manus: rates going up. janet yellen says the fed's coast -- close to the fed projections. draghi divergence. ecb watchers will be looking for clues about the direction of policy and the central bank's first meeting of 2017. cuts, the german lender is set to tell employees that job cuts are on the way. after slashing bonuses for senior staff.

printing: theresa may meets she will- francine: give her first interview of the day right here on bloomberg at 4:30 london time. trade and business, we speak to the u.k. chancellor of the exchequer in that interview is coming up in the next hour. plus german reaction to the ecb pick -- to the ecb. ♪ manus: welcome to "bloomberg daybreak: europe." it's our flagship morning show right here from the city of london. francine lacqua is settled in for a long and hopefully joy -- enjoyable ride at the world

economic forum in davos. another day of great guests. you're going to kick it off of the little bit more of a swiss labor to today's agenda. francine: it's certainly very cold but we will bring you some pretty good interviews to figure out what 2017 has in store. we will speak or to the -- we will speak to the chancellor of the s checker and we will speak -- of the exchequer and we will speak to theresa may. in the post-brexit, once they start negotiating, what do you do if you are a ceo? do you start planning now and do you start moving jobs from now? ubs and hsbc and we know they are getting ready. we will now see what the government thinks they can achieve in negotiations. we will speak to wolfgang

ministersnto what the thinking about all this purchasing. and of course i'm also excited about an interview with the chinese regulators. what we want to ask is about the common misconceptions on china. manus: there are many misconceptions around a number of issues. just looking at the bankers, jamie dimon is not that close to making a decision. saying it will be this time next year before they make a move. when you speak to bankers, they say they haven't really made a decision, but they are bankers. they are used to dealing with risk. it seems like they have everything in place. ubs has the euro bank in frankfurt that they set up.

it seems that the infrastructure is in place. they just want to see how negotiations are going before moving people, i imagine. again, it could go very quickly. thes: we will get into story this morning, suggesting that goldman sachs may be making preparations more aggressively than we think. have a great day, francine. we will see you throughout the hour. when it comes to aerospace, there is a deal on the table. aerospace, zodiac it's at the bottom of your screen right now. for zodiacdding aerospace at a premium of 24.6%. we will have their numbers. fourth-quarter numbers for the netherlands. toot of this comes back janet yellen's preparedness to

move up a few times per year. yellen,an upbeat janet bucking against the trend of what donald trump wants. focus on this, because tenure government bond yields had one of their biggest moves in almost a month. 2.43% is where we traded so we've come back a little bit from that. francine was mentioning china and policy. they reduce their holdings for november 11.e nymex crude is up by point fit -- by .5%. good and steady efforts by the good and steady efforts by the opec members. tremendous efforts in terms of the opec agreements. juliet is standing by.

>> the chair of the u.s. federal reserve has said the u.s. economy is close to the objective of full in and stable prices. janet yellen also said she's confident it will continue to improve and it makes sense to gradually reduce the level of monetary policy support. colleagues,of my the other members of the board in washington and the president of the federal reserve bank are expecting to increase our fiscal fund rate target two times the year until by the end of 2019, it is close to where our estimate of the longer run control rate of 3%. >> deutsche bank tell some employees at job cuts will continue even after its last bonuses for senior staff, according to a person with knowledge of the discussion.

been asked to identify the bottom 20% of performers in preparation for possible cuts. a spokesman for germany's largest lender declined to comment on specific job reduction. opec's first agreement to cut production in almost a decade, is,op officials sentiment so far, so good. the secretary-general spoke to .loomberg in davos >> we are seeing demand rising steadily and evers are being made by all the 24 participating countries in this new broad platform of producing countries making tremendous offers to meet their commitment. coleman goldman sachs may cut its london staff and have to 3000 workers while transferring others to other locations while preparing for brexit.

comes a day after hsb ece oh told bloomberg trading operations generating 20% of revenue for its investment bank in london made moved to paris. a spokesman said it has not made any decision. president george h w has been admitted to the intensive care unit of a houston hospital with pneumonia. his wife barbara was also hospitalized as a precaution after suffering fatigue and coughing. a family spokesman said the 92-year-old former president who's been in the hospital since saturday is now stable and resting comfortably after a procedure to clear his airway. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the .loomberg at top let's get to market action here in asia. a significant call -- fall coming through from to contra shares.

taktat -- takata shares. it's discussing a turnaround plan with relative parties. falling 17.3%. we saw the hong kong market under pressure today, down by .5%. you've seen the energy players coming under significant pressure because of the 2.7% drop that we saw during the wednesday session in new york, even know it has recovered in .he asian session shanghai coming under pressure in late trading, all 5.3%. all the speculation this week has been about whether or not the pboc has intervened to prop up the market, as we saw the president speaking at davos and switzerland. australia up .25%.

