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. tom keene, we have had a great

week. tom: it has been a great week. francine: not on the market. tom: the big talking point here is how to get home with the storm coming on the east coast. day-to-day, it shifts, and that is the outside story. francine: and every year, we have a big piece of news. last year it was all about the swiss national bank did. this year, they look at the market. you see people checking almost on an hourly basis. tom: the age of technology -- what are markets going to do? i'm calling it as a dead balance we saw. francine: i love that. we will get back to that in a second. but first, let's get the first word news with bonnie. vonnie: thank you and good morning. stocks are rising today on speculation that the central bank will do more to stimulate the economy. asian markets closed higher and europe is up for the second straight day, futures up after

the s&p 500 rose yesterday. still, the index is down almost 9% for the year. in somalia, suspected islamic militants attacked a restaurant and hotel, killing at least 25 people. the attack in mogadishu began with a car bomb and ended about seven hours later. soldiers say they killed the attackers and captured the mastermind of the rate. -- the raid. authorities suspect all shabbat is responsible. died when1 refugees the ship sank in the agency. the coast guard is trying to rescue survivors. officials say they left turkey, seeking asylum in europe. with less than two weeks to go before the iowa presidential caucuses, donald trump is lightening his lead in the republican race. a new cnn/orc poll shows him with an 11 point lead. the conservative magazine "the

national review" is coming out with a list of what you should not be the nominee. the city of washington had problem with a couple inches of snow earlier this week, but an historic blizzard is expected to hit today and will probably be a nightmare. forecasters say washington to get more than two feet of snow by tomorrow. canceledhas already hundreds of flights. day.an get news 24 hours a i'm vonnie quinn. bring back some snow intelligence, tom inferencing. tom: thank you. let's look at equities, bonds, currencies, commodities. not the shock and all of yesterday. yesterdayf. awe o a little bit of a rebound off the draghi shock. not even close to a technical .reakout

right now the download, under 16,000, german two-year at -0.5%. we get some dollar strength but nowhere near 100. was that quick enough? francine: it was great -- let's look at what stocks are doing. davos keene has coined the good bounce. 2.6%, there isd a little bit of risk-taking, that this is on the back of what mario draghi said. there are sessions on whether this is sustainable and what the markets were expecting. tom: you hear that discussion with george soros, he is dreading coldwater. francine: he told me so. we had an hour-long conversation and he said if there is any optimistic room, that will change when i get in. he says, sure, central banks are there but they don't have the ammunition to deal with what's coming. our guest degrees -- neil

ferguson, harvard university professor. great to have you on. >> good to be here. francine: if you look at the turmoil on the markets, there is a little bit of anxiousness that there. what are people in davos saying? it seems like they are still optimistic. >> it's sometimes a good idea to ignore what people in davos are saying and take a step back, rather than worry about one-day moves let's ask where we are. this is phase three of the crisis. phase one was the usa . phase two is the european. this is the chinese. we need to understand why there is so much nervousness in the global economy. i don't think we are necessarily looking at the right indices -- tom: what would you look at? >> i think we should look out worlat world trade. it's interesting to try and look at that. exodus of capital

in china is making it difficult for chinese authorities to achieve what they want to achieve, which is a very gradual depreciation of their currency. i don't think that will be possible. that is a key point -- professor, what you are so good at is taking a broader reach of history and calling it into our present tense. give us the scale of the unsettled nature right now. is it a big event like 2008? is it a big event like 1998? is it a big event, post napoleonic? where are we? >> i don't think we can go back to napoleon, but we can certainly see in terms of the commodity moves of the 1980's to 1990's decline. it had a massive impact, not least of which on the soviet union. that is one important parallel to think about. if oil made a permanent decline to the $20 to $30 range, which i think it quite possibly has,

that is disastrous news for all the petrol states, including russia. that's the first analogy i would draw. the collapse of trade really makes me nervous. that is on the scale comparable with 2008. francine: but what does that mean? is china growing lower than what we're seeing, or are there points of weaknesses that we so we convince ourselves that the oil story is another supply story when it is a demand want? >> it is not what china is importing less oil. -- it is not that china is importing less oil. i think one of the puzzles here is that we can't just say china is slowing, there for all commodities have gone down. it's more complicated. something else is at work here and i don't think it's supply, i think it is expectation. expectations of future demand are affecting oil, and the knock on effect on oil producers is the key. they are in disarray, and they

are having to do two things. they have to curb their imports, sell a lot of assets. that is one of the things moving the u.s. equities. tom: can we talk to him for an hour? i have got to ask about the quadratic major move in the russian ruble. do you see a risk the reserves that we see in russia, in china? the russian ruble is -- >> and that is why it is worth thinking back to the 1980's, when oil touched these prices, because that was a disaster for the soviet system. i think the key here is that, remember, paying out in rubles and earning and dollars, the strategic depreciation is a smart one that makes perfect sense, but there are limits. tom: where is that limit? >> it is hard to say about the politics. putin, it seems to me, is hard to dislodge.

he is too scary, even if you really hate what he is doing. the most powerful oligarch in russia would not go near even thinking of challenging authority. that makes russia steadily weaker. can talkot -- they about how tough they were in ii, but it has been a long time. ultimately the economic pressures must take their toll on the popularity on the president. francine: you are saying this is a third phase of the world crisis. are we going to see recession globally? >> i wouldn't go that far -- francine: you -- >> i don't think it will go negative globally. u.s. consumers are holding up well. ultimately, they are cheerful with the cheap energy. but i do think, once again, they are revising their growth estimates down. here's the key point.

