we're not expecting interest rates to go up for quite some time. what does it tell us? mr. osborne: you need to get mark carney on the show. making,t i was fundamentally, after a period of very low interest rates driven by the need to stimulate the economy during the crash, an increase in the rates is not to say a bad thing. it is a sign of a stronger economy. even if that creates some turbulence out there, like cheaper oil, transition in

china, they are fundamentally forces for good. francine: we just heard a great interview. editor in chief was talking to argentina. >> one of the things he was saying was that huge reliance on the west for growth -- when you look at the eurozone, do you worry about what is going to come in terms of the growth which he needs but you also need? mr. osborne: the new argentinian government i think is a good thing. the last argentinian government was pretty terrible for argentina and the world. david cameron met with the president. has never been an easy relationship, but we are hopeful they carry on the quite impressive reform path. same applies to europe. we need to see that reform path

implemented. lots of talk of completing single markets. fine, but talk doesn't deliver. >> do you think a potentially weaker chancellor merkel makes that harder? mr. osborne: chancellor merkel has been one of the strong forces in european politics. if you look at the advocacy she's provided to the deal,tlantic free-trade while it is not universally popular, actually, she's been a real boost. francine: george osborne, thank you so much. the u.k. chancellor of the exchequer. he's a busy man. we can't keep them for too long. coming up, we have some great, great, great guests. we are not only speaking to governor kuroda of japan, but also to a business secretary. we will talk more about brexit.

we will also be speaking to the european commission for energy. it is extremely important. ♪ guy: lovely shot down the valley looking at davos. let's talk about something that's warming up. let's talk about the markets. we have seen a significant rally in a number of asset classes. it really took off yesterday as a result of the comments from mario draghi in frankfurt before he hot footed over to davos.

euro-dollar.llying fascinating to see the fact that we have seen the euro down, but not by that much. draghi says he will do whatever it takes. we are potentially going to see a march meeting on changing monetary policy. let's show you the story related to the asset classes that have been gyrating of late. that is the stock markets here in europe. tokyo up over 5%. europe over to present. some of the mining stocks doing well. the cac 40 is up over 3%. we've seen some decent data out of the french economy this morning. let's get you all the other news you need to know. here's nejra cehic. nejra: phillips has canceled a $2.8 billion sale of its lighting components unit to a consortium led by geo scale of china. the deal was terminated because

of opposition from a u.s. regulator. phillips is trying to split off to focus on consumer health care. s.a.p. has predicted sales for next year that topped its previous forecast as it moves customers to a new version of its software. the company expects sales to increase as much as 23.5 billion euros in 2017. electrolux has set its cfo is to step down. he will stay at the swedish company for up to six months. the announcement comes just 11 days after the ceo left electrolux after he failed to land a $3.3 billion beale -- deal to buy general electric. guy: we are speaking to haruhiko

kuroda later today. he will be telling us about his aspirations. we will see you in a moment. ♪

francine: welcome back to "the pulse." we are live from davos. oil is he racing losses, extending a three pound to over $30 a barrel. u.s. crude stockpiles are still

rising. bp's ceo said the industry was seeing very sharp shocks. let's talk about what's happening and what's happened over the last 12 months as well as efforts to secure energy supplies to europe. joining us is the vice president of the european commission in charge of energy, and also our chief energy correspondent, happier glass, joins us. give us a sense of how difficult it is. bp saying there are shocks either to the downside or the downside. should we stop trying to predict where energy is going? complex definitely not. last year, we were very supplies -- surprised. it was difficult to imagine it could go lower. things.ave these new

it is very difficult to predict. at the same time, i think it's an opportunity for all countries and the global community to look what we can do with the phasing out environment. i don't think we will have a better opportunity in the future. francine: will oil continue sliding? investors and ceo's want to find a floor. otherwise, this turmoil may continue. it seems the market is testing something. difficult it's very in a market economy for oil to find a floor. we have important factors. the first one is that the paris de-ement sent a signal that carbonization is an important political priority for the next decade. iran coming back to the global market. these are the signals which are causing the turmoil on the

market. >> it is easier to implement the paris agreement, easier to de-, that we oil is so cheap are to get hooked to fossil fuels? >> it is a challenge. i had a meeting with the car industry. cars are getting more popular. economically, it would be more challenging. at the same time, i'm convinced that the momentum will be maintained. [indiscernible] >> what about renewables? we see low prices, gas prices, very low. are we going to see investment in wind and solar power? >> i think we have seen some drop of investment over the past years. i think it was also due to the fact that there were difficult

economic times. i think the industry showed how resilient it is. renewables cost of clearly show that the costs are getting lower. they can compete with the traditional source of energy. i think this competition will continue on. with all the goals we set for renewablesn paris, have to play a more important role in the future. francine: is there a perfect price for oil? >> i think those who know it -- francine: should we have that analysis? read this ithen i is kind of modeling scenarios. s and the lot of if' most experienced people cannot predict what will really happen.