shares rising by 15% there today. manus: a great round up on the markets and the headlines. , francine lacqua has a guest. francine: i'm delighted to start the day with the a deco ceo. the perfect day to see about recruitment and the health of the labor market in europe. it's always great to speak to you. thank you so much for joining us. when you look at brexit, and we spoken to a lot of bankers, what does brexit mean for you? have you seen an appetite for temporary staff? what does it mean for your company? level, is-- at this quite limited.

is always somehow good for activity. inre we see the impact is the london area, and focused on the financial services for highly skilled people. will find out more when we speak to the prime minister later on, but does it mean you need to go out in the u k and actively look for people with british citizenship? will it change her model in the u.k.? difficult to figure out the details of all the measures that will be taken. some small activities will probably move back to europe. we saw the announcement of hsbc, but it is quite limited. do you think you would have gotten a better price if you had bought it a couple of

months after the referendum? >> were very pleased with the acquisition. we have the recruitments business and also the carrier transition. we are number one worldwide and in all the key markets including the u.k. and we will be very happy to transition some people from one industry to the other or from one country to the other country. you when what worries you look at job security and job recruitment and temporary staffing? it seems like countries are more inward looking. does it mean you can increase revenues? your services to fill some of those jobs with temporary staff. ? protectionism has never been a good idea. in the long, it's not a good solution.

what we're working on is the transition. it is important that we help companies and help people staff to go from one technology to the other. -- embraceo increase new jobs. francine: is there any more m&a on the horizon? >> i don't think so. when you look at the current environment, it's more on the organic path. that is the feeling i got this week. it take forat will the ceos to start spending a little bit more? donald trump is getting an auger rated tomorrow. how do you spur of animal spirits across the world? >> you see there is a trend back to growth. what we're missing for a couple of years is growth. we are living in a world of low

growth and low gdp figures. we will see what the new government, in the european countries, france and germany and the netherlands, what kind of measure will it take to restore growth? your index has to do with productivity and the way we should look at the labor markets. >> it's about the attractiveness of the countries regarding talent. we are measuring 61 criteria for countries in three families. the capacity to attract talent, and the capacity of the country to retain them, which is very important. the u.k. is number three. francine: even after brexit, or after article 50? -- it's one of

the assets of the u.k.. really be able to attract international talent, but on the is the ability to export your talent so they can enrich themselves and come back and in rich the company. francine: thank you so much for joining us early in the morning in freezing davos. coming up next we will talk , and it'srtising really the day where we focus on brexit in the u.k. with the chancellor. manus: and what it will mean for the u.k. economy and the city of london. we will get back to francine in a couple of moments. we will hear from the european commissioner, the former french finance minister.

and the threat of populism. ahead of theresa may's address at the world economic forum, bloomberg speaks to the man task with steering the british economy through its divorce with the eu, the chancellor, philip hammond. that is right here on bloomberg. this is bloomberg. ♪

>> whether it's health our environment or education, are starting to get a lot of good dialogue between our foundation and there's about what has worked and what has not work. manus: the microsoft cofounder and the world's richest person,

bill, speaking to bloomberg at the world economic forum in davos about his philanthropic efforts with china. that's get the bloomberg business trash -- business flash with juliette. >> the court has turned down a a person forlease bribery and perjury. it said there was not enough evidence to keep him in jail. the allegations are linked to a corruption scandal that led to the impeachment of president park. simpson has denied it provided financial aid. toshiba has seen its biggest intraday decline in more than four decades after a report that the loss in its nuclear business may meet the maximum. it was reported the right down to be more than $6 billion. the nikkei newspaper said

toshiba has asked the development bank of japan for financial support and is seeking help from other leaders. that is your bloomberg business flash. manus: juliette, thank you very much. let's get straight to davos. francine is joined by another guess. francine: one of my highlights is to speak to my next guest. thank you so much for joining us. this year feels different. last year we had a conversation here in the mountains, a little bit less cold but similar views. you tell me you fight to have visibility because of the u.s. election and the brexit. now we have visibility. what do you see for 2017? >> i would say it is the same. we know that the brexit will be a tough one. they have chosen the hardline,

which is to really cut them from europe, from every single institution in europe. this will probably create a lot of issues and problems and at the same time, everyone in europe wants to continue to have good relationships with the u.k.. ,o we believe that all in all it will be tough, it will be difficult, but it will not have a huge impact on the economy. and probably it will be good for the european countries. francine: are you going to move people from london to elsewhere, to paris? >> we don't need to do that, working locally. all our teams are working for local clients and local accounts. there's no reason to move them from london to paris. when you look at people who have are they have teams working on global issues from sector,n the finance

the need to move to europe. what is attractive for the banks is frankfurt on one hand and , paris is very attractive and a lot of banks are interested. on trump, it's a very different story. francine: will he be apple to unleash these animal spirits? , we don't know if he icis.be good for publ if he is good for the u.s., it will be good for the world. the key question is the fact that no one knows how to predict the next tweet.

