anna: good morning from bloomberg's new headquarters in the city of london. manus: these are your top stories. anna: jerome powell is confirmed to lead the u.s. central bank. discussion with the democrats about the border heats up. manus: the s&p 500 closed at another record high. the japanese yen strengthened and the dollar dropped for a third day. anna: it is day two of the world economic forum in davos. this hour we hear from the ubs chairman and the ceos of

generali. ♪ anna: this is "bloomberg daybreak: europe" and we are of course live at the economic forum in davos. good morning. >> good morning from really cold davos. globalization is the theme that we heard yesterday. dublin down on globalization after president trump imposed tariffs. we heard from the likes of trudeau. modi saying that anti-globalization and isolationist policies will have to end. of course we have a great

lineup. we will be sitting down with the panels -- and analysts --. we will speak exclusively to the of a standard chartered. manus: a little bit of breaking news from switzerland. he leaves and just over a week -- in just over a week. the guidance for this year will be low single-digit growth. a rebalancing act, of course. being hit by cheaper copycats trying to bring in those new, innovative, and high

costing drugs. that's a rebalancing act and you saw a deal just the other day. 2018 operating income up to mid height single-digit range. what will the new ceo do? will he match and meet? anna: we will see. we will keep on the earnings story this morning. this is the picture over in the asian equity markets. taking a bit of a breather. we touched a new all-time highs at the close of the s&p yesterday. keep in mind the context. we have had the best start for asian equities since 2006. we are still had it for a 13th consecutive month of gains in asia.

, we see a bit of weakness in the dollar this morning. the yen is up. it is really a dollar weakness story, we are told. citing the comments around trade from president trump. the dollar continues that 2017 weakening trend. we put the pound in here as well. a little bit stronger for the 0.2%. this morning, up by an eu rebate helped like a bit of a fire under the pound. t thisl go through tha week. manus: there could be a few

stumbling blocks for sterling. let's talk about the u.s. markets. this is your chart drawing ratio.r the put to call we are seeing it again. this is the two-year paper, you are seeing the bid to cover ratio. the yield was the highest since 2008. there is a new reality for the bond market coming. mr. mnuchin is going to lay out how much supply comes to the market. it is expected that over $1 trillion is going to be issued in 2018. the average demand has been around 2.82. -- bid to cover ratio cover ratio highest since 2010. there seems to be this lack of belief in the inflation story, lack of belief in growth.

there is a lack of belief of it transpiring into higher inflation. 2.9% for 10 year government bond yields by the end of the year. juliette saly has your first word news. juliette: u.s. president donald mayps new trade barriers put more pressure on the nafta talks. import taxes on solar panels will affect canada and mexico. trump has repeatedly threatened to dump nafta. we are working very hard to make sure that our neighbor to the south recognizes how good nafta is. it has benefited not just our economy, but his economy, and the world economy. we are very much open to more trade deals involving more people as long as it is in the best benefit of all of our citizens.

hasette: chuck schumer withdrawn the offer that he made last week to give donald trump more than the initial $1.6 billion that he requested for a u.s.-mexico border wall. republicans called the move a step back in the continuing debate on immigration. trump sent out a tweet. he said that if there is no wall, there is no daca. the head of the u.s. consumer financial protection bureau has pledged to tone down the agencies aggressive regulatory and enforcement stance. writing an op-ed, mick mulvaney said that he would continue to make sure that the bureau would continue to enforce consumer protection laws. he said that it will not assume --. the bad guys

loan considering waiving a just weeks after the world's biggest opec producers sold bonds. they are in talks with international banks about pricing the loans. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . we are seeing a little bit of a stall to the row here in the equity momentum here in asia. is down as we see the yen continue to strengthen. --. kong's bellyflop australia's market had a pretty good session as well, led by the energy producers. in terms of some of the stocks that we have been watching in

taiwan showing some growth in the tech players. china oilfield looking very good and the hong kong session. gain oforecast a strong $5.1 billion for 2017 compared to a loss in 2016. is down.ance analysts say that they may not pay a final dividend this year. anna: one of the main themes that we have talked about many teams -- times has been a defense of globalization and free trade. this comes after donald trumps ffs on solar of tari panels and washing machines. good for trade and growth and