very often, in such a tense market condition as we have right now, you just have one factor which can really affect the prices. francine: one of the arguments we've heard is that, with these low oil prices, gas security is less of a concern. exporting countries want to export to europe. ofwe would like to kind demonstrate here that europe is open for business. we're going to present a new energy strategy in early february. energy really became a global commodity. europe has a lot of capacities. we use them for a little bit more than 20%. for us, i think it's a good opent to show that we are

for these new supplies. >> with low prices, one of the problems is that governments struggle to sustain spending in north africa, the middle east. europe relies on oil coming from those regions. are you concerned about sociocultural instability in the middle east and africa? >> it is a concern. i believe that now, the market strong, evenay so oversupplied, and stocks of oil are so high, that i don't want to face the problem of not having enough supply in europe. it is just one lesson to be learned, not to rely too much on one sector of your economy. it is dangerous from the long-term perspective. we always trying to be very helpful.

to help these countries, to diversify the portfolios. francine: russia has taken a beating. ruble was at a new record low. does it change our relationship with russia? -get russia is, was, and will be very important. it is not only oil and gas. it is nuclear. we need to work on this issue very closely. what we are telling our russian partners is, we prefer to work in an atmosphere of coloration -- of cooperation. , becausee ukrainians we always managed to find a solution. --would like to be [indiscernible] we are paying more than one billion euros a day for energy.

we pay on time. i think we pay a lot and we deserve fair service and good prices. >> one of your goals is to create a proper european union for energy. with low prices, is that easier or more difficult? >> i think that political momentum is there. even though we have the lower energy prices, this happened already several times in the past. after that, usually comes volatility. i think there is no place for complacency. we have to be better prepared. we invest in new measures for improving our gas supply security. measures for oil supply. we want to introduce something new. this would be contingency plans for any eventuality on the regional basis. we would like that regions in

europe would cooperate better than before. >> you mentioned volatility. what is your concern, the industry hitting europe, overseas in russia, the middle east, not investing enough, and we have a big increase in prices? >> this is what i heard a lot over the last two days. a lot of investment decisions being postponed. i heard the figure like 1.5 trillion put on hold. currently, we are in a situation of oversupply. as i said, we have seen already in the past such a period of low prices usually followed by bigger volatility. we see how this would be -- [indiscernible] it's difficult to predict what could be the scale. francine: going to the possibility of a shock because

of underinvestment, is it a 30% chance or higher? because we are cutting investment so much, we get oil at 100? i wouldn't dare to predict. when i was listening to the oil producers and gas producers, they've been quite confident despite this brake pressure. there is new technology coming in shale gas exploration. producersr-cost oil still believe they can be competitive. we still see a lot of competition. francine: thank you so much for joining us. vice president of the european commission in charge of energy union. i know we have to look at the markets. today, a little better than yesterday. update us on where oil is. guy: one-story bouncing back. one of the factors behind that, mario draghi.

francine maybe a little chilly in davos, but the warm weather has been contributing to poor retail sales data over the last few minutes. a significant miss. the summer retail sales falling 1% in the u.k. ae median estimate was for decline. unsurprising given how warm it is. only a few people need to buy warm coats. let me show you what else is happening in terms of what asset classes are moving. francine mentioned oil. let me show you what is happening with the euro-sterling rate. the euro continuing to decline. the stoxx 600 up by 2.5%. ty stocks leading the charge. nearly 6% on a 24-hour basis.

let's get the first word news now with nejra cehic. nejra: european stocks are higher this morning after shares in asia rallied. oil has surged with emerging-market currencies on speculation that central banks are set to expand stimulus measures. goldman sachs has done a u-turn on its euro forecast. analyst robin brooks sees a drop to $.95, less than two months after he changed his call to a dollar, saying he had badly misread the ecb december meeting. the euro has fallen this week after mario draghi signaled more stimulus. anotherrger has got 10,000 jobs. the world's largest oil field service provider reported a loss of just over $1 billion compared to profits of $302 million a year earlier. the bloomberg first word

news. back to you in davos, francine. francine: thank you so much. the news ranges from the price of oil to china to all the turmoil and what that means for the world economy and what that means for our countries in europe. i had a conversation with george soros. he said markets are underappreciated the fact that this could be a repeat of 2008. he said the rest of the world should be ready for spillover effects from china. chinese left it too changeover in the growth model. a hard landing is practically unavoidable.

francine: so you are looking at a financial isis -- financial crisis that would start in china when authorities couldn't deal with it? issue: basically, the key is deflation. condition-- it is a 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 yet engaged in the markets. we just don't know how to handle it. it's a different environment. now, we have to face it. francine: on china, do you expect a hard landing? george: it has happened.