he is impacting policies through tweets, and it is something that has some merit, because he's bringing the issues at the top very urgently and people are saying we have to deal with that immediately. at the same time, it is unpredictable. you don't know. to a lot ofu speak ceos on a regular basis. what would be your device to them and how you would deal with a tweet from donald trump singling out your company? >> the first thing to do is obviously do everything you can to avoid being tweeted. if there is a tweet, depending , if you do not have a argument with the president-elect, who will be

president tomorrow. don't try to have an argument. there's an issue, try to do it in a normal way and negotiate what has to be negotiated and settle it. this is the best advice i can give. the good news is that it seems that president trump wants absolutely to push for a better the for the americans and he willhe economy, spend between $800 billion and $1 trillion on infrastructure. if he can do that, it will be good for the worldwide economy, and this will probably trigger growth. francine: you are stepping down this year. who will take your place? >> my successor. francine: how do you choose your successor?

>> i don't choose him. we are a public company. it is the board, and it is working pretty well. this is something for which i haven't answered today, yes. someone from the inside. it is an unequivocal yes. francine: thank you very much. >> you will see me around. i will be going to ski. will speak to you for you leave. back to you. today we have an exclusive interview with the german finance minister, the u.k. prime minister, and philip hammond, the chancellor of the exchequer, coming up. manus: up next, we will hear from a banker, jamie dimon.

his warning on the eurozone and why the jpmorgan ceo says the block is in danger of breaking up. this is bloomberg. ♪

manus: 6:30 a.m. in the city of london. 3:30 in the afternoon in tokyo. you're looking at a shot of the emperor's palace. the dollar-yen is undecided at the moment. we saw the dollar rally against the yen on the back of janet yellen's flagging up the potential for rate hikes. some breaking news now for you, hello usa. at cointreau,

323.3 million in terms of sales. formarket was looking 307.5. the market was looking for rise of 8.8%. that gives you a sense of the trajectory for cointreau. the chinese new year coming earlier, it's january 28 as opposed to february 8, and a number of people are saying that would have driven the numbers for cointreau. another country delivering , morgan stanley saying you should expect moderately soft quarter. estimate.e when you break down the geography, in france you have fourth-quarter sales at 10.76

billion, a little bit ahead of the market. the hypermarket business is absolutely in line. that's according to the bloomberg first word. francis pretty much in line for the fourth quarter. france is up .7%. china was down 5.4%. those are the stocks we will be watching at the start of the trading day. there is a new edition of daybreak on your bloomberg. the cover story states the play for the fed may well be a couple of times a year. that seems to be what janet

yellen was telling the markets yesterday evening. the jobs target warranting gradual tightening, but one caveat from neil cache kari. ins too early to factory trumponomics. the next story, the ecb. everyone was having a chuckle this morning in the newsroom quote.e robert frost mario draghi may dominate january's job in headline inflation. there. not much traction no policy changes are expected at the meeting after last month's tweaks to qe. that may well be the case. i think it will come down to the language that was used.

it's been two years since he shifted his stance in terms of how he sees that risk in the eurozone inflation picture. let's see what kind of language mario draghi uses a little later today. are things broadly balanced? playing five is point -- paying three -- pipe -- paying $5.3 billion. bullishanalyst to be and using fixed income results of u.s. banks to extrapolate estimates for its security business, according to people familiar with the matter. line,bout the bottom revenues may have gone up but it's about profitability at the bottom line. the markets have moved a little bit. matt miller joins us from

frankfurt. what are you going to focus on? matt: the dollar is one interesting move that we saw late last night that has come off today. there is kind of a tug-of-war between janet yellen on the one hand coming out and sounding a little more hawkish than we are used to hearing, or the fed in general looking like it's going to have three rate hikes this year. on the other hand you have donald trump tweeting about how he wants a weaker dollar. there is that tug-of-war going on. the dollar strengthened on janet yellen's comments, more than 1% at one point, and today we have flattened out on that trade. so interesting to keep your eye on the dollar. also the yen, because it is up for eight days out of the past nine trading sessions. , soas gained some strength

the yen is one to watch. our investors running for the safety of the yen. is the trump trade unwinding? it did look like that for a while with bonds, but it seemed to turn around yesterday. will the yen continue to gain as much strength? and will that help the japanese stock market? in japan, yen up, market up. the topics was up more than 1% and the nikkei was a gain or. other asian markets were mixed overnight, but the japanese markets trading higher. interesting to watch the interplay going on in tokyo. let's see what volatility comes to play in these market. was the dollar over saul -- oversold on political risk?