wealth. it is not a good thing to apply in this world of open trade. >> i think there have to be some corrective measures and renegotiations. i don't see anything that is going to be leading to have a significant risk of protectionism. >> we are always concerned with protectionism. we realize that for citizens around the world to want to see the benefits of trade. >> obama had solar panel tarif fs, so this is not a new thing. i thought that it was wrong when obama did it and i think it is wrong when trump does it. it is bad for the global environment and the economy. >> it is not going to change our approach. it is not going to change our direction of developing solar

projects. manus: we are joined now by bloomberg's julie schneider in hong kong. how soon can president trump expect retaliation from china? fs are notr trif ffs are not- tari expressly at china, but china is a key deliverer of those products. how soon? >> it is hard to know how soon, but china certainly has a history of retaliating in these kind of trade disputes. what we are hearing from some global leaders is about that. it is viewed by economists as a questionable move, because in the end, whatever gain there might be by imposing it is often outweighed by the fact that they retaliate. you could end up in a real trade war. china has done this in the past

and they have a history of this. there are products that they on write aould hit on write -- right away. one would be boeing airplanes and another would be apple products. it could be broad and it could be very soon. it is hard to know. what we were hearing from china and the language we were hearing very infuriating, the infuriated about the move by the trump administration. it seems to indicate that there could be a real threat of retaliation quickly. anna: i was reading how threats to orange juice businesses in florida have caused other presidents to back down. on another subject, i know you have been keeping an eye on what has been happening on capitol hill.

does the broad bipartisan vote for powell give him a mandate to make changes at the fed? what can we expect? >> yeah. it certainly was a big boat in vote in his both -- favor. him making changes is not really anticipated. president trump broke with a three decade tradition of previous presidents of keeping the fed chairman from the previous party. he appointed someone will have gone on with the previous fed chairman. mr. powell has voted with chairman yellen. he has voted with her in terms of -- and agreed with her in terms of a policy of gradual interest-rate increases. we are not expecting a big change their.

president trump hopes that he will help ease regulation. he talked a lot about that and his willingness to go ahead and ease financial service and banking regulation. that is where we might see a change, but maybe not right away. manus: let's see how quickly china actually responds or reacts. up, stay with the team. a guest joining us live at the economic forum in davos. anna: we will also be joined by the former italian prime minister. this is bloomberg. ♪

♪

manus: the world wakes up to another deliberation of what happens on global trade. the wildcard trump is set to turn up at davos. she may extract some value from her next guest. good morning. >> trump is not here, but he is already making waves here. his tariffs are front and center. let's get perspective on what it all means from a company that has expanded in a significant way into renewables. good to have you with us. >> good morning. >> you say that despite the tari ffs, it could have been worse. >> there have been speculations

about this move. iff movethat it is a tar that is sizable anyway -- in a way. 30%. there is a reduction in every year. iff move,l, it is a tar so it is significant and symbolic in a way. the panel itself weighs about one third of the overall cost of the large installation. you can see that this has a 30%. you are looking at an increase in the cost of installation that could probably be observed -- absorbed by reduction of costs

elsewhere. materially it is not going to change much. >> having said that, korea has talked about pushing back. could there be a trade war? could this be the start? >> i hope not. clearly when you start tingling with -- tinkering tariffs, other people start to do so as well. so possibly. >> this conversation has started to revolve around electric vehicles. what opportunities do you see for your company? >> i think electric vehicles are going to be around and in faster -- in larger volumes than people think. technology is getting better as we speak. has ak that my company

presence worldwide and our task is to get infrastructure ready so that these cars can circulate and the owners do not have problems. we are doing some acquisitions in the technology space. we acquired an american company, by the way, and we are them to spread this technology around the world in order to get our infrastructure ready in the next couple of years. we have a plan to install a nationwide network in italy and we will announce one in spain. we will keep doing that all around south america. >> can we expect more acquisitions over the next year? are you actively looking? >> yes. our acquisition space is basically networks, so we're looking at midsized acquisitions. we just completed one last year in brazil and there are opportunities that were looking out right now.