i'm not expecting it. i'm just observing it. can manage it. it's got resources. latitude inater choosing policies than most other countries because it has over 3 trillion of reserves and so on. however, they have a way of inflicting their problem, passing it on, to the rest of the world. they can handle it, even if they right.et the position they can certainly continue for 2, 3 years on the wrong course. francine: george soros being

extremely critical of china's policies. china's vice president has told bloomberg there are no plans to devalue the yuan. he promised to look after stock investors has his country works to live in volatility. he then worked to reassure those in

lot of business based in the u.k. telling you the same thing? >> pretty much all businesses tell me they want to see reform in the european union. for the benefit of about making it more competitive, the single market -- having this red tape. that will benefit everyone, and that is what they are focused on and that is why i think there is support for what the uk's doing. francine: is the u.k. risk to big question mark too much of a gamble? excessive british and thatt in the past is important. the politicians, they keep their the british people understand this is a reform process.

this is a very sensible way to get everyone together, to think about things that are important to all of us, and to try and get those done. when this deal happens, it will benefit everyone in europe. francine: do you see a possibility of you having to campaign to leave the eu? >> what i see is what the prime minister is saying. his goal is clear. he wants britain to stay in a reformed european union. he's working hard to get that deal. he's hoping we can make more progress. if he gets the right deal, he can take that. in davos,made clear he said in his speech, if he doesn't get that deal, he's not desperate. francine: a lot of business people are reluctant to talk about this issue at the moment. u.k. voters may see it as an

effront. >> this debate will have an impact. lots of people will have a view on this. there will be a deal at some point. i can't tell you exactly when that will be. there will be one and that will be put to the british people. everyone will take part in that debate. francine: has any bank or large business said they are either thinking of cutting down investment or thinking of moving headquarters if the u.k. were to leave the eu? >> not to me. that's not the conversation i have. when they see me about issues including europe, what they talk about all the reforms they want to see. ,hey all agree on one thing which is, we can make europe a lot more competitive. they talk about the single market. why does it take so long in europe to get trade deals with

the rest of the world? we still don't have trade deals with the three largest economies in the world. you would think that would have happened by now. francine: they must also say, i'm really scared of a plan b. what happens, i need to have a plan b, which may be looking at the u.k. leaving the eu and having to start from scratch. i'm sure there are businesses looking at all the different scenarios. i think what they are most focused on his understanding first of all why britain is doing this. it wants to see sensible reforms. ishink where their support is actually saying yes, you are right. let's get these changes. everyone wants to see more competition. it will lead to jobs and growth. that is something parts of europe are very short of, jobs and growth.

luckily, in britain, we've been going through what some people are calling a jobs boom. we've got more people employed than ever before. this is all great news. we want all of europe and benefit. francine: that is encouraging news. governor carney is not ready to hike interest rates. does that not point to weakening growth and concernwe've got mord than ever before. amongst the business community? >> decisions on interest rates are a decision for the bank of england. there are a multitude of factors. not just what is going on with the u.k. or europe. it is more the global situation. people have talked about china, concerns about the eurozone, and that all feeds into that. in britain, we are still growing. last year, we were the fastest growing economy in the g7. that is great. but i want that growth to

continue. i want growth taking place throughout europe. there are large economies with youth unemployment rates north of 40%. how can you sustain that? we need a more competitive europe. francine: when the voters in the u.k. vote on the referendum, they need a clearer picture of what happens if the u.k. does leave the eu. do you think we will be seeing prime minister cameron, yourself, and other cabinet members going to brussels more, to get assurance that we will get some kind of trade agreement? >> the prime minister has been clear on this. reform, and getting if he gets his reform, to campaign for britain to stay in a reformed european union. i think he's set out very clearly his message and goals. francine: thank you so much for joining us. we have plenty of interviews coming up. kuroda be talking to mr.

, the japanese central bank governor. this is day three of the world economic forum. we will be talking on the nymex and strength or no strength in yen. ♪

francine: welcome back to "the

pulse" live from davos. it has been a very busy morning. of course, coming up, it's even more busy. it's "surveillance." we talked to a lot of business leaders. we spoke to the french finance minister. we had george osborne. we are going to put all of these questions to our guests. tom: there's a synthesis of the market rebound we saw yesterday wrapped into central bank. . we knew there would be an impact when draghi spoke. what a market moving impact. dash throughhim our congress center. draghi,e lagarde, mario and who knew and economist would have an entourage like that? francine: when you look at market volatility, what does it tell us about fragility? it wasn't anything that

significant. guy: i'm calling it a -- tom: i'm calling it a dead devils pounds. we had bets made on a gloomier assessment. there's one thing i would talk about. that is the german two-year yield off of draghi moved ever lower. not record lows, but it is really a statement on this belief of lower for longer. francine: we still trying to figure out china. chief had a in great interview with the chinese vice president. a lot of chatter here as to whether we believe they don't have an active policy devaluing yuan. tom: one of the most important things i've heard was how lonely the chinese are with that almost fixed exchange rate. going to be a great "surveillance." we are back in another minute. about threells for

hours. he arrives, it's gorgeous. you can follow both of us on twitter. day three of the world economic forum. ♪

francine: there is retreat. global stocks rally as the potential for more ecb stimulus sparks optimism. billionaire investors say it will be a hard landing in practically unavoidable. goldman sachs and templeton disagree. bringingfrom davos, you an all-star lineup from the world economic forum. this hour, we speak to the bank haruhikogovernor, kuroda.