this time of year we realize that central bankers cannot conjure up inflation that will. we have been taught by generations that you pull a lever and inflation expectations respond. it hasn't happened in japan, it isn't happening in the u.s., i don't dig it will happen in europe. tom: i think this is beautiful. i need to squeeze in the triumph on youf your book on henry kissinger, when he wasn't famous. when he was in academic and struggling. what with henry kissinger do in a new westphalian world? what would you do with the scale attention we see in europe over migrants and refugees? >> i can channel -- [laughter] [laughter] >> i think the key thing about what henry has taught me is that if you think about the geopolitical problems, a post

westphalian world is not a world of nationstates. the big worry of geopolitics remains the middle east, north africa, in south asia, where sectarian conflicts are destabilizing more states. we have lost nearly three if you include iraq, syria, and libya. and could be destabilized, the economics of cheap oil have hardly helped. tom: we are going to come back. with that ski outfit, you have to take francine skiing. thank you to professor ferguson. look for his wonderful effort on henry kissinger. coming up, an important interview on bloomberg radio. kuroda, the governor of the bank of japan, an important moment for him. stay with us, this is "surveillance." ♪

tom: good morning, everyone, from the world economic forum in davos, the second lovely day here. we are here for a final day of conversation. we hope to bring you some smart conversation on television and radio. very quickly, the data check -- a continuation of the bounce. francine and i are calling it the dead davos bounce, churning off the draghi bombshell. 10 year yield up, up to a 2.06. oil with the rebound.

i was asked eight times yesterday, what do i think oil will do? and $100?between $20 [laughter] tom: it will fluctuate. we have a wonderful guest, a wonderful tradition, to speak with laura tyson. no one in america dovetails policymaking and thinking about the workplace like the professor. she combines it with a real-world experience, starting long ago and far away at smith college. your last year at smith college, what did they say? get into the citigroup leadership program? put you in a cubicle? >> a wonderful thing about starting with smith is how important it is in terms of finishing college and choosing a major, which is a major of concentration that will lead to employment. actually, there were a lot of women at an all women's college in the early 1960's studying economics.

tom: they had the courage -- >> very wise. tom: are you talking about my kid? [laughter] >> and my son refused to study economics. tom: i got an e-mail once from one of the daughters -- microeconomics, this is hard! [laughter] >> hard, but forever interesting. hereine: a lot of the ceos didn't do economics. they did maths, they are the guys who are changing the way that we live and protecting the businesses we use. >> i think oftentimes the people who are engineering, math, statisticians, data, analytics -- when they think about their business model, they are talking to to economists and people in the law, in business management to think about how did all this brilliant technology come together, and to a business model like this? tom: what rings true here about

the light, happy talk of technology? you are famous for cutting off conversation and saying -- that is hot air, this is the first condition. what is the first condition of our new technology? >> i do try to be a hardheaded economist, but also a softhearted economist. i do cut off things when i feel that they are not reflecting what is really in the numbers. isthe truth about technology -- i will focus on the u.s. -- for quite some time now, for the last 30 years or so, technology has been a great boon to productivity. it has reflected tremendous innovation, but it has also displaced lots of workers. it is laborsaving, it is scale biased, so it helps those at the top. it is a major contributor to income equality. it is also the case that the productivity gains from technology has not been broadly shared, in part because the

technology has been wiping out middle income jobs at the same time -- tom: and that research on the middle class was brilliant. francine: 50 theme this year is the fourth industrial revolution, and that is not going anywhere. >> i agree. there is great concern about the ability of the technology to create wonderful benefits in terms of flexibility of work, productivity gains, wonderful new ways to do work. it'shere is concern that taking out traditional employment, putting more people into the sharing economy or hourly wages, where there is a lot of uncertainty. where do you get the benefits from if you don't have a steady employer? these are all very serious issues. i think societies are going to have to think about how they deliver their social contract, given that the nature of work is changing. tom: within your public policy experience, whether it is president clinton or trump, and i'm sure trouble call upon you,

the basic idea of the american and british fear -- i lose my job to all this fancy stuff. what is the policy prescription for the people who aren't in joining your technology revolution? >> i think there are number of things to think about. one, and i think it is important to say, one of the things that has allowed for the growth of the sharing economy in the u.s. has been obamacare, has been the ability to access a fundamental benefit that families and individual workers need. it's the nature of your traditional employment contract. an employer.ve t you have to rethink retraining programs. if employers will do retraining, we have to focus on the worker, on the community college. part of the reason for suggesting community college needs to be free is because we have to figure out a way to take these workers going into a different workplace where their

employer will not take care of them, to skill. tom: thank you so much, always a brilliant conversation. we will continue that dialogue in the next hour, without question. the best essay on technology. we will be joined from the massachusetts institute of technology, and we will look at the fears and hopes of technology. from the world economic forum meetings in davos, stay with us. ♪

francine: francine lacqua and tom keene in davos. this is bloomberg "surveillance." tom: ♪ the hills are alive francine: this is your morning check -- a davos dead bounce? tom: the dead davos bounce. francine: there you go. this is the euro 600 after we heard more from draghi, doing more to fight the turmoil. the stoxx 600 bouncing, the dax getting some 1.7%. time for the morning must listen. we talked a lot about china, and the depression -- i asked the u.k. chancellor george osborne, given the market turmoil, and given the fact that we are in a worse place because of the concerns over brexit, how he viewed china. >> it's definitely a tougher

start to the year, and we see that in the financial markets. i would look beyond the market and say what is driving these things. china is moving to a consumption-based economy. that is a good thing. energy is cheaper. that is a good thing for most families and most businesses in most countries. not everyone, but that is a fundamentally good thing for the global economy. francine: you know, tom, we started off our davos coverage asking whether or not there were too many optimists. ceos don't want to talk about china -- focus on the turmoil, china will get better. tom: i'm getting a more adult view by policymakers and economists. what strikes me, the new effects of low interest rates and what they mean for business, and also what they mean for china. it pushes against the hard landing certitude you heard earlier. francine: right.

there was really nothing he was optimistic about. he said there was almost a repeat of the financial crisis of 2008. nuanced. truth more tom: that would be nouriel roubini. francine: it's like we planned it. he will join us -- are we facing another 2008 crisis? this is bloomberg's "surveillance," where the conversation focuses on tom's singing, macroeconomics, business, and the market. ♪

francine: welcome back. this is bloomberg "surveillance." we are keeping an eye on the market. this is your data bird -- he's about to do it interview.