>> when you take a look at oil prices, it indicates otherwise. demand keeps going up. is there too much hype? >> it is a question of numbers. if you look at the number of internal combustion engine cars and trucks that are circulating in the world, and you look at how small the electric car part of that is going to be in the next five years. there is no way that this is going to change that quickly. we are talking about 20 years you really see this huge wave hitting you really ses huge wave hitting you on electricity. it is just a question of time. it is not if it happens, it will happen. the -- it is just about the time it takes. >> is there concern about a hung

parliament? substantial, but not controlling. we not concerned about that at all. the state has never interfered in the management of the company. >> but should the government change? do you expect that the new government will interject even more? >> no. they would not do that. i don't think they even have the means to do that. moreover, if you look at the energy programs that the various parties are projecting in the campaign, they are all very much in sync with our strategy. on that we are not concerned at all. >> how about the tapering of the ecb's bond buying? could that impact finance, given that you are looking to make acquisitions? >> not right now. if you look at financial

stability, i think we have just completed huge bond programs with the actual interest rates that give us a lot of flexibility going forward. we have more than ample means to carry out our program right now. >> what are the uncertainties right now for businesses? what is the biggest challenge for enel going forward? >> the biggest challenge in general for utilities is how the societies we are working in doing. europe is doing fine. so you are likely to do quite well. down, ifonomy goes society does not do well, we will not do well. we are intimately linked to the

well-being of the society that we live in. one of the reasons that we're spreading around geographically is that we want to hedge this. we have decided not to focus on one single area, but to add geographies every year. we think this hedges us a lot more than other things. there is a price to pay, which is the complexity to manage this. we have been so far. good at that -- so far pretty good at that. >> do you see complacency? the u.s. and europe are doing better than expected. is there too much complacency? >> you always have the risk of complacency. i think we should enjoy more trust in the future. i think we should enjoy a better sentiment about what is going to happen to us. there is nothing wrong with that. i think it is better conducive

to a better economic climate. trust and go into the riod, and enjoy that. maybe next year we will talk about complacency. let's enjoy a year of good outlook. >> so you are not concerned that the market is hitting record after record after record? >> markets are doing this after a big period of low restructuring, fixing problems. i think what we are enjoying today is all of the work and suffering that we went through. all in all, there is always someone saying that it is too good to be true. i don't think so. i think we earned it and we deserved to look at that for what it is. it is good growth. >> we thank you for your insights. there with us.

this is bloomberg. stay with us. ♪

anna: this is "bloomberg daybreak: europe." it is a 7:30 in davos. waking up to another day of deliberations on global trade. they wait patiently for president trump's arrival on friday. the global equity rally taking a pause in asia after u.s. stocks hit records. msci asia trade pretty flat. china is flat. weakness in japan. a bit of strength in australia. it is a mixed picture. the overall benchmark is

treading water. if you look at the next chart, what this is showing is hong kong's stock valuations expanding from the rest of the world. by other measures this is looking like a hot market. , theoth the hang seng highest in a decade, but still the bulls have kept piling in. we are seeing the dollar extended its losses, to a fresh three-year low. it may follow as we look at the , some weakness through concerns around protectionism and developments in u.s. politics. the broadbase dollar weakness has been felt most strongly in the dollar-yen. the yen has been bearing the brunt of it.

it is being argued that one await is what you should be level that you should be looking at. this pair tried and failed to breach in april and september of 2017. manus: back in japan they may have something to say about that. the euro is seeing a testing time. the third-largest economy heads to the polls on march 1. let's get back to davos with francine lacqua. francine: good morning. theing us today, the ceo of insurance company in italy. what a picturesque view in davos. what is your biggest concern?

are you worried there is a protectionist wave coming, and we will hear about it from donald trump on friday? >> first of all, thank you for your time. is not ase weather cold as last year in davos. i'm not sure this is great news for the climate. it is important that the u.s. are committed to the environment and climate change. economy, the the u.s. are doing well. there is significant growth, unemployment is low. this is good for the u.s. and the whole world. are in an we institution with good growth in the u.s., in china, and in

europe as well. what i am expecting from mr. trump's speech is more insight on the geopolitics. is also aboutb and ist of the world, would like for him to understand and taking care of difficult and tricky issues in the world. davosne: a lot of talk in is that europe is back, growth is back, and it will be stronger from now on. we have an italian election. it could bring up surprises. how much are you worry about politics? confidentte everything will be positive in italy. when you look at what had been in france is close to italy,

last year it has been positive because the populist risk was high as well in france. result.have seen the the populist risk has been .anaged very well in france i am convinced it will be managed the same way in italy in march. we shouldt mean underestimate this risk. some people are disappointed. some people are scared. some people are angry, and they have reasons. we have to listen to them and address their issues. we have to improve their situation. this is the best way to reduce the populist risk. we are on the right track in italy. francine: talk about the efforts to turn around generali.