plc is getting stronger in the usa. let's talk about wall street dollars, the bonuses. we will have deutsche bank news overnight here in europe. yousef joins us with his chart. many people go into classrooms and come out with smiles. yousef: absolutely, and not the kind of smile that you have. happening as we have the fed pointing out price measures, the preferred up 1.6% through november. what has beaten that is the cost of living in new york city, up 2.1% in december, versus december 2015.

chart, takeat this a look, the top panel being cpi in the new york city area. i've highlighted this for you in yellow. the key question is, our -- what is going to driving the cost of living increase? out, housing,ning medical care, and energy. and then there is the broader question with what happens to the population to employment ratio? the fed pointing out that the labor markets across the country were reported to be tight or tightening during that time. so you have to scale back some of the venture's in new york city. manus: i cannot afford to go anywhere because you just want to take a look at the currency and it gets expensive.

brexit is never far from the newsreels and never far from driving markets. if political leaders don't address the growing discontent and make subsequent changes, according to jamie dimon, who's been speaking to our editor-in-chief in davos. >> we are thrilled she made a's reach and trying to have a transition period. we have the ability to move systems that acquire real estate. the british people will decide and they will negotiate with the eu, and when they finished that negotiation, we will know what it means for us.

we have to accommodate the laws of the land of in britain and the eu. that will determine who has to move. it could be more or less. but it's athreat, fact that we will have to accommodate the new requirements. >> she made it very clear she is prioritizing immigration over the market. you are a global bank based in london. you hire a lot of non-british people to work there. generally, britain is heading in the wrong direction for jpmorgan and for other banks. >> london is a fabulous financial center. scale for the people of europe. , it they change the rules will reduce jobs there. the brits will decide how they want to compete around the

world. it's not up to me, it's up to the prime minister and the parliament at this point. grexit seems more likely the big american banks might pull jobs back to new york. >> it looks like there'll be more job moves than we had hoped for, yes. it depends what the law is. the equivalency and the requirements. the eu could put in very stringent rules are they can bill of more flexible, so it depends on what they come up with. and businessations to negotiation's will take quite a while. >> another election coming up this year in france. one of the words you have about this year? -- what are the worries you have about this year? >> it's really about what it says for long-term health in europe. brexit thinking is that

would cause the european union to look at what went wrong and fix it. , in some ways it looks like they are doubling down. europe is not fixing its problems in response to brexit. >> you have the same thing about immigration, how much and flexibility you will have. i'm still hoping they do it, but if you have a marine le pen presidency, that is all right. it is very complex. >> so it is a pessimistic view of europe, unless they change. >> unless they change. they will have to change to be more competitive globally. i say it out of respect for the european people, but they are going to have to change. it may be forced by politics or new leadership.

>> are there any new leaders inside europe that kerry that mandate of change in a positive direction? >> angela merkel is one of the most competent political leaders today. she is up for reelection also. >> you've described a europe which is not reform. your faith in her may not be entirely justified. >> we will see. it is not over. there is a long way to go in this game, in my opinion. manus: ceo jamie dimon speaking to our editor at large. a couple of interesting headlock -- headlines coming across. is an aggressive .nd intimidating negotiator it goes on to talk about the eu hel be severe on want a posh paschi, which failed to

raise money in the capital markets before christmas and is on a whole new role in terms of starting it -- sorting itself out. coming up, we will hear from the european commissioner of economic and international affairs. he will give us his views on brexit, trump, and populism. then a conversation with one of the top business leaders. a year from his addictions that brexit would win and that clinton would not happen. ahead of theresa may's address at the world economic forum, we will talk with the man task with steering the british economy through its divorce with the eu. this is bloomberg. ♪

manus: it's 1:47 a.m. in the morning in new york. eventful, hasn donald trump to move the market, that's a question you have to ask yourself. to make sure you're not on that twitter lists, that is priority number one. juliette, good morning. >> a court in south korea has turned down a prosecutor's request to arrest the samsung bribery and embezzlement. it said there was not enough evidence to keep him in jail, based him the facts presented. the allegations against the air to the country's most powerful company that to the impeachment of the president. samsung has denied it provided

financial aid in return for any favors. toshiba has seen its biggest intraday climb in more than four decades after the report that its loss in business make see the $4.4 billion maximum the company had flagged for lenders. kyoto news reported the write-down could be more than $6 billion. one newspaper said toshiba has asked the development bank of japan for financial support and is seeking help from other lenders. netflix jumped in extended trading after it added a record number of subscribers. the world's largest paid video service sign-up more than 7 million new customers in the fourth order, topping expectations for both domestic and international growth. in 2016 it added 19 million customers after expanding to more than 190 countries. that is your bloomberg business flash. done, going get a

glass of water there, we will get back to you. let's get straight back to davos . francine is with our next guest. francine: let's get straight to our guest. commissioner, thanks so much for joining us. there are so many uncertainties that the eu has to deal with in 2017. brexit, donald trump. what is your take on brexit? how of the will the negotiations be between the u.k. and the eu? >> it won't be ugly. francine: will it be friendly? >> yes it will be friendly. the u.k. will stay a european country. common,so much in security, defense, and interest to protect our borders, so i'm not worried about that. but it will be quite a tough discussion.