this is the picture for the market. 1.4%,n see s&p futures at that's certainly what mario draghi would wish for, crisis over. but we are seeing some rebound after a 2.5 year low. this is all of our effort and hope and aspirations, and look at oil, a lot of the oil is searching. -- is surging. let's get to the first word news. vonnie: egypt is cracking down anniversaryn the ai of the arab spring uprising. the president is concerned it will be marked with protests. police have arrested a number of demonstrators. francois hollande is repairing to visit india, which has led to stress from the islamic state and other militant groups. he will arrive sunday for a

three-day visit. lice say there are students who plan to attack shopping malls and religious sites. students were reportedly in contact with handlers in syria and iraq. may reachron agreements on a reform deal in the european union by next month, according to irish prime minister enda kenny. cameron's insistence that the u.k. be allowed to restrict welfare payments for eu residents who moved there for work. an american tourist has been arrested in north korea. the state television says the student is accused of plotting against the government. reported earlier this month. the leader of the armed group that took over a federal wildlife refuge in oregon is now talking to the fbi. he spoke by phone to an fbi negotiator, and says the group will leave the refuge until it is turned over to local control. global news, 24 hours a day.

that's ourquinn, and 151st world economic forum. tom: thank you so much. it was a generation ago, it seems, i sat at the belvedere evening anduiet spoke one-on-one with a professor from new york university. he went on to global acclaim with an intelligent analysis of crisis and our recovery from the great recession. nouriel roubini, global economics. my, have the years gone by from that evening you and i spent at the belvedere. on thee way out front negative impact of lower for longer low interest rates. mario draghi just reaffirmed one of your fears -- lower for longer interest rates. what will be the ramifications of that central-bank strategy? >> well, since there is significant market turmoil, we

are concerned about china, the u.s. growth, oil prices falling because of the weakness in global growth. --., china, emerging markets a whole bunch of things that make one nervous. unfortunately, bad news becomes good news for the markets only when there is policy reaction, youit's not structure, and saw what happened when mario draghi said we are likely to do more in march. markets are now expecting the pboc to take action, the fed to signal they will not hike in march. situationat when the in which economic data is shaky -- tom: you don't agree with george the world or for china? >> no, i don't think we are back to 2008. one is that it's not the same as it was at that time, the financial imbalances are

smaller. secondly, you can't have a global recession with a hard landing of china. china is not going to softline. it will be bumpy. 6% this year, to 5% -- francine: in these conditions, you really think the fed can hike? they are not hiking at all? >> they might hike later this year, but the fed probably made a mistake in december. growth had disappointed, inflation was lower because of falling oil energy prices. certainly, they cannot do all four hikes. maybe by june. maybe they think the risk will go away, boj, ecb, they will do something -- but something from the fed means we don't hike in march. francine: what is the probability of a rate cut? >> has of now, -- as of now, low.

manufacturing is weak, services is good, gdp is weak, job inflation is good. the dollar and the weak commodity prices, consumption is doing well. they aren't that terrible, and i think all in all we still might gradually stabilize, then the fed can start hiking. tom: a core idea for the developed and successful companies -- we heard this earlier -- you're a world expert at this. can we look at our economy and our confidence in our economy and ignore world trade? trade into domestic calculus? >> the u.s. right now, world trade is hurting the united states. in spitere weakening, of the fact that we have increased production of energy at home. the domestic economy is doing well. the u.s. has new energy

technology, new biotechnology, new manufacturing technology. medium long-term, technology might benefit the united states. be problem is not going to -- it will be the distribution of benefits. tom: that is the smartest thing i have heard. this is the issue -- the distribution of societal benefits. it's the underpinning seen. -- underpinning theme. >> there will be a revolution, capital-intensive, liberal savings. income,ave lower middle it will be displaced. it will be the social threat. francine: and i would argue that part of this -- it may be linked to that. are you expecting further corrections for stocks? >> i think it will depend very

much on economic data. it will take another couple months, and the policy reaction -- i think the signal from the ecb is a positive one. i think the fed will have to recognize that they can't go on in march. the pboc will have to act, and probably the boj. maybe you stop this correction from becoming a full bear market. francine: we are not in the financial crisis in europe, so how is qe working? is it working? >> it is working. a combination of qe, lower euro, lower bond yields, higher stock prices, and oil at $30, the eurozone is surprisingly upside. it's also surprising on the downside. of course there are structural crisis,, but migration i would say fatigue --

lots of things can go wrong -- tom: there is no fatigue here, among the elites, among the ceos. is this low interest rate environment their drug to keep the party going in the new, gilded age? >> certainly, inflation has continued because several banks have suppressed volatility, which led to inflation. asset prices are too high right now, private equities are expensive, traders expensive. -- trade is expensive. there has already been a correction. tom: nouriel roubini, he will continue with us. also later today, bloomberg radio and bloombergtv, a conversation with the bank of japan governor haruhiko kuroda. looking forward to that. 8:30 in new york. from davos, this is bloomberg "surveillance." ♪

francine: 83 here at the world economic forum. we are in davos, cold in the morning and gorgeous. we have been having fun. tom: you are the one up early with london. real job, no job. francine: let's get straight to new york. vonnie: as you have been saying, a recovery today after a traumatic weekend. let's take a look at some of the movers, for example the nikkei 225 after an up and down week. finishing the friday session up almost 6%.

the shanghai composite is up 1.25%. in europe, the euro stock 600 up 2.5%. week, a bear market last and it is still down 7.6% for the year. all points to the u.s. index futures, higher, s&p 500 up 26, or 1.5%. may have something to do with this, 1.5% percent to read crude. -- to brent crude. look at that 10 year yield. pointsa move of 10 basis in just a day or two. the german two-year yield is still negative, -44 basis points. moving onto currency -- after mario draghi spoke yesterday, you can see that euro-yen is at 128.03, but dollar-yen is a little bit more with 1.1812. british pound, look at that

canadian dollar. 141.78. that is what you will get for a u.s. dollar. back to you guys in davos. tom: wonderful. nice to see it doing better with the recovery. taking in aini, wide number of topics. i think we can say oil is the shock and awe of the last two years. no one saw this coming, with $40 per barrel oil. how would a guy like you know oil has hit bottom? how do you quantify that? what is the process to say, ok, that is it? >> well, the market economics between excess supply and demanding soft because of the weather and slow growth in china would suggest that oil prices can go lower. but if they are going to go lower, toward $20, i don't think they will stay there for a couple reasons.