you cut costs. you sold unprofitable units. are you happy with the turnaround or do you need to do more? our turnaround plan is proceeding well. we are happy the results we have been achieving so far, we are year ofting the last this plan. it will end at the end of 2018. we will achieve all of our targets. 2018 will be an important year for generali and we will start our a new three-year plan. it will be different from the previous one. it will not be another turnaround plan. we will enter a new phase for generali, which will be an expansion, a growth phase, and because we have created the conditions for these, and because the world is going to help us.

going to be positive and important for generali. i feel like it is a pivotal year for generali. does that mean like you will do acquisitions? philippe: i don't know. we are opportunistic. we will look at opportunities and if they them, accelerate our strategy. at the tape -- at the same time we have to be the same on acquisitions. maybe yes, maybe it out. francine: do you look at the markets? overall it seems we are at the end of monetary policy easing. is that a good thing or bad thing for generali? we are not 100% sure we are at the end. japan many living in years ago, and nobody understands what is going on

with interest rates. it is not so clear or obvious. if example as of today inflation should be higher. inflation is not as high as expected. we do not know exactly what is going on. ofinitely the scenario progressive deceleration of policy will lead to a steady increase of interest rates, which is obviously a positive scenario for generali, which is a very important life insurance company. if this scenario seems positive to us, i am very cautious because i could have bet on this scenario to happen. francine: thank you so much for

joining us. that is the chief executive officer for generali. coming up will do the chairman of ubs. anna: thank you, francine. if you are a bloomberg customer and you can use the tv function. lot more than the regular stream. you get the charts and options that we use during the program. you get to influence the conversation area click on the ask the guest a question button at the bottom of your screen. manus: coming up, we return to coming up, we return to davos with that ubs chairman. anna: later on, michael spencer joins us for his first interview of the day. ♪

♪ anna: this is "bloomberg daybreak: europe."

6:42 in london. snowy still on the slopes in davos. steel giant, consolidated net profit, below the estimate. operating profit coming in a shade below the estimate as well for 2017. analysts ahead of the summers have been looking for something stronger. joyce's -- prices were supposed higher because of plans for infrastructure in the u.s. and china. we will see what explanation the company has for these numbers. we've had american steel tariffs on washing machines and solar panels. to bloomberg business

flash with juliette saly. drugs for heart disease will return to growth this year. the company said earnings excluding expenses will rise by single digits, showing no change. price on generics fell. blackrock, the world's largest asset manner boosted annual .mployee bonuses according to people familiar with the matter, the overall bonus was in the high single digits in the range of about 8% to 9%. bonuses jumps so substantially, while others who did not delivered got cut. missedofit analysts that forecasts, the french company said earnings before taxes fell

by about 2%. political turmoil and the spanish region of catalonia, and operational difficulties led to 45 million euros. despite the ongoing stand up with the saudi led coalition of arab nations. that came in line with estimates. the dividend may come under pressure. that is your bloomberg business flash. ceo, in a combined business he seems to boost efficiency. the company is setting new targets. let's go live to douglas with

francine lacqua joined by one of the banks top executives. francine: good morning. we are joined by the human -- ubs chairman. trump,alking protectionism, tariffs. welcome to the program. what worries you the most at this moment? is it monetary policy? is it reactionary from the stock market and a protectionist agenda if that is what trump unveils on friday? >> all of these things matter. i tend to focus on the outlook and the risk. the outlook, we have never seen such a big disconnect from the hard data and the soft data. the hardped countries data and soft data are alike. it is in the mature markets where we see a major difference. example, you see