the commission will defend the 27 members interest because it's clear that for us, being a member and being outside the eu doesn't mean the same. this was the way to leave the single market. we need to find something completely new as a relationship between us. francine: how long will it take? we're looking at double taxation, regulation, and the common market. feels like it could take five or six years or even longer. .> not possible my compatriots who is the negotiator for the commission thinks we have something like 18 months. we must be aware that if two years from now we don't have an agreement, two years from the moment when the negotiations start, it takes two years. now -- i know you're

getting a phone call. you are very busy man. but when you look at the growth prospects in europe, they are actually quite low. we are trending upwards, but the recovery is still very fragile. can brexit derail that completely? economically.isks when i presented the forecast we saideu in november, that growth in the u.k. could mean 2% or 1%. there is a fiscal cost and also economic ups and downs. the climate cannot be ugly, because it of his ugly, it's damaging for both sides. we need to find a way, it's not simple, it has to be balanced. but you have two

opposing forces, so it will be very difficult to be balanced. you have two sites that want different things. >> negotiation needs to be a compromise. we are defending our interests, but we need to find common ground. that's why the president that we need to reach a balanced agreement. and taking into consideration that we want the eu to be strong . we cannot dedicate all our energy to that. it cannot be a fight, it's a negotiation. how can it be more productive for its citizen, how can it be more democratic? we need to strengthen in parallel in the eurozone in particular, because that is our future. francine: if you look at brexit, if you look at donald trump and populism, does it mean you're

more worried about the french elections and the italians, what's coming next with the lyrical turmoil? >> -- with the political turmoil? >> innocence, we combat populism. we think that is the enemy because nationalism is not a way for the people. we also look at the electoral cycle. elections in the netherlands, then in france, then in germany, and somewhere in between, italy, probably before 2018. it is difficult to take decisions in that kind of cycle, but still, you need to have ideas and proposals. that's why the commission is going to write a white paper with proposals on defense and security and taking initiatives. i hope it will be -- it will not be a blank year for europe.

the meeting is to have results. -- the main thing is to have results. we need to be strengthening the economic recovery. ,he advantage of being in davos i spoke to french people, and -- i'm note need to worried about marine le pen being the president of france. she must not have a high score. it's about the way she influences policies. you could say that's the next our last step to power. francine: how worried are you

about german exporters because of brexit? >> we have today already a major imbalance in europe with external and fiscal surpluses which are enormous. the view of the commission is that brexit or not brexit, we need to resolve it because we need to balance europe. when there is too much divergence, especially in the ofozone, it's a point tragedy for europe. francine: thank you so much for your time this morning. we talked a little bit about brexit and the political situation in france. coming up we will speak to the u.k. translator. manus: great interviews live from davos. bhp looks as if they have a preliminary view. you have three companies with

deals said to be worth $48 billion. this is bloomberg. ♪ . .

thes: janet yellen says economy is close to the feds objectives with a few hikes are year. the dollar jumps, treasuries gold, and the end slide. the ecb watchers will be looking for clues about the direction of policy and the central bank's first meeting of 2017. deutsche bank cut steepen. the german lender is said to tell employees more job cuts are on the way. bonuses.ting teresa may heads to

dallas to speak after her speech. speak after her speech. we speak with philip howland -- hammond. the german reaction to the ecb. --speak exclusively speaking following the central bank's decision. welcome. it is daybreak europe, the flexion morning show from the city of london. cranny.us francine lacqua is at the world economic forum in davos. productiveird most country in the world, make sure

you're not on that twitter list from trump. francine: we have had an array of guests and we heard about how you deal with damage control in case donald trump tweets about you that you should prevent it. if you look at this new world order which could be china, the forefront in terms of foreign policy as populism, it is interesting. you have everyone, almost everyone of from the u.s. trump administration, donald trump gets inaugurated tomorrow. no one knows how to do with it. people are trying to figure out what this wave of populism came from, whether it is innovation, lack of jobs because technology went to quickly or it is a squeezed middle-class and that is linked to inequality. a lot of people here, most people i talk to not -- want to know about brexit. theresa may laid out her vision, what does that mean for double taxation and for the u.k. to be a safe haven but a tax haven,

that does not fit with her vision of being a more equal society. we will talk about that. we're speaking to the prime minister effort chancellor and we figures -- focus on ecb and rates. wordnus: he has not used the broadly balanced. looking forward to a great days forecast from davos. malaysia and their rates unchanged at 3% area they talked about the economy and said it remains on track. inflation is expected to average higher in 2017. we have it in europe and a u.k. and we have it in the u.s. these reflation trades were in toce for donald trump took the helm. he inaugurates in less than two days. a little bit of breaking news across the bloomberg terminal. a couple of companies reporting,

gazprom is one of them. what we have is third quarter net income. the estimate was for 11 billion rubles so a slight miss for gazprom. a renaissance, a resurgent for the gas companies. third-quarter revenue came in at 1.26 trillion rubles below where the market was looking for a 1.28 trillion rubles. 102 on third quarter. the market was looking for 111. on the revenue side just a bit lower at 1.2 6 trillion. let's check in on the futures. slightly better for these markets. no doubt about it. janet yellen in that kind of mood where she signs if she is ready to get on with rate hikes and it actual pace or she signed it almost as if she is ready to act, is she ready to act as early as march? that is the question. areon, frankfurt, and paris

good. -- bid. get that to davos because francine has a special guest from the advertising world. francine: i am pleased to be pp ceo.g to the w a british day today. we are here. we were -- were you invited to the inauguration? guest: i was not. francine: what does exit mean for you, do you have to move staff, are you expecting advantage your operations? the best germany is number four, france's number six, screen is number 10, italy is number nine.

they are important to us. and we have a lot of business as a result with the eu in brussels and in those markets so losing influence in those markets is a critical issue. we have to deal with that. francine: he said it could derail a lot of the recovery in europe. guest: i think that is true. obviously it will have an impact on growth at some point in time. looking at her budgets for this year for the u.k., looking pretty much ok. the u.k.it last year, performed ok. it might have performed better. at some point the devaluation of impactg will have some on inflation. that will have some impact on the business. we were talking about eu countries recovering from a low

base. i want to come back to the thing you did the preamble, the rise of populism. lehman haslicy since been a chief reason. francine: do people feel represented and it want to take control back? >> we had a crisis. the reaction was a very strong monetary policy. the priority was on inflation. employment. was on now it is the reverse, what level of inflation would you tolerate? francine: did you want to change the mandate? yes: the mandate is being changed. trump will be infrastructure spending and lowering tax rates. he spur animal

spirits? guest: i am bullish on the u.s. economy but not for long time maybe before the next election if donald trump seeks reelection. it will be quite a difficult picture because big deficits still, what he is proposing will not reduce the deficit. it probably will increase the deficit to some degree. those repeat funds, will they go into capital expenditure, innovation, which is what we believe drives topline growth or will they go to more dividends? the s&p 500 is shrinking. they paid out more in dividends. basically is abrogating responsibility. francine: is that expected to change? guest: it will. the issue with trump is it might

be good for the u.s. economy but what does it mean internationally? what you gain on the u.s. swings, you lose on the international front. the uncertainties whether it be mexico or china or russia are so great that induces some hesitancy amongst companies and ceos abroad. sinceenario we have had 2008, 2000 nine, no growth, no inflation, no pricing power focused on costs will continue in most economies. francine: a quick question which i need to ask you, you have been one of the most controversial ceos in terms of pop -- packages. will that be more controversial? guest: the issue is related to performance. if it is pay for performance, then fine.

francine: thank you. we have some great interviews coming up including the u.k. chancellor of the exchequer, philip hammond. great levelheadedness coming through. in terms of his effusive miss in the markets. and we should do some more waiting and seeing. the bloomberg first word news. of the u.s.e chair federal reserve said the u.s. economy is close to the central banks objectives of full employment and stable prices. speaking overnight in san francisco, janet yellen said she is confident it will continue to improve and it makes sense to reduce the level of monetary policy support. >> as of last month, i and most of my colleagues feel the members of the fed ward in washington and the presidents of

the 12 regional federal reserve banks were expecting to increase our funds rate target a few times a year until by the end of 2019. it is close to where an estimate of its longer run neutral rate of 3%. juliette: deutsche bank told some employees that job cuts will continue even after it cut benefits -- bonuses for senior staff. some parts ofd in the investment bank, managers have been asked to identify the bottom 20% of performers in preparation for possible cuts. a spokesman for germany's largest lender declined to comment on specific job reductions. goldman sachs may cut its london staff in half to 3000 workers well transferring some to other locations as it prepares for brexit. that is according to the german newspaper citing unidentified

people in the financial industry. the report comes a day after bloomberg that trading operations generating 20% of revenue for investment bank in london may move to paris. a spokeswoman for goldman sachs said it has not made any decision. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i am juliette saly. this is bloomberg. manus. manus: thank you. at's get bakck to davos, man with his pulse -- finger on the pulse of the british economy. chancellort is the of the exchequer, philip hammond. people are trying to figure out how negotiations will go, what happens next, what do you see as a transition deal, how long will that last, are we talking 18 months or two years?

guest: what the prime minister talked about is the need to move forward quickly after we served the notice to scope up with the and state will look like and get an agreement on a practical solution for the and the state of the relationship between britain and the rest of the european union area but recognizing that will take some time to implement. until we get into the detailed talks we cannot say much time am a we have to be pragmatic. they will be systems to be put in place, businesses will need time to make a transition. the clear message that we are giving and i think this works for britain and for europe, no cliff edges, known and change for business, plenty of time to adjust. francine: businesses that we see figure out what the ideal solution would be. the premise to was saying that she wants a better deal. what does that better deal look like? guest: we have to recognize that on both sides there are political imperatives.

from the u.k. side we can no longer accept freedom of movement, that is clear. from the european side, they have a position about the indivisibility of the four freedoms in the internal market. within themork parameters defined by the reality of politics to find a trading relationship, cooperation that allows the patterns of business we already have, the supply chains that operate across europe to continue to operate with minimum disruption. that is good for written but european for our union. francine: negotiation can be sure it. if you have two sites that have opposite views, they could be done within six months. could begotiations short but i suspect they will not be. we should be able to agree quite easily on the principles but working through the detail will take longer. i hope that you will be able to

get between britain and the european union quite early on in this process a sense of where we are going. i hope we be able to medicaid that to the wider world. the whole process is created -- has created uncertainty. that has not been in anyone's interest. the sooner we can start to give his misses, concern -- consumers a bit more certainty, the better it will be for the economy, including britain. francine: what happens if they come back with a deal they do not want? guest: i am confident we will be able to get a deal that we can explain and parliament will express their view. we have a mandate from the british people to take written out of the european union and we need to do that in the way that protects the economy to the maximum possible and allows us to engage without -- with the wider world in a way that the british people expect us to do. francine: is it possible the u.k. will become a tax haven, a

kind of monaco where you protect your interests by becoming an island that offers a lot more than the european union and how with that fit with this? guest: last time i checked we were bigger than monaco. the uk's this sixth-largest economy. we are not in the position of some of these island states that are often quoted. preferences that britain should remain in the mainstream of european economies. we need to be able to train with our nearest neighbors in europe. a long as we can get pragmatic and sensible outcome which works for britain and the eu, britain will remain in that economic mainstream. if we are forced out, we will have to look at mother -- and -- and other ways. going to do is

to say we cannot compete. we can always compete. we are an inventive people and we will find ways to maintain our competitiveness and protect our standard of living. our strong preference would be to do that by a close trading relationship with the european union. francine: what kind of assurances can you give to financial services? it came at number 13. this is the heartbeat for london. guest: it is a very important sector for our economy. our european partners know that. they know that in talking about comprehensive trade deals for britain, it has to include goods and services because we're primarily a services producing economy. it has to include financial services because that is a large part of our service economy. we have to be pragmatic about the challenges that having a cross-border financial services industry involves. the sooner we can get into the

detail with european clinical leaders and with european regulators as well, to look at how this market can work in the future. bearing in mind this is not just something that is good for britain. it is good for europe as well. a huge proportion of europe's financial transactions passed through the city of london. francine: is it a priority? is a priority for the u.k. government. francine: there is a perception that it was almost a second thought. yes: not at all. financial services is not the only history we have in the u.k. we have a -- to do a deal that works for all arts of the u.k. and developed nations and all the sectors of our economy. financial services is the single largest sector in terms of [inaudible] and we have to ensure that is protected in the deal we do. francine: have you modeled any job losses that could happen in the next couple of years? because of brexit? guest: we have looked at all

sorts of possible outcomes but until we get into the real discussions with our european partners and start to look at what the options are, i do not think it is particularly helpful to explore different hypothetical outcomes. i think six months from now, we will have a much clearer idea of where we collectively feel we , where the political imperatives on both sides allow us to find a meeting of minds that will work for our economy and work for the european economy. francine: i imagine you are speaking to a lot of u.k. ceos and foreign ceos that have bases in the u.k.. what is the question you get asked most? toxicity isreatest the uncertainty. business crave certainty. what businesses are saying is get on with it, get it done, whatever the outcome, whatever it -- if it is good, bad, or