there will be another round of market reduction in spending. cannotportantly, it produce profitably and they will cut back on production. but the yearwer, and has to be about $40 because the fundamentals do not justify it. tom: let me bring in this chart. this is a chart i was thinking of -- we have shown it a lot here, in the days of davos. this is dollar-ruble, directly linked into oil. you just really wonder, francine, mr. putin, nouriel roubini onlin line two. what is your advice to the unique politics that is russia? >> russia is doing well on the macro side. they realize the oil shock was permanent. they had an adjusted currency, and that could pay for oil

prices being lower. they have been financed by large current account deficits and fiscal deficits. yes, this fall in oil prices is hurting, and it will go lower, but eventually it will go higher. i would say from a market point of view, russia is ok. it is running a large surplus. a potential growth of 1% because there is no structural reform, it is dominated and give becoming even more nationa. francine: is there an ideal price for oil? russia can withhold this, but this is not great for saudi arabia. we have been talking about this day in, day out. lower oil prices been beneficial for the western economies. what is the ideal price? >> some of them are ideal, but certainly prices that currently

level are not sustainable. or $90are well above $80 are not going to be justified by the fact that you have shell, and the fundamentals could change radically. i would say over the medium-term, the fundamentals justify them around for two dollars or $60. for $50 or $60. oil will not be $100 any longer. tom: promise me we will adjust to that. thank you so much. coming up on bloomberg , an important voice in this valley. lawrence think is the chief executive of blackrock. ryrry think on the -- lary fink on the economic experience. stay with us. ♪

tom: on the half of 17,000 employees at bloomberg and our large, wonderful team here helping us with these beautiful

shots of davos and all the reporting and conversation on economics and finance and investments, we welcome all of you to the world economic forum. right now to new york city with our business flash. vonnie: absolutely beautiful, tom. the german business software maker sap has raised its forecast for next year. it's set to generate more revenue from cloud products. british retailers were rocked by december's mild weather. they fell last month by the most in more than a year. the warmer than usual weather hammered clothing sales. they fell more than 6%. and a big pay raise for jpmorgan ceo, boosted by more than a third to $27 million. most of it is tied to futures performance. that is our bloomberg business

flash. francine: thank you so much, vonnie. as we wrap our final day up, we want to look at the major news we have given you this week. i had a great conversation with george soros, and this was his take on what the fed can do this year. ifi would be very surprised we have another rate. effectively, they were aiming at getting up to 3%. that would have been back to normal. it would have given them more when you haveease downward pressure, but they can't get their. -- get there. cohen saying it is very unlikely that they will do the four rate hikes.

tom: there is a quieter voice here aggressively pushing back against george soros, and i would say adam pozen is one person against that. this is a fed that has to worry about the domestic american experiment. francine: it all depends on when you look at the international scene, exactly what china means for the world economy. they could potentially break everything. here is george soros on china. >> it has happened. it, i'm justting observing it. china can manage it. it's got resources, it has greater gratitude in choosing policies than most other countries. it has over ¥3 trillion in reserves. francine: george soros saying

that the hard lining has happened, but it is going to be messy. jon will be leading our coverage rareavos and had a opportunity to speak to the vice chancellor of china. >> that's right. he came here with a message that there has been a lot of talk about china, but ultimately the people and policymakers in beijing know what they are doing. the economy is ultimately sound. but with that came all sorts of twin sides of their policymaking, this idea -- we want to help stock investors. we don't want chinese investors to lose too much money. tom: what you and your team do, which i don't do, you are in the room, in the hallway. is there a trust about what a nation's policy leaders say, and specifically, is very trust about the message from the chinese leadership? >> that has been one of the main messages, to come out of davos this week and the u.s. treasury

chinese need to learn how to communicate with financial markets. artom: are you going to be pr out of beijing? [laughter] >> well, you never know. [laughter] >> it's difficult and they just aren't used to it. the more china opens up its markets, the bigger they have to overcome. francine: it's amazing that there are two people participants are worried about -- a want to understand where they will end up 12 months in a. angela merkel and donald trump. >> they are both missing from the seats. neither of them are here, but delegates are obsessing. there is a lot of concern about merkel's political future, and at the same time there is a lot of deep angst -- tom: i want to bring in my quote. bring this up, if you would --

it was my morning must-read, and it really speaks to the idea of the quiet story, which you have been wonderful on this -- lord draghi comes in with his we've got and -- exceptionally smart note -- mario goes to hollywood, off to davos, relax to the world economic forum. another manic week, the negative sentiment is deeply entrenched, and today's pre-weekend position cutting, and brexit remains a big risk. you nailed this. francine: i want to go to john with a question and also relax -- >> it's a -- the ecb, since the

beginning, has been doing what it has always been, saying we are there. we will support, not only the financial markets, but also to a certain extent the politicians. that message -- tom: we'll here that today. john fraher will give you must-read and much watch coverage. coming up, a most special guest will join us, explaining that the deficit is a disaster in the united aids, forget about it -- in the united states, forget about it. andhe will join us at the top of 6:00. another hour of "surveillance." ♪

draghi is in davos.