150 basis points priced into these expectations than the hard data. in europe it is more, 190 basis points. correlationbetter with future developments. there is a most of disconnect that you see in that. with all the stimulus from monetary policy, and a new fiscal policy regime coming in in january, and also in the u.s. about infrastructure, it will be the tone of this year. there is a good chance there will be a very strong short-lived boost for the economy. we might see growth that is unprecedented. francine: are we escaping stagnation? -- what does it mean for the rest of the market. axel: we are frontloading future

developments into this year. , we seesee investment very strong numbers. people might take that as we are out of the woods. it is a short-term stimulus, but it needs to be followed by long-term development. the focus should now shift from phasing out monetary policy. focusing on fiscal. then doing something about long-term investment. that will be the key driver of future sustained growth. -- the risk i see, geopolitics is a big risk. i don't think the risk will come from markets. they will be in the political sphere. will the central banks continue or will they fall behind.

francine: how would you position yourself in the markets to deal with this turbulence? axel: it might strengthen over the next two years. there is a good run on the economy ahead read there is good consensus that is the case. where i am concerned in the markets is volatility is at an all-time low. there is a lot of complacency out there. if you look at something like bitcoin, you can see there are pockets in the market where bubbles are building. the impact of this monetary policy on markets rather than just on inflation is something central banks need to focus a bit more on at this point in the cycle. francine: what will bitcoin become? will cryptocurrencies become something that is actually a force that people will look at in the market? thesefor a long time developments, cryptocurrencies

have are too small to matter for the regulators. now they are making their way to retail. look at the phenomenon, look at it favorably. any investment that goes up in price will get the attention of investors. we don't trade in bitcoin. we don't expose retail clients to bitcoin investments because we fear in the future if these investments implode and the market corrects, then investors will be looking at who sold us this, why were we not warned about the high risks. francine: what is their reputation? axel: there is a risk in the long run that the price is unclear. -- it is not ase currency. it does not store value. the value is determined by the demand for it. there is little elasticity in the supply.

for one reason or another, future regulation or governments make it harder to hide transactions, there will be a massive downward correction. those that hold these will sit on losses. francine: where is the bubble in the markets? really,al estate is after the crisis, pricing very highly. real estate prices here in switzerland are in an elevated zone. years, been saying for real estate developments, in particular have seen new levels. to see vacancyg rates, and you will see defaults in loans, and an correction in the market. look at germany. the real estate market has been run away. debate has not helped.

there are markets where you see low interest rates leading to a huge increase in credit. that is something that might be corrected in the future. axel: what are you expecting from president trump on friday? axel: my expectation is that he will give a speech where he will focus on international relationships and trade. i think the u.s. at this point is in a combative mode. on trade arrangements. the rest of the world will wait for the future direction there. howe is a lot of concern on the nafta negotiations will be settled. the same issue about tariffs now. we have not seen that for a long time. china is at the receiving end of this. labor,future division of at the global level, davos is an open group of people. most of the companies here have strived from globalization and operate globally.

is there going to be a setback for that? is it going to correct massively? people fear if we moved to a new age that that is not providing for a better world, it might not bring growth and income to those who have not benefited from this recovery. with some of the chinese money be fined to europe instead of the united states, and does the relationship change with china? axel: chinese officials and corporate are focused on europe. some of the chinese companies we talked to are more invested in europe than the united states. that will continue. europe, relative to other constituencies, will remain an open union. you will see cross-border flows. authorities in europe, the ecb is looking at what they can take out of the system to have more cross-border flows and

consolidation within the eurozone. i think this will continue. the risk is on the geopolitical side and the trade side that we will not read the benefits of the recovery we are now seeing, because it is about investment. impacting those who have not benefited from the division of labor globally, you target the needs of those people, and invest in their future is something that would be a better way to bring growth and jobs and income to those who have stood on the sidelines of these developments rather than focusing on reversing the recent trends. francine: is this one of the major central banks that can surprise investors? i think the ecb has for guidance is out there, one is that they would buy and reinvest . i don't think they will change that midcycle.