indifferent, as soon as we know we can start to plan around it. we can work with it. is wessage from business can live with any outcome you deliver but just get on and deliver it. the speech the prime minister made on tuesday shows that we are committed to setting out our objectives, to engaging with this process, and the message i am hearing back from counterparts across the european union is they are genuinely pleased that we have set out our -- in a way that they can engage with. francine: i know negotiations are difficult to predict. do you think a big ceo or small seo -- ceo will have a clearer view of what the future will look like? guest: i cannot be certain about this but i suspect that once the two sides engage in the french presidential elections are behind us because that is a big logical event on the horizon now, once we get past that stage, i suspect that they will start to be quite soon a sense of whether we are heading in the

right direction, whether the two sides have engaged in -- effectively and there is a coming together of views about what the future should look like. business will be greatly reassured if it hears from both sides in the negotiation that we are moving forward, that we are working well together. the u.k. who does negotiate with, angela merkel, through the commission, it is unclear the channels of communication that would be the strongest to get your message across. guest: it is not unclear at all. the eu has made it absolutely clear that the commission holds negotiating mandate. there is an appointee. the european council has made clear that we want to have on behalf of the member state governments a very close oversight of that process so that day-to-day execution of the negotiation mandate will be in the hands of the commission but of course, the strategic control

of that will be in the hands of the council. francine: are you worried about the velocity at which the pound fell? volatilitydy likes in the currency markets or any other markets. we do not take a view on the correct level of the pound, the markets will determine that and it is not an absolute gain, it is a relative gain. people will look at what is happening to other currencies and other markets around the world. we are confident the markets to work in that sterling will find it's appropriate level at any time. francine: what is the level you deem not appropriate, do you foresee the situation where you have to go into a crisis meeting because the pound has dropped too much which makes it good for exports but difficult for the current countdown? ofst: we have a high degree confidence in the way that foreign exchange markets work. they are very sophisticated. there are short-term movements atch can be irritating

times, but over the medium-term, i am very confident that the markets will find the right level for currencies and we believe that it is one of the reasons written has been so resistant to the idea of ever being in the euro. we believe very strongly that having one currency linked to one economy and one fiscal authority allows that currency to move to reflect economic realities. that is a positive thing. francine: it is an unusual question from me to a chancellor of finance minister but there is not a level at which because we are in uncertain times, is there a level where you will think that markets are misinterpreting the message coming from the government? guest: politicians are misinterpreted all the time by markets, by business, by journalists. we will continue to khamenei kate our message. the markets will look at what is happening. we saw earlier this week first

of all, sterling fell in monday. it recovered sharply on tuesday. sometimes it takes the markets hours, a couple of days to digest what is going on. francine: when do you think you will stabilize? guest: i can't answer, that is for the markets to decide. francine: do think a lot of world leaders have had -- i do not think it is misinterpreted or misunderstood the government's plan. guest: is not just about brexit. there are a lot of other things going on in the world including understanding the new administration in the u.s. and its agenda. coming here to take part in the world economic forum, talking to people from around the world about the bigger challenges we face is also part of the equation. i should be looking to worldbute our views on economic events as well as to explain our plans for brexit. to some extent, there is a lack of understanding. i hope the prime minister's

speech on tuesday went along way to clarifying for many people what we planned. francine: what do you see the u.k., u.s. relationship look like in the next 12 months? just: strong. the relationship between the u.k. and the u.s. works in the way it does because it is not just robust at the top levels, but it is very deep. it runs right down through our governments, through our societies, through our intelligence agencies, through our military might we work very closely together. i am confident that president trump and the premised or will develop a strong working relationship. i am confident that the everyday contact that we have at every level will keep that relationship strong, whoever is in government in either country. for your thank you time. the u.k. chancellor, philip hammond. we have a great line up of

guests. it is not only about brexit although a lot of people my there is a lot of appetite in the corridors of data does -- davos to understand what that means. manus: a great interview. that is the objective for philip hammond and theresa may. stocks are rising. you have the dollar slightly better. all in back of yellen's comments talking about gradual moves, the dollar index at 1% and bonds at a pretty but -- big move yesterday. what you have seen this morning is again on the back of that, the biggest one-day move in almost a month. we jumped by 10 basis points on 10 year government bond yields. stocks are bid and the dollar is bid, it is ecb did -- day. when will mario draghi talk about a -- balanced risks in the european economy? we will tune into his news

conference later. theresa may joins bloomberg. that is it for a daybreak europe team. the european open is up next. a of great guests from the slopes of davos. ♪

guy: good morning. this is the european open. the first trade of the cash session coming up. matt miller. francine lacqua in davos. what are we watching? hike in of a fed rate may right. yellen economy close to the central banks goals but if the dollar falls well market be expecting more question i get a grip. jamie dimon tells bloomberg