remain calm. newonsider in this hour the world order. freezing", we need to consider -- when freezing in consider need to global warming. i am tom keene, with francine lacqua. secretary kerry darkens the door of davos. francine: we are watching the headlines. we had jon ferro reading our coverage here. to hear morewant about the political future. donald trump, angela merkel. this plays into that. tom: it is amazing his enthusiasm when speaking to an international audience versus the contentious nature secretary has in the united states, and both democratic and republican politics as well. francine: he is saying a new

door has been opened. tom: right now we need to go back to new york city. she is getting ready for the storm on our first word news. here is vonnie quinn. on the riseks are worldwide today. investors are betting central banks will do more to stimulate economic activity. the king the antics -- the key japans in hong kong and all with her biggest gains in months. u.s. futures are up after the s&p rose yesterday. the index almost 9% lower for the year. died when1 refugees two ships sank overnight in the aegean sea. the coast guard is trying to rescue survivors near the island where the smuggler ships went down. the victims left turkey seeking asylum in europe. -- an americants tourist is under arrest in north korea. he is accused of plotting against the government.

a former oklahoma police officer convicted of sexual assault will spend the rest of his life behind bars. was sentenced yesterday to 260 straight years and prison. he was found guilty of play -- of praying on women in oklahoma city. 13 women testified against him. forecasters say the blizzard today could be one of the 10 worst ever to hit the eastern seaboard. there could be more than two feet of it in washington by the end of the day. 50 million people are in the storm passed -- are in the storm's path. i am vonnie quinn. back to tom is snowy davos. tom: quickly, let's get to the data check. we are calling it the debt-davos bounce. futures up again nicely. your-dollars churning, nymex crude with a lovely 31.

crisis over. on to the next screen. closing, 26.69. two-year, -0.44 shows the draghi effect. francine: you know with this points to? if not volatility, it is that the markets do not know what to latch onto. tom: brent crude, $31 a barrel as well. looking at the political economics and the geopolitics in usually in berlin, hans nichols. what do you think active hans: -- what do you think? hans: this is the confluence, hurtow price of oil will their ability to fight the islamic state. listen to what mr. a body had to say. i do not think anybody

anticipated the collapse would be so huge. there was in anticipation of some drop in prices. now we are selling for $22 a barrel. there will not be much remaining well we are at war. tom: absolutely brilliant. what for the american viewers and those in the west is the distinction between iraqi oil dynamics and iranian oil dynamics? hans: for german companies like siemens, trying to get a piece of iranian oil, they need to be otsieul about how much fo they play. jobs, a european recovery. in terms of where oil comes from, i have never been particularly particular whether i am filling up with branch or

wti. have a domestic discussion coming up with hans nichols, at the white house. -- i havemendorf called him up 47 times of the budget office. interview now -- no, no, no, no. finally, the dean of the harvard kennedy school, and he will not shut up. also urges media with a wonderful public service. i want to bring up the triumph of douglas elmendorf. bring up this chart. this is the most unloved american chart that exists. this is douglas elmendorf's victory lap on the u.s. budget deficit. the recovery and the budget deficit back to 2.3%. why is there so much on love -- so much unlove?

douglas: people are worried about the high level of debt, the highest it has been in 50 years. but we should not be preoccupied with that. we have a long-term deficit and debt problem we need to deal with, but we cannot let that make us make the wrong decisions in the short term. we need to continue federal investment in the way that is endangered by these caps on appropriations. should step in alongside monetary policy, even though we have a high level of debt. francine: are we in the path of making wrong policy decisions? on? should voters focus douglas: the crucial issue about theral budget policy in u.s. is that we have a long-term budget problem. we should make changes in the long term to reduce federal spending or raise federal taxes. but we should not do stupid things in the short term. we should have had more fiscal

stimulus in 2011 and 2012. we should not have had these artificial crises about annual appropriations. tom: this is so important. this is the debate over austerity, which you have seen collared in germany, and you have seen in the united kingdom. hans: germany did not quite go to the level of austerity that the united states did. everyone thought we needed to do something in the short term, and we in the media are partly to blame. we spent a lot of time talking about simpson bowles in 2011. most economists would agree on that. one point on stimulus in germany now, all this refugee spending -- they are forced to spend maybe 6 billion, 7 billion additional he per year. that will have a stimulative effect on the economy. francine: when you look at the conundrum in europe and you see where the pressure comes from, if you look at fiscal policy, it

needs to come from something, either markets were monetary policy. tom: douglas elmendorf, where should this discussion go on austerity? douglas: austerity has been damaging to the world economy in the past several years. u.s. austerity has been damaging and german austerity has been damaging. the weak demand for services to pump up demand. you are so important as a voice because you served with martin feldstein during the reagan administration. you worked at that you will shop the brookings institution. you have an interesting policy mix within your washington. what is the prescription for the republicans on fiscal policy acca douglas: the republicans should be willing to raise taxes -- the republicans on fiscal policy? douglas: the republicans should be willing to raise taxes and

cut spending. when you get below the headline of people wanting smaller government, they actually want social security benefits and medicare benefits. they want support from lower income people, federal highways, research and development to be supported. people want many specific things the special -- the specific things these federal government spends the money on, even though they do not want larger government in principle. it is harder to cut spending. i think the republicans will discover that, but that means we will need to raise taxes along with cutting spending. tom: you did a definitive so that he -- you did a definitive study at cbo on inequality in the united states. what was the information from your researchers? douglas: the output in gdp and overall outcome in the past several decades has grown so disproportionately for people at the top of income distribution.

we should make sure that as we try to bring the debt under control in the long-term, we do not do that on the backs of the lower and middle income people who have experienced the slowest gains in income. at thehen we look productivity puzzle, and francine and i were about this earlier in the week -- is technology going to be the root of it? are we going to see differences in developed countries? will there be different development in the states versus germany or france? how can we sue so much technological change and not see so much growth in productivity? many people leave that many people believe that there was some miss measurement and there were some gains in technological change and we have not seen productivity. underlying but productivity is flowing, and that will make our choices harder in the future, but also it is true that the rise of new technology will probably accrue

to most higher income people, and that means we will have to be especially cognizant of the effects. hans: and that lack of productivity growth has implications. you will not see that upward pressure. douglas: inflation has remained surprisingly low for many economists, and that is an important reason why the the federal reserve should not rush to raise interest rates. francine: later today on bloomberg radio and tv, we speak bank of governor of the japan, haruhiko kuroda. this is "bloomberg surveillance ," live from the world economic forum. ♪

francine: this is bloomberg surveillance. tom keene inua and the hills of davos, covering the world economic forum. stocks rising, extending through the rebound from a 2.5-year low. if you look at european stocks, futures up higher. look at crude. we are getting some 3%. it is the best week in at least six or let's get straight to the bloomberg business flash with vonnie quinn. annie: buco paid apple billion dollars to keep its search for them in the iphone. -- google paid apple a billion dollars to keep its search engine in the iphone.