in september they've may take out some of the quality desk quantitative easing. i think that looked shaky last time. clear theyb has been will only look at interest rates once they stop buying. the expectation in the market is that will be a long time after september. i think current data and where inflation is going might actually move that expectation the first interest-rate by the ecb forward in time, and ecb will because just. the euro has become strong recently again. the ecb will not want to rock the boat, and be gentle. francine: given the performance of ubs, where do you go? pool, we've made

the determination that our results are better. we will meet with the markets. francine: but people should be competent? .xel: we have a clear system once our performance increases and our profitability increases, shareholders and employees should benefit from that. it is a system we put in place years ago. as shareholders will benefit from the better result, so will employees. francine: thank you for joining us. that was the chairman of ubs. you, francine. coming up, live from davos, we will be hearing from michael spencer of nex group. we will talk about financial services and the role of london. that will be part of the conversation. stay with us for

that. this is bloomberg. ♪ we use our phones and computers the same way these days.

so why do we pay to have a phone connected when we're already paying for internet? shouldn't it all just be one thing? that's why xfinity mobile comes with your internet. you can get 5 lines of talk and text included at no extra cost. so all you pay for is data. choose by the gig or unlimited. and ask how to get a $150 prepaid card when you buy a new lg x charge. it's a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com retail. under pressure like never before. and its connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered.

leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. bloomberg's new european headquarters in london. confirmed as is the lead of the u.s. central bank. meanwhile, donald trump's row with democrats over the border and immigration. anna: the s&p closed at a record high. the dollar dropped for a third day. manus: it is day two of that world economic forum in davos where the political and corporate elite, we hear from the former prime minister of italy and did not -- and send

land. -- finland. it is eight :00 a.m. in davos. 7:00 a.m. here in the city of london. stock markets are still in an uses mood. sive mood. the chairman of ubs tells francine it will be not in markets but politics and trade. we are seeing higher numbers in europe. we are seeing paris a little bit higher. we will get data later today that will drive these markets and pmi's. for more, let's get to francine lacqua. thank you. we are here in davos, we have so much going on.

we will be speaking to michael spencer shortly. ask whether he is worried there will be a wave of protectionism in 2018. we will be speaking to two prime ministers, the prime minister of poland and italy, and also the former u.k. prime minister tony blair.

in changing the outlook. the ecb will be gentle in terms of its outlook. this was property prices remain

elevated. you've got the euro and manufacturing numbers. that could set the terms of the recovery here in the european market. you are going to get that confirmation of perhaps a trend in terms of unemployment numbers. sterling above 140. european -- that what could happen next with unemployment? juliette saly has your first word news. u.s. president trumps onde barriers, import taxes solar panels will affect canada and mexico. trump has repeatedly threatened to dump now deck and may have more to say on tariffs when he goes to the world economic forum in davos. >> we are working hard to make sure our neighbor to the south realizes how good nafta is, and it has benefited not just our economy but his economy and the world's economy. but we are also very much open to more trade deals involving it is inle, as long as the best benefit of all of our citizens. juliette: u.s. senate mentored

-- majority leader as withdrawn the offer to give donald trump more than he requested for a u.s. mexico border wall. republicans call the move a step act in the continuing debate on immigration. "crying chuck schumer understands after his humiliating defeat that if there is no wall there will be no daca. " --an is considering raising according to two people familiar with the month -- familiar with the matter, repeated calls to oman were not answered. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories at top . anna: let's get back to davos.

francine lacqua standing by. her guest has a lot to say about london financial markets. on thee: we are focusing financial markets with michael .pencer, ceo, nex group we talked a lot about brexit this year. there is one show in town called donald trump. michael: the first person to come since clinton. for not going to be here donald. he has not invited me. i am heading back to london on friday morning. of the context of other leaders speaking has been the importance of continued globalization and not a return to protectionism. trump plays a different tune, we will see. francine: are there parallels with brexit? how may times to you get stuck and asked about brexit? michael: it is the subject du

jour in the u.k. still. the prime minister will be pressed on that subject today or tomorrow when she arrives. francine: how do you see it unfolding? negotiations like brexit are complicated. it is a very big issue for the u.k. and europe. negotiations like this never get concluded quickly. everything happens at the last minute. in difficult circumstances, our government is making progress. we are edging forward and achieving a deal on manufactured goods that is straightforward, not least because the u.k. is a major net importer, and the europeans have a big surplus out of the u.k.. it is going to be more complicated, although macron make comments last week when he was visiting the united kingdom which may give a view that it