747 eight is very weak. its $569ny will take million charge because of the cutback. amazon is offering full refunds to anyone who bought a hoverboard. good news for you, tom. the government wants other retailers to follow amazon's lead. the government is investing -- the government is investigating 40 cases of hoverboard's exploding or catching fire. piper jaffray says apple could rise by 50% in september. he is recommending a buy on january 26. cycle will iphone fuel that rally and multiple expansion. let's look at how apple shares are doing premarket. aboutks like they are up 2%. they traded at a lower multiple

today, over the past 20 months. tom: we saw goldman sachs do the same thing a few days ago, but munster carries an awful lot of weight at piper jaffray on the product cycle of what apple will do. vonnie: exactly. time for my morning ross street -- time for my "morning must-read." from "the financial ceo's anditing about cmo's. the title of the op-ed is "the tiny shifts that sink bill -- that signal huge changes." actually, that is an old op-ed. i will read it from the newspaper itself. intensity, and paying attention to how authorities are managing them or not in china and elsewhere. she is talking about the movement to capital, but not just large sums of capital, not just vast flows.

at thesaw gillian tett espresso bar down here. love your morning must-read, and this is something we were doing yesterday. regulator,a chinese how do you look at the markets? we know there is an exit is on the part of regulators, but i think overall maybe we are giving them too much of a break. you also need to give them time. tom: this goes back to the that's being made rhetorically in davos, and particularly someone like george soros, saying with the caution and gloom about a hard landing, there are a lot of people pushing against that, including gillian's capital flow article this morning. vonnie: and it goes back to francine's point there, and what you were asking george magnus last week in london, about the opacity of the market.

saying here that chinese companies are trying to get ahead by repaying dollar debt often by wreathlaying -- funds in theing renminbi. tom: vonnie quinn, thank you so much, in new york, on the theme of stock and flow, as the economists like to say. gary cohn is in charge of making the ship run for mr. blankfein at goldman sachs, the chief operating officer. gary cohn, in conversation. look at that on "bloomberg " this morning. a perfect day in davos. good morning. ♪

francine: welcome back. this is "bloomberg surveillance ." tom keene and francine lacqua in davos. it is gorgeous. we need to get to your data check. tom: looking at the data check right now, it is clearly risk-on, as well as futures up nicely. yields have moved higher in the u.s., and i have said through the show, really in the late evening, the draghi effect -- and he is here today -- the draghi effect of a lower german two-year yield. a -0.44.ear yield is

crisis over. all bankers can relax. francine: if you speak to the bankers here like we have, i was trying to get to a guess from credit suisse, as to why banks are under so much pressure. he said there are risks, but at least one thing that is much better than 12 months ago is europe. it is together and it is looking better. crisis. not have a life economists, we are in the best position since 2010. emerging markets have a bigger upside, and the fundamentals out there. francine: this goes back to what

nouriel roubini was saying. oil does give a little bit of a boost in terms of spending. tom: it is good to have these voices. i would say that the bankers, they are out in front of the other ceo's in terms of the better news from the major nations. francine: if you look at risk, when you look at the markets yesterday tanking, today recovering, we look at the impact of central banks, we look at china, europe, but other risks in europe, including the risks of the u.k. leaving the e.u. here is chancellor osborne. >> we want the business community to have its voice heard in this referendum debate. we do not want them to be on the sidelines because i think their perspective is going to be very useful, not just big businesses, the kind you get here at davos, but also the small businesses as well. you can see it in

france with the rise of -- tom: saying this morning grexit matters. when is the date that francine lacqua leans forward? francine: david cameron says he is going to go and renegotiate and try to get a good deal. tom: before the vote? francine: of course, because then he can we can stay per if he does not get what he wants, then it will be a tricky position. this, some argue, destabilizes. the benefit of renegotiating may be much smaller than the destabilizing it is doing. tom: you guys do things so differently than we do. wouldk a lot of americans say you guys do a better because we have the debate with 6, 8, 10 people lined up screaming at each other. you have the ability to avoid

that. maybe you guys do that in the newspapers more. francine: later today i will kuroda, thearuhiko governor of the bank of japan. that is at 8:30 a.m. in new york, 1:30 p.m. in london. we will ask him about the success or not of abenomics. how do you fight deflationary pressures when oil is at $30 a barrel? this is "bloomberg surveillance ." the conversation continues on business, microeconomics. this is our third and final day of live coverage, the world economic forum, 2016. ♪

francine: this is "bloomberg surveillance." we are in davos, and this is a picture we are seeing live from

our studio. we get to vonnie quinn with earnings. vonnie: general electric earnings are out. , $.52 per quarter share, compared to analyst estimates of $.49. we are getting headlines slowly but surely. there was a little bit of a mess. analysts were looking for $35.9 billion. we were looking at guidance for the entire year and that will tell us whether the shift, the downsizing of ge is going to be successful. of course, ge continuing to sell the bulk of its finance arm. once again, a beat on the bottom for, a miss on the top line general electric. we will bring you more as we get them. tom: vonnie quinn, thank you so much. that underscores what we heard from john rice yesterday on the new industry and the new technology app, the new general

electric. the interview we will have on davos. let's look at the technology -- applemelding computer, this underscores what a lot of people look -- what a lot of people had forgotten. there was a malays, and then it ended. this is a long chart. charts when we speak to someone from the massachusetts institute of technology. that is the only reason they show up. there is apple with the slope we know and love and a slope from another time, which is a great introduction. the world's expert on thinking about technology -- i will make it as clear as i can't. his essay from last summer, two summers ago, with michael spence, and his co-author, andrew mcafee on technology, was a must read. it is in this beautiful for an affairs document that gideon

rose put together for davos. wonderful to have you here. i do not want to know what you have learned here because everyone is listening to you. what do people want to hear from you? what are the questions you get from people mystified by your technological world? >> one of the biggest misconceptions is the idea that computers are coming for all of our jobs and soon we will all be jobless. there is no question that technology is automating a lot of tasks, even entire jobs at the time -- even entire jobs at times. but it is leading the transformation of whole industries. tom: the digital transformation. we had a slide rule before we had a calculator. we would do a slide rule thing like apollo 13. those days are over. smart guys like you have an edge on the american or global public. how do the people who cannot do

the math you do catch up and participate? >> that is another misconception. it is great to have math skills, and i encourage people to come to m.i.t. and other top universities to develop those skills. century, people skills are going to be even more valuable. being able to connect with people, communicate with people, relationships, caring, leadership -- not too many people would be motivated by a halftime speech by a robot or a leader who was robotically explaining -- tom: this is brilliant. technology automates more of the routine kinds of tasks, there is more value for the arts and creativity and interpersonal skills. the best is when people come by the two together. jobs' genius was not just that he understood technology but ascetics and art and design.

you bring those together, you create more value than when you keep them separate. francine: how do we compare for that? we are not going into detail about who is at risk, but how should i be thinking about how i form my future. -- how i form my future? erik: people need to think about their individual careers, governments have to change. organizations have to change. education needs to be transformed to be not just teaching people how to follow instructions, sit in rows, memorize facts. that is what machines are good at. we need to think about how can we develop our own relationship skills, persuade people better, interact with people better. how can we be more creative? it used to be that we thought those skills cannot be taught. but they can be taught. people can be motivated. tom: one of the heroes of this valley is tim berners-lee.

he invented this thing called the internet -- erik: the web. tom: i'm sorry. when you look at where we go from here, how do we give the internet to the world? how do we give the web to the world that cannot afford it or does not have the infrastructure? erik: mobile phones and smartphones -- have one.t erik: it is under hyped. the biggest thing is how we are connecting billions of people to the internet. it means we will all have this access to this knowledge, on wikipedia, google. more importantly, they can all contribute to it. it is becoming democratized. that is a real revolution. it is changing not just how we do science, progress, and arts, but also how businesses are run. francine: is part of our daily

lives. you cannot even imagine -- he is always on it. tom: this is the bloomberg terminal. the bloomberg terminal -- this has changed -- erik: we have a financial trading room, and you guys provide all sorts of data, doctors of finance and mba students use that data every day. francine: we use it day in and day out. we could not live without it, which is why it is difficult to see the impact it has, right? erik: it is not like it requires a phd or lots of specialized knowledge to use a smart phone. the cool thing is it is being led by young people, like 22-year-olds. he dropped out and started a multibillion-dollar company called strike another student of mine wrote an app in a few weeks, had a few million users on facebook and a couple of months. you can reach people because of this platform.

tom: the most important question for anybody with kids, how do we manage your world with young kids? they are glued to whatever thing is at the moment -- minecraft, whatever -- what is your advice for parents who are overwhelmed by kids and technology? erik: you have to strike a balance. it is important for kids to have time away from screens. i have a 15-year-old who loves programming. one of the things that makes me happy is he is excited to go away to cap over the summer, four weeks, completely unplugged. i think you need both of that because you have to connect with the real world. i'm glad we are out here. look at this. it is beautiful. you would not want to spend all your time online when you are in a world like this. francine: it is a big green screen. we are kidding. thank you so much. that was a great conversation. tom: can i do a shameless plug? is wonderful article, michael

spence. i will be speaking with michael spence this afternoon, with ian bremmer. francine: thank you so much for joining us. they do today on bloomberg radio and bloomberg tv, i will speak with haruhiko kuroda, the governor of the bank of japan. york,s a: 30 a.m. in new 1:30 p.m. in london. this is "bloomberg surveillance ." ♪

tom: from the world economic forum meetings in davos, "bloomberg surveillance." our final day in davos as we

dash to london and then head back to the eastern seaboard. vonnie: let's start with ge, the big earnings report this morning. unfortunately, it missed on the top line because the stock reversed, now down 2/3 of 1%. $.52 a share is what earnings per share came in at. that was a three cent beat. the first through -- the first three weeks of the year were especially volatile, but one economist believes there is enough grow out there -- in of growth out there. oil and gas are the two big bets ge is making at the moment. let's have a look at the equity markets right now. the nikkei, that rebounded, up

a betterg the week to place for the nikkei and japan in general. china's shanghai composite index, 1.25%, denting the losses there. 2.67%.sses, for the u.s. markets, declines are good for the positive open. let's look at commodities. brent crude above $31 a barrel now, 31.08, a rise of more than 6% today, better tone after mario draghi's speech yesterday. gold is languishing below 1200 per ounce. if you look at the u.s. 10-year yield, there is a 10-basis point move in the last couple of days. 2.06%. tom: thank you very much. this is a wonderful privilege for us in davos.

it gives pause when you are the jon hicks professor at the london school of economics. that title carries, and one of them is lord stern. more than anything, it is a stern review, the violent criticism you got from the stern review on climate change. where are you prepared for the people who went after you when you released that report? >> not immediately, because we had our head down in that report. in the autumn of this year, looking back, i have not found any mistakes. i have not found any typo, any mistake. looking back, more people have been coming in that direction, the big conclusion that the

costs of inaction are much bigger than -- meetings,the paris and it was great to be with for hisbloomberg support beyond coal and other projects. do you have an optimism or to do within global, change politics? do we have an optimism to get things done? nicholas: i do. paris opened the door. it was real clarity on what our target should be, not just the world below two degrees. it was real honesty on the gap between where we are currently going and that two degrees. that, francine? i was surprised about the to do list of little things. vonnie: -- francine: the world has changed a little bit because oil, since the cop21 agreement, has slipped further and further. that makes it less attractive.