may not be as controversial as some of us worry. see the: where do you future of the conservative party? is there going to be a leadership challenge to theresa may? michael: there is a bigger chance for a split in the labour party. party has been taken to an extreme left-wing point. it will be one of the most left-wing parties in the world. it is extraordinary in terms of its move back to socialism that we thought belonged in the museum. francine: they are popular with the youth. think if corbyn was a stock, i would say he has peaked , and do not buy him anymore. were ae: if theresa may

stock what would you say about her? michael: she has had a bit of a recovery. i think we will have a further recovery. she is not perfect, but she has some strengths. has guts and stamina. a lot of other people would have crumbled under the pressure she has been under. i think she will see a smooth brexit and will do a solid job. francine: will she get a deal on financial services? michael: of course she will, but we don't know the detail, and in financial services the detail is everything. approachthe european to financial services and u.k. is split, on one extreme the french see this as an opportunity that they can erect barriers from europe that they will benefit from. the formal central bank governor ,f france has been out

including me, he came to visit me. when you look at the angst in the markets, is it because markets are expecting a good brexit deal or because they are not expecting brexit? michael: brexit is going to happen. i don't believe there will be a second vote. francine: in the markets understand that? michael: i think so. i will say they are taking an optimistic view, they are taking a less pessimistic view. the u.k. economy is performing better than the naysayers have forecast it would. francine: did you forecast for the pound? michael: the last time i was interviewed by one of your colleagues in london earlier in and said where do

sterling go from here, i think it will get to 140. francine: doesn't go to 160? michael: the dollar has had a week run recently. in financial markets generally, when there is clear momentum, you stay with the momentum. rates cyclet, the is changing in the united states, and we are expecting three rate hikes this year. i do not think the dollar has a sustained barra run. -- bear run. francine: are we over optimistic that this can be the end of easy money? michael: we are going to have a year of decent economic growth. a different story is that does the stock bull market have much more to run? i think this is a tired bull market now. francine: thank you so much .ichael spencer, ceo, nex group

we will have more interviews including with the italian prime minister. manus: if jeremy corbyn was a stock then we have reached peak jeremy corbyn. let's go to juliette saly with the business flash. other illnesses will drive a return to growth. the company's earnings excluding expenses will run to mid to high single digits after showing no change last year. price pressure on generics eroded. blackrock, the world's largest asset manager, boosted employee bonuses last year after a stinging 2016 when incentive pay was cut. overall, the bonus pool was in the high single digits in the range of about 8% to 9%.

they said some employees saw bonuses jump substantially in the 20% range. others who did not deliver got cut. a blackrock spokesman declined to comment. -- dohaof delhi bank earnings in line with estimates. the dividend may come under pressure. >> i think it is better to because this because the banking business model is getting changed. , qatar andd payout the gulf states are generous. we have to be moderate and profile, and the dividend is likely to go through a downward trend. that is the momentum i see. that is your bloomberg

business flash. let's have a look at the markets here in asia. closed see japan's nikkei focused on that yen strength dollar weakness story. the yen pushing past 110. we are seeing buying in china. org kong pretty flat, slightly higher toward the latter part of the session. at a positive finish and australia, led by energy players. elsewhere there have been weakness particularly in tech stocks. tokyo falling substantially. jp morgan downgrading the company from neutral. taiwan falling.

then we saw a good rally coming through in the financial sector. that upside and the upside in energy players propelling the h index to another finish in .ositive territory 19 consecutive sessions. juliette saly in singapore. good to get michael spencer's take. davos was the mood at not positive for the euro area. what a difference a year makes. risks still remain. let's get to davos were francine lacqua is joined by two guests. by thee: we are joined former prime minister of italy, and the vice president european investment bank. thank you gentlemen for joining us on this cold but nice day in

davos. is this a little bit of european growth would look like? are we did get a deal on brexit? here in switzerland we are not exactly the european union. you are confident about brexit? thing is the overall european economic situation. if you want to point to specific we maylike brexit, discuss them. i am not confident on brexit. i think it was not exactly a smart move. i have to be competent on italy. and i am even confident that the italian elections are not going to be is disruptive as we might have thought six months ago. francine: on brexit, do you

believe they will reach an agreement on financial services? >> usually the nature of negotiations eu find a last-minute deal at some stage, and then everyone will be disappointed. the solution is always suboptimal. the difficult the for the u.k. is to understand that when you join the european union you do not join on your own terms but on that eu terms. when you leave the union, the same thing is true. your negotiating cards are very weak when you're trying to leave. that is what we are seeing in negotiations now. francine: we have seen leaders given overture to the u.k., saying you can come back if you want to. what is behind that? >> no one on the continental friedants to have shaken -- schadenfreud. from a security perspective, if

we were to give, the elements to the british media to say, look, they want us out, all europeans want to avoid that. when it wasast week said that our hearts are open to the u.k., and the door is always open for the u.k.. in me hopesoptimist the u.k. will not leave, or come back at some stage, but that is up to the british to decide. francine: are you that optimistic? >> ultimately, yes. what we have in the european union as a single market is essentially a british intellectual position because that was brought by margaret thatcher. eu, and of course

theirave to leave with us best babies. it must be very sad. how bad thatows totally legitimate decision was. francine: does it make it difficult for brexit negotiations russia mark -- brexit negotiations? the key right now is obviously that france and germany put their minds together and cooperate, because there is never advancement in european integration without this axis functioning. i don't think this hampers the brexit negotiations. they are led by michel barnier. i think he is doing job. talking aboutwere

the italian elections. you are not expecting them to be disruptive as others. what kind of coalition are you looking at? >> first of all, there were a couple political parties, the five-star movement, the league, which had been pleading for steps to take out of the eurozone. maybe by calling a referendum. this has vanished. defeat, and aen positive move economically and politically throughout europe they must a perceived that is no longer a winning proposition. we now have a convergence of all parties on accepting the european context. to be fair, we have a convergence among global parties to issue promises, particularly

that aretters inconsistent and belonging to the eurozone because they tear away all the fiscal and financial parameters. as recent polls show, citizens do not seem to be impressed. they do not believe these promises. if we look at the financial markets, the spread between italian bonds and german bonds, that is still high because italy is up relative to spain, which is not normal. but it has been unaffected by the electoral season. that is ecb, but also out of the flourishing unrealistic proposals is because

thanks to qe, or because of qe, not necessarily thanks, to the degree an anesthetic is very high. francine: what are you hoping to hear from donald trump? >> i don't think anyone can expect anything. it will always be quite a surprise. i think it is intelligent and shrewd for president trump to come to davos this year, because he was put forward as an anti-divorce candidate in the u.s. elections. i also think it is smart because last year, he was upstaged by president xi who came here to davos as the champion of globalization, as the champion of free trade, and as a champion fighting against climate change. i admit i am staying here for friday only because of trumps speech. francine: how will he be

greeted? >> i don't know. this is usually a civil place. people listen and then draw conclusions. you will probably not have demonstrations in the center. it will be interesting to see. it depends on his message. francine: is there an opportunity for europe, if there is a trade war between the china and the u.s.? >> i don't think if there is a trade war there is an opportunity for volatility. the interest for europe is to make sure the road of multilateral trade goes on. toxpect president trump reflect on the fact that his main objective for america first is not inconsistent with a well-managed coordinated globalization in a multilateral context. after all, each country aims for

filling national interests, but the beauty of government globalization and the multilateralism is that the only way your own interests in the long-term is to achieve also to some extent the interests of the others, and vice versa. have a trumpwill moderated by some awareness of the fact that even the u.s. is part of this world. francine: is 2018 different? >> 2018 is different than 2016. it is different than 2017 because the economy is doing much better. that is why you will see happier faces than last year. francine: thank you so much. the former italian prime

minister and the former finish prime minister. -- finnish prime minister. anna: liam fox the u.k. trade executive making some comments that the u.k. must be able to sign its own trade deal the on the eu. --sees the possibility manus: it is amazing how we get down to splitting the hairs. the brexit talks -- he says trump may be moderated by the fact that america is part of this world. it will be interesting to see what donald trump has to say and davos. anna: we have some stocks to watch this morning.

that is it for "bloomberg daybreak: europe." this is bloomberg. ♪

guy: welcome to "bloomberg markets: european open." the cash trade is 30 minutes away. the dollar-yen climbs through 1.10. has kuroda lost control? will yellen's successor really deliver. and down the drain. french utilities missed estimates. the stocks are called