nicholas: a little bit. we are looking out 10, 15, 20 years. those are the key years that will shape our world because we will be building messages. the way you do that involves 10, 15, 20-year horizon. if you look back on the price of oil and forward on the price of oil, you come to two conclusions. one is that it is really volatile. discern a is hard to trend looking backwards, it is hard to discern a trend looking forward. we are talking about a much longer time horizon for these investments. you have very big oscillations. you look at the other side, you have room at robles trending strongly downward -- you look at renewables trending strongly downward. francine: we were speaking to the ice president of the commission and -- of the -- we were speaking to the vice president of the commission in charge of -- how much will investment be delayed? i know it

is a 5, 10, 15 year horizon but it will have an impact. nicholas: i think it will be honest. the last couple of years you have seen around the world, electricity is more than half in the renewable area or if you look at energy efficiency, which is 40% of what we need to do -- electricity is an important part, and it is moving strongly in that direction. if you look at energy efficiency, that is something where people's understanding of technology is moving very quickly. it is a bigger part of the story than the other story. the way we design our cities, public transport, we must keep clear on that. it is fundamental. tom: shock and awe a week before the paris meetings and the immensity of the coal pollution in china. do you have faith that the chinese are on board this debate? nicholas: absolutely. i have been working with china

for the last 20 years, and i am close with chinese policy discussions. the last five years or so, the deep understanding of the costs of pollution, the deep understanding of how vulnerable china is to climate change -- climate change is mostly about water, and china has fixated understandably on the management of its water in the millennia. if you look at one more thing, at china possibility to perform well in the green race, they are confident of that. there is an underlying real phenomenon driving china's change, and that will not go away. withlet's come back nicholas stern. lord stern will stay with us. coming up, an important conversation, with laurence fink , chief executive officer of blackrock, and the 7:00 hour. stay with us worldwide. "bloomberg surveillance." ♪

tom: good morning, everyone.

from davos, switzerland, the meetings of the world economic forum. there is no other topic. i was just on the phone, trying to find if the gulfstream landed in jfk. we do not know. there is a storm coming to the east coast. funny quinn, i am going to make it home saturday? vonnie: i insist that you make it home, tom. i am too lonely here on my own. it, do they call cross-country hiking? ice-skating? we may land in nova scotia and drive down. have your work cut out for you because thousands of flights have been canceled ahead of the snowstorm. it could be one of the 10 worst ever to hit the eastern seaboard. washington got a taste yesterday and could have more than two feet of it by days end. 50 million people are in the storm's path. sohn kerry says the world face

dire consequences to her he spoke today at the world economic forum in switzerland. he said the world is on the break of conflict with iran. john kerry: i cannot tell you how many leaders when i travel through certain areas said you have to vomit. that is the way it will salt -- you have to bomb it. to solve thisy problem. we formally certified this as weakened iran's path to building a bomb -- it has been closed off. vonnie: he spoke out against aggression -- aggressive nationalism worldwide. and the republican party is banning the national review from the presidential debate because they devoted an entire issue to slamming donald trump. the caucuses are 10 days away. news 24 hours a day powered by a 2400 journalists, in 150 news

bureaus around the world. tom: it is a different forex report from the tumult of the week before. we have seen the yen weaker here. that is what mr. abe wants, and that important interview that francine will have with the governor of the bank of japan. dollar-ruble, with that 82-85 shock. sterling at 1.4282. that gives us that that gets us into a discussion in the united kingdom. you have been way out front of this debate. francine: it links it back to what mark carney can do on interest rates. when you look at the grexit debate, how should investors around the world look at it? pound, andative for mark carney can probably not do anything until a referendum happens. is there a real risk that the u.k. leaves the e.u.?

that would be insane. nicholas: i think it would be insane. i do not speak for everybody else on this. i have no party affiliation. but i think it would be very worrying. i hope that we get the referendum out of the debate soon so that the uncertainty can go away, and i would hope that the answer would be that we stay in. i think that is likely to happen the voice ofnk as business -- i come from academic life -- our research interactions, research funding are very much european. we depend enormously on the movement of people and goods and services. on trade, we negotiate together as europe, and we get much stronger as a result print on climate we negotiate together. if you look at security issues that you have been talking about, speaking as europe, you have a much stronger voice. francine: will business actually speak up? they have been quiet

so far. we have not heard from that. nicholas: people like martin -- some of them will say is there a risk to being able to trade with what we produce, whether it is goods or services? we will think twice about investing in the u.k. francine: thank you so much. tom: we greatly appreciated. francine: we have had quite a weekend it is not finished. we have had some amazing interviews that we will be bringing -- and we will be bringing you more throughout the day. tom: one of the perspectives here, it has been the most disjointed davos we have ever seen. there is a bill will limit -- there is a bewilderment over what is going to happen. francine: we talked geopolitics, monetary policy, china, european refugees, and grexit. -- and brexit.

through our interviews, we have been able to tell the story. tom: i would say as we went into monday and tuesday, particularly onzurich tuesday, the debate inequality has had a different color this time around. mr. corbyn, mr. trump, mr. sanders, and the others -- there is a new energy about the inequality debate. francine: i agree. coming up, we bring you an important conversation with the governor of the bank of japan. tom: good morning to all of you. we continue our coverage. this is "bloomberg surveillance ." ♪

david: welcome to "bloomberg ." we are here in the alps in dallas -- in davos, switzerland.

i am david westin. stephanie: i am stephanie ruhle. our guest lineup -- we will hear from bridgewater associates' greg jensen, blackrock ceo and goldmanlarry fink, and sachs coo gary cohn. all week long we have been saying so many people are saying wait it out. do not ignore the volatility, but ride it out. i am going to say maybe the markets are starting to listen. biggestly in oil is the two-day rally we have seen since august. david: unfortunately, there is not much reason to think the markets might not go back down and back up. stephanie: you have got to say what is janet yellen thinking? janet yellen is data dependent. she has to put blinders on with all of this. lots of data, lots of thoughts from a lot of world leaders from davos here it -- from davos. david: