president trump contradicts his treasury secretary on the dollar, but the currency stays lower. the davos speech at 2:00 p.m. local time. the white house says the president will support citizenship for up to 1.8 million so-called dreamers. he wants $25 billion for a border wall and more. on different pages, theresa may's office slaps down gensler philip hammond for saying he hopes brexit will bring only modest changes. good morning, everyone. welcome back to "surveillance,"

and davos. i am francine lacqua at the world economic forum. it is a packed day. coming up, from davos at this hour, u.s. russian relations. the e.u. prepared to sign off on the brexit transition. a number of conversations that we are talking about brexit. he is david lipton. we will talk to him about world growth, but also inflation. i will be talking about the end of easy money. what that means for the world economy and for asset classes. i will be joined by the ecb. a little bit later in the day of from donald trump. his america first agenda is also first, let's get to

the bloomberg first word news. here is nejra cehic. nejra: -- raising concerns among top aides he would put himself in legal jeopardy. trump ultimately relented after his white house counsel refused to carry out the order and trend to resign. one focused on possible obstruction of justice. trumpresident donald would support the path to citizenship for as many as 1.8 million undocumented immigrants brought into america. trumphouse officials say also wants congress to provide a $25 billion trust fund to pay for a southern border wall and enhanced security at boards of entry as well as improvements along the u.s.-canada border. he would seek immigration judges.

toldvors, george so growth the world economic forum the trump administration is a danger to the world. trump defeated in the next presidential race. >> clearly, i considered the trump administration. a danger to the world. it is a phenomenon that will disappear in 2020. or even sooner. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. francine: the governor has praised draghi's message yesterday, saying it was one of

confidence and patience. >> president macron came to say that france is back. i must say, as an independent central banker that this new government has been quite efficient on accelerating reforms. there are new labor laws out implemented in less than four months. and the alleviation of capital investment taxes. more must be done on reforms because we need to increase the potential growth. francine: governor, how many questions do you get on the euro? theario draghi asked question yesterday at the press conference of the ecb. looked at the, we

volatility of the euro exchange rate. that requires monitoring the effect on the inflation. this is what we had. clearly, we had no exchange rate objective. our foreign objective is inflation below 2%. we have to monitor the effects of the exchange rate. francine: right, but because of the u.s. treasury secretary showing up in davos, and saying that a weak u.s. dollar is portrayed, is that talking down the currency? >> they were different declarations from different and very important messages. mario reminded, without quoting anybody, the terms they agreed

up on in common. what we also said, including the new u.s. administration ,was "we will not target our exchange rates for comparative purposes." this sentiment is important and remains we rule of the game. not only for public authorities, but also for business. francine: do you worry about inflation not taking hold, or worry about the exchange rate? r only mandate is about price stability. look at and speaking of monitoring yesterday are the effects on the inflation outlook. how can you be so sure that inflation will come to europe? >> if you remember a couple years ago, we had the danger of deflation.

the first success of our monetary policy. and the message we expressed yesterday was a message of confidence and patience. confidence because we are confident that in the path of gradual normalization of monetary policy, this gradual normalization of monetary policy is progressing in an efficient way towards our inflation target of 2%. patients because we are not yet there. francine: that was the bank of france governor and ecb governing council member francois villeroy de galhau. stay with "surveillance," plenty coming up, the eu is said to be open to extending the brexit agreement. later on i nthe program, we are joined by the imf diffie director david lipton. director imf deputy

david lipton. that's coming up in an hour from now. this is bloomberg. ♪

guy: economics, finance and politics. this is "bloomberg surveillance" and i'm mark barton. the stoxx 600 rising today after it fell for the biggest amount yesterday in the wake of that ecb meeting. we are up 1/3 of 1%. we're looking at how the index has fared over the week. that three week gain could come to an end today. yes, the euro fell yesterday in the wake of donald trump's

comment. it initially rose after mario draghi attempted -- may be attempted is the wrong word. he commented on the volatility of the euro. that pushed the euro up before trump's comments, but it is rising to the highest level since december of 2014. the german ten-year yield, jeff gundlach says 60 is a very significant level for the german bund market. i'm talking on the bearish front. and gold, which fell yesterday because of the dollar's initial strength, it is on the way back up again, close to the highest level in 18 months. weak dollar, strong gold. nejra: donald trump is courting biggesteurope's businesses. he held a dinner last night, attended by ceos of companies, including bayer. we will bring you donald trump's

address to the world economic forum in davos from 1:00 p.m. u.k. time. donald trump: millions and millions of dollars are coming into the u.s. and people are very happy with what we have done, not only on the tax bill, but the cutting of regulations and being the cheerleader for our country. not the cheerleader for your company, but your country. no matter what happens, it is not going to work. nejra: the ubs investment bank says there is a slew of investment. he spoke exclusively to francois villeroy de galhau in -- he spoke exclusively to francine lacqua in davos. >> it has been climbing from 2016 to 2017. we have the biggest deals being done during the fourth quarter. we think that should continue due to what has risen, which is growth, confidence, changing taxation in the u.s. and

regulatory relief. we think that will push the amend a cycle. -- push the m&a cycle. let's get back to davos, where we are joined by haslinda amin. haslinda: the brexit transition period. monday it is expected to lay down a december 2020 expiration date. countries are open to expanding the phase beyond that deadline. joining us now is the european commissioner. he joins us this morning. good to have you with us. when you look at the brexit negotiations? will it be a long time before we see actual results? >> britain will leave the union on the day which has been set. it's in our law. so, you cannot stretch the legal system.

there is a one-year time period. of course, we have to look at the future arrangement. we will talk with the president. one thing is for sure. even if if we had the best possible trade agreement with the u.k., it is never as good as the single market for the u.k. francine: do you think the u.k. is too slow making brexit demands for trade? >> i don't think so. we have had possible discussions on possible trade agreement. but it will take some time. a comprehensive trade agreement is not an easy task. it will take quite a while. francine: what is quite a while, do you tinhink? >> it is difficult to say, but we usually negotiate for years with other markets.

with japan we negotiated for four years. with america, 20 years almost. in britain, it's a special case. we are so close to each other. we know eachother. it's much easier than a negotiation with a third country. there are a whole range of issues. of course, it's in both sides interest to get a good trade agreement, but it is never as good as being in the single market. francine: that is not to be, though. given brexit, what are the prospects for eu integration? >> at the moment, prospects are very positive. we are further integrating the phase of security. if i were to admit something, i would expect we have a cyber defense system in place in three years time. we are deepening our military

commitment. we are establishing a new fund for developing military capabilities in europe. this all is completely new. also, looking at the single market, the energy market, the capital market union, those are all areas where we have and will create excitement. and finally, emu the emu must be reformed. morest become more secure, incorporated. this is what we are working towards. juncker: do you think has done enough to ensure eu survival? >> yes, we have the most

ambitious trade agenda ever for europe. emu security,ket, defense, even with crises like this, europe is a very different place in two years time than in three years ago. more integrated, stronger in terms of the economy, stronger in terms of security. so, europe has moved. somehow with all these uncertainties around, coming from the united states, the middle east and coming from russia -- terrorism, fake news, cyber terrorism, it has encouraged our member states to take a leading position, as we have heard happening, for instance in davos when president macron and chancellor merkel gave very good speeches. francine: you touched on trade. it is chugging along, despite

some anti-globalization sentiment. trade is goiroing at half the pace it is meant to. economic officials are talking about possible trade war. where do you see trade headed? >> the first is protectionism, which is coming from the u.s. and the other is what the eu is doing. last year we concluded our trade negotiations with canada and japan. those are completely new trade agreements, very comprehensive trade agreements. this year, actually i in two mo nths time, we will conclude with american countries, i.e. argentina and in a couple of m onths time, with mexico. is important for us

to modernize the european economy. unilateralism and trade is the way to bring values to globalization, bring values to trade. europe is enhancing free trade. unfortunately, all the others are not on the same path. we are a bit worried about the development in the u.s. we want to avoid, whatever the price, a trade war. it's harmful for everybody. we do what president trump -- we do hope president trump would recognize this. reporter: we know the u.s. is j awboning, trying to get the dollar even lower than where it is. given how low the euro is, how concerned are you? >> european fundamentals are

getting better. the member states have reformed the economy. there is more work to be done, but nevertheless, europe as a whole is stronger than it was two years ago, thanks to structural reforms. thiscb has -- has significant ability. also, the economic stability in europe. we should not speculate on what happens next, but the only mandate is to take care of the price of the european economy. reporter: is there too much eu phoria, complacency and optimism? are the market economy is prepared for major central banks tightening at the same time? or possible geopolitical tensions in the korean peninsula? for china, it's inability, if

ever, it may fail to rein in credit without causing instability. >> looking from the european perspective, complacency comes from the fact that now we are coming -- we are clearly out of crisis mode. we were in the crisis since 2008. now we are out of it. so, even though the growth started earlier, mentally we are out of the crisis now. that's why people feel more seucre. they are more content and are more trustful for the future. but it's also because of political leadership. macron, chancellor merkel, the other political leaders have set the change. move. is on the

we are moving forward. we are addressing the weaknesses. we are reforming the eu. we are reforming the member states. so, this moment creates positive impacts. it's all impact. you are right, there are crisis coming from possible trade wars, etc. the best way to prepare for this is to strengthen the basis of the economy. , werter: jyrki katainen thank you for your insight. mark, the world is waiting to see what trump has to say. that speech coming at 2:00 p.m. local time. gmm is your function, the wonderful function telling us everything about what is going on this morning.

equities were rising today. we saw yesterday on the back of thosee comments from trump, on the back of the ecb meeting. i will tell you about the correlation because it is breaking down. stocks are up today after declining yesterday. they are on track for the first weekly decline in four as well. the second column has been the column of the day and week. given comments from steve mnuchin, donald trump and even mario's draghi weighed in on the debate. meeting,fter the ecb and fell on the back of the trump comments, now at the 2010.t level simncnce fourth-quarter gdp data in six minutes time. 0.4% is the estimate we are expecting. there is the u.s. president donald trump in davos. he speaks in a couple of hours

time. let's look again at mr. trump, president trump, in davos. as haslina just said, he speaks in a couple hours time. 1:00 p.m. local time in 2:00 p.m. loca. haslinda: president trump is making his way to where we are right now. of course, people are wondering what donald trump would be addressing when he speaks later on at 2:00 p.m. local time. the sense here is that he will be pushing his america first succeeded,how it has despite what people said one year ago. when he came to power, remember, and pushed through the america first, people have said, it will be to the detriment of the global economy. that has not happened. in fact, gdp throughout the

world is rising. we saw the imf, changing his projection for most countries in the worldso. so, trump may indeed claim victory for that. you'll hear what he has to say. this comes at a time as well amid a rising possibility of a full born trade war between the u.s. and china. and china, at this particular davos meeting, the top economic official came up to say, you know what? be prepared for a more open china. china will open up some measures within the economy, exceeding the expectations of the international community. these are interesting developments, mark. given where we are in terms of trade and where the currencies are this point in time, the dollar, the lowest in about three years. not great for asian economies, which are part defendant economies. how will thisow,

play out? will asian central governments rethink their currencies? will they jawbone their own currencies to respond to the u.s.? so, lots coming up over the course of the day. up next, plenty more to come from the world economic forum in davos. we will talk u.s.-russia rel ations. next. this is bloomberg. stay with us. ♪

economics, finance, politics, this is bloomberg "surveillance." let's get to the bloomberg first word news. nejra: donald trump is said to

have wanted to fire robert mueller in june, raising concerns that he would put himself in legal jeopardy. the new york times reported that trump ultimately relented after his counsel refused to carry out the order and threatened to resign. the news appeared as soon as mueller appeared to be wrapping up his case on obstruction of justice. donald trump will support a path for 1.8 million undocumented immigrants brought into america. jump also wants congress to provide a $25 billion fund to pay for the southern border wall and security at the port of entry, as well as improvements along the u.s.-canada build -- border. soros told thee world economic forum that the trump administration is a danger to the world and said the u.s.

president is risking more with north korea. soros is expecting a democrat landslide in the midterm elections and trump defeated in the presidential race. >> clearly, i consider the trump administration a danger to the world. but i regard it as a purely temporary phenomenon that will disappear in 2020, or even sooner. nejra: the governor of the bank of france said mario draghi's message yesterday was one of confidence and patience, even amid the recent euro volatility. he is also a member of the ecb governing council and spoke exclusively to bloomberg. global news, 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am nejra cehic.

let's get back to davos. time to: ubs says it is keep as much of its business as possible in the u.k. as the country reshapes its relationship with the european union. francine caught up with the head of ubs for a wide ranging interview and started by asking him about the unit model. >> adjusting the model means for example, we stopped getting engaged in certain asset classes because they were very heavy regulatory wise. for example, the moveon exchanges, when we get cleared we can move back because they are capital light and their returns might be higher. some businesses were a lot more higher value, higher volume in 2013 and 2014 and now less so we are deemphasizing those. competitors are evolving and you need to stay on it.

the capital high risk adjusted model can grow in dedicated segments and stay the same as successful. francine: talk to me about m&a. you are expecting a little less than some of your competitors, or more? andrea: m&a has been strong but slightly declining from 2016 into 2017, but the acceleration we had in q4 were the biggest deals being done. we feel that that should continue, due to what has driven that, which is global growth, confidence, changes in taxation in the u.s., regulatory relief. we do think that will push the m and a cycle. we do not think it will be massively greater than what it was in 2017. francine: overall, there is so much optimism in davos and i do not know whether this is because

the world reform or economic outlook by the imf was better than expected. is there too much optimism? are you worried something ugly can happen? andrea: i think economically, we have not had it so good for a long time. you cannot have it much better than that. from a market standpoint, which is the way the financial , asset valuesoks continue to go up in pricing, volatility is low, so we are concerned there is a little bit thatuch of a comfort everything is fine and nothing can go wrong. everybody is quite geared up. there is a big deployment of capital across the industry. if there is a pullback, i think it could be quite significant. so i think that from a market standpoint i am a lot more

cautious. from an economic standpoint, i share the optimism of most people. francine: when you talk about a pullback, could that be triggered by a mistake in monetary policy or geopolitics or a drop in the market? andrea: all of the above. what is changed probably in the last three to five years is instead of considering pullback to two monastery policy -- monetary policy or whatever, we have a whole bunch of uncertainty, political across the world. these things are a lot more difficult to adjust to. mifid, anding out the first reaction has been better than we expected, but it could've been worse. nobody knows the impact of such great changes of regulation and market structure. brexit, we'll talk about it. for the time being, everything is relatively quiet and people

are going through calmly, but as we get closer to the deadline, things can go wrong. we have a number of these things that can continue going well, but could also turn the wrong way. haslinda: that was andrea or bank ceo of ubs investment speaking to francine lacqua. black rocks ceo larry fink has urged investors to stop keeping money in cash as stock markets reached new highs. he says too much money on the sidelines of financial markets from china. he also discussed global synchronized growth, and the next move from the world central-bank. larry: the economy was growing between two and a quarter and two and three quarters. we estimate the tax reform, tax cut, and the budget is going to probably add at least 9/10 to

the gdp. so we are going to see a u.s. economy going three and a quarter to three and a half. that is quite stimulus for the entire world. at the same time, what i hear in davos with the europeans, a year ago they were very pessimistic about the future of europe, the eurozone, what will happen in france. the outcomes were all favorable. now you have an aggressive central bank. we are going to see a europe growing at at least 2.5% over the next 12 months, may be higher. you have china growing at six plus percent, but no one ever wants to talk about japan which for 30 years with slack. they are the third-largest .conomy growing at 1.5% we are in a unique position of incredibly synchronized global growth. erik: that can last for how long? larry: it will last at least for

the next 12 months, minus any political disruption. i think it could moderate because i think central banks' behavior will be changing. i think the ecb has more difficult problems that actually the u.s. and our federal reserve, but the federal reserve has begun. we estimate three to four tightening's over the next year. that actually does modify some of the growth. and we will see where it all plays out. subject to some global problem that is more politically oriented or a spike in inflation that we are not anticipating now, i think we should anticipate a fairly strong economy. erik: you have hit on the nagging concern that can be , or ited as inflation can be expressed as tightening monetary policy.

what is the possibility that the fed and other central banks take the punch bowl away, and it does not just moderate growth, it spoils the party? larry: i do not see that at this moment. i would argue that we need to define what is good and bad inflation. president trump would say good inflation is rising wages. that is what they are trying to do with the tax reform. erik: it feels good if your wages are rising. larry: i am not speaking for the federal reserve, but if we had a spike in wages that created inflation of 2.5%, is that a problem? i do not think it is. erik: it is only a problem if you define price stability -- larry: at 2%. at the same time, they have been at 2% and we have seen it much lower, and wages are not the totality of inflation.

i think we are still at an incredible point where technology will continue to disrupt and be deflationary. i think one of the bigger issues we have to address is china, as china does its reforms, and we will see if they get around to these reforms, china has been the biggest exporter deflation and they have such excess capacity. the reforms mean consolidating the stained owned enterprises -- state owned enterprises and eliminating excess capacity. could we see a china that goes from an exporter deflation to an exporter of inflation, if they do those reforms? there are many things that need to be thought upon and considered. one thing we do not spend enough time on that i harp on every time i am with you, we do not talk about the pool of money that is still sitting here. our financial markets are up three times since the financial

crisis, three times, and the pool of money sitting in cash worldwide has never been greater . it is a problem in china, where 45% of disposable income is in a bank account. if you speak to the finance , 72% of allfrance french savings is in a bank account. erik: germany is earning no interest. larry: can you imagine the type of inclusion we would have worldwide if we had better financial literacy, more people investing over the long run, the type of financial gains people would have in their 401(k) or ira? i think that is one of the bigger crimes that we do not talk about, and that is one of the reasons why i believe we have more momentum, because of the pool of money sitting around. haslinda: that was blackrock ceo larry fink on growth risks and markets. interesting views on the cash as

well. stay with "surveillance," plenty coming up. we will speak to david lipton next. you are watching bloomberg "surveillance," i am haslinda amin in dallas. -- davos. ♪

mark: you are watching bloomberg "surveillance," i am mark barton in london. look at what is happening to the markets this friday. we just had gdp data out of the you the -- u.k. check out the top of the second column. gdp up by .5% in the fourth

quarter, faster than the .4% forecast. growth last year as a whole flowed to 1.8%, the weakest pace in five years. rise, upcontinues to by one half of 1%. stocks are up today, down for the first week in three. in the wake of draghi's news conference yesterday, they are falling today. i just want to show you this wonderful chart courtesy of the queen of charts. you will find her on twitter. she comes up with all sorts of wonderful charts. showing us the breaking down inverse correlation between the euro stoxx 50 and the euro. that inverse correlation is breaking down as investors like draghi did yesterday, focused on the macro side, on the strong economy rather than on the strong euro, which is a

reflection on the stronger euro zone economy. tom: haslinda amin here. we say beautiful morning. what is so extraordinary about the is her first visit to set this morning, we need to be briefed each and every moment up to the president's speech, and of course with the news flow. we start strong in my morning with a gentleman who understands international economics and the market reaction, and represents the good work of madame lagarde. he is the first deputy managing director, quite a title. david lipton joins us now. david: good to be here. tom: there are eight or nine things we could go on, and i see we still have dollar weakness. with the multi-decade

experience of the international monetary fund and foreign exchange, when professional phd's like yourself hear the dialogue of the secretary, the dialogue of the president on dollar, how do you respond? david: we look at the big picture and the long-term. we have come to the conclusion that flexible exchange rates with the exchange rate determined in the market and allowed to float freely, and where everyone understands clearly that will be the case, that serves countries well because then the exchange rate will move went economic forces push it. it will be kind of a shock absorber for countries when they need it. the g20 has agreed that is the approach that g20 countries will take. in the long run, it is best for advanced economies. tom: is the president learning a constructive lesson about the power of the markets?

when we see the dollar reaction some of the bond market reaction yesterday, it takes the market sometimes to suggest he policymakers how the system works. david: we will see. i think it is hard to interpret the words that officials speak. that is a challenge for people in the markets. all i can say is i think that it is best when there is a clear and understandable exchange rate system, just like we believe about monetary policy. .om: that means advert free "ultimately" is not used. haslinda: the question really is, how will the rest of the world respond with the u.s. job -- south korea would want the country to be weaker as well. who is to say whether china can -- david: good question. g20 has a long-standing

agreement on exchange rate policy, and i think they will probably in march when the finance ministers get together, reiterate the support for that approach, because it serves so many countries for so long. haslinda: how do you see this playing out? david: we will see how markets react. officialsat when think it over, they will press together to carry on with the approach that has been working. qualified tomost bring forward that i'm lagarde's dialogue. short-term and cyclical do not matter. we need short-term changes to lead to economic growth. you worked with jeffrey sachs decades ago. ring us forward on innovation and technological applications that will lead to sustained economic growth. david: i think there are two messages coming through this

week in davos. with the economy doing better, the global economy, and it is, it is time for countries to try to secure stronger growth in the future, and to make sure that our system of globalization is durable. the poorer countries depend on it for their future. there is discontent around globalization in the united states and europe. there needs to be a way for everyone to hear the concerns, the discontent, and deal with it. lesson number two is, i think the buzz of this week is all about new technologies. will be commerce be a threat to non-e-commerce? will non-automation be a threat to workers? the question is, will this be opportunity or dislocation? tom: the president, in his clearly made cnbc

the distinction between a multilateral approach and a bilateral approach. the backstory of davos is the rekindling of tpp. thathe imf take a stance could potentially draw america into that fractured agreement? david: we have supported trade agreements that list the standard -- that provide access to markets, provide a higher standard, that brought in the inclusiveness of countries that are cooperating. tpp, unfortunate that including the united states, if they can find a way to join that would be good for asia. tom: what do you see in singapore on tpp? what was the reaction of your reporting day after day? haslinda: i think the initial reaction was disappointment, and the eventuality, what they are hoping for is that the u.s. will come into the flow at some point

in the future. i want to bring up your point about asia. tpp is critical for a lot of asian economies. in one of your reports, you indicate that india is poised to be one of the fastest growing economies in the world. slack,a pick up the should china slowdown? david: we think if china plays its cards right, and they seem to be pointing in the right direction, they will continue to grow. one third of growth in the world last year came from chinese growth. with two thirds of global growth coming from emerging markets and a good part now coming from india. india will be a new growth engine, and integration of asia altogether will also i think be good for the participants. tom: i had dinner with ken rogoff the other night. what a joy it was. this is important for the

singapores of the world and the commodity nations. all of the focus, dr. lipton, is .n euro-dollar, dollar-yen what does this verbiage of the president and secretary mnuchin made for currencies -- mean for currencies that do not have the power of europe or america? what is the damage of this language to currencies we do not talk enough about? david: currencies in most of the emerging-market countries now are floating or nearly fully floating. makes that key distinction. year 2000, wehe have seen so many ups and downs in the global economy, and that has provided a cushion in bad times. tom: agreed. david: provided some support in good times. whatever comes with the normalization of monetary policy in the u.s., europe, and japan,

with whatever is happening in the big currency markets, i think it provides the best way for emerging-market countries to react. haslinda: the normalization, can the emerging markets withstand the practice? david: if central bankers do what they have said, which is to have their monetary policy follow the course of the recovery of the economy and the recovery of inflation, then as the countries' economies strengthen and inflation returns to the target, they will normalize. then really, that should be fine because it is really the strength of the economy driving the process. normalization is following. the risk is that something goes wrong and inflation picks up. that should not be a base case. that should be considered a

risk. alan ruskin at deutsche bank agrees with you that the inflation linkage is now less so with foreign exchange than it used to be, do you agree? david: there is what people have dubbed missing inflation. it is hard to explain how unemployment rates have gotten as low as they are in the united states and japan, without inflation returning to target. it may be that it is a little late and it is just now happening. central banks will have to stay alert to the events, but so far we have seen is that central banks' normalization has been gradual, and that seems to be working. we will have to see whether the inflation demons return at some point. tom: i would suggest you will have eventful meetings in bali. david lipton, thank you so much.

the first deputy managing director at the international monetary fund. without question, this is an extraordinary friday in davos. i have never seen this. awaitda: it is, and we what trump says at 2:00 p.m. local time. tom: i was down before he walked into the congress hall where matt campbell was observing the festivities, the president was signing autographs. he was looking presidential, that there is a real mystery about the speech at 2:00 p.m. davos time. we have complete coverage, including coverage on wash -- in washington. "loomberg "surveillance continues. ♪

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president of the united states will address the assembled global elite. an trump america, it is america alone out in the w ilderness by ourselves. the trump message, enough is enough. the confusion is the mession. mr. trump demands an ultimately strong dollar. the dollar trade is hugely weaker this morning. well, it's crisis day on the street. eric smith and selective gazillionares, they stand in line. for takes the davos trophy the toughest ticket in town. this is "bloomberg surveillance ," and i'm tom keene at the world economic forum. this 48thiginal davos

year. there's never been one like this. i think it was president clinton, 17 years ago and today president trump in the hall, preparing for his speech. business continues. here is our francine lacqua with her new panel. francine: to the world economic forum right here in davos. welcome to bloomberg's televised panel. i am francine lacqua. since 2008, central banks have added trillions of dollars to their balance sheet, driving yields to where they never have been before. so now, as they start to tighten monetary policy, is the world economy really ready for the end of easy money? please, give a big round of ourlaws applause to wonderful panelists.

[applause] francine: radel io, bridgewater associates founder, the financial research chairman, and the chairman of ubs. thank you for joining us. we will start on currencies -- we will get to inflation in a secon.d there's been so much talk as to whether we are entering a phase of currency wwaars. if we are, how much does that complicate the world of central banks? >> hello. good morning. war is the last thing the global economy needs today. ratese in a world where should not be targeted for competitive purposes. let's stick to that. and we see a lot of activity being created by different statesman.

and any discussion on the acceleration should be sent back to where it belongs. that is where the discussions should take place. volatility is, helpful. any unwanted tightening of policy, we would have to reassess. francine: the u.s. treasury secretary shows up. weaker, andlar is he says that is better for trade, but his boss says, we are targeting a higher dollar. is that currency wars? >> no, it is not. the u.s. position has always been outspoken to focus on the strong dollar being in the interest of the u.s. in the end, the u.s. will come back to the

realization that the strong dollar is best for the u.s. it is good for many countries. monetary policy around the globe has been acting as part of quantitative easing. currencies that were using were easing on the foreign-exchange side. quantitative easing through financial markets, and quantitative easing between two currencies can affect the exchange rate. where we did see an impact on qe was in the exchange rate. we are normalizing monetary policy and interest rate channels and credit channels are coming back more. that does not mean the exchange rate will go away. central banks around the globe are getting out of qe at a different pace. also, in different stages. ual perceptione us you would have with the u.s. exiting qe first, that would have been something that would have driven the dollar continuously up.

we saw the dollar doing the opposite. we are in uncharted territory, exiting from qe will be a difficult exercise, but i don't think the dominant news will come from the central banks. the central banks will have to take a cautious approach, and they are all doing that. i don't think the disturbance of financial markets will logically come from central banking, because it is on track to what they would like. the other geopolitical risks have the potential to disturb the global economy. >> i agree. this is not necessarily a currency war. it's confusing, right? and the market has been very volatile. the two key peoples have a very different view on the currencies. and the market got very confused.

that is very important. in the current situation, the key central banks are searching for a different policy. the ecb still follows the certain path, as does japan, too. the exchange rates can be very volatile. so, we -- i will say this is not a currency war. but we have got to be very careful that the currency wa r is avoided. francine: ray? >> i think it is in porton to look at the mechanics of who determines where the currency movements are. the policy maker, like the treasury secretary making a statement, can affect the mood of that. central bankers can affect monetary policy. and then there are those who hold portfolios. they can hold reserves in currenceiies. and they have a big effect.

portfolio is very skewed to the dollar assets. the world as it portfolio. even more than the currency mixed. of dollar bonds, whoever holds those dollar bonds, that is a pile of dollars for -- a long-term pile of dollars. and how you feel about those dollars will affect this. i do believe currency will be a big issue this year. as there is a reconsideration of how important the dollar is as a world reserve currency. portfolios too skewed in that direction? i think they are too skewed in the dollar direction because if you wanted diversification, you would not have so much. i think central bankers will be paying more attention to currency as a consideration when setting monetary policy. ordinarily it is growth and

inflation. growth, inflation and currency -- i think currency will be a factor in the next year. francine: they won't be used, or will they be used as a trade tool? >> i think central bankers will react to it. not close it. francine: deputy governor? >> coming from a small, open economy, we have to live with what the big elephants are doing in the world economy. i think it's clear with free capital movements and the interest rate channel and the are movednnel, these by economic forces. we are a small economy and we have got to be honest with the that that this is part of the transmission channel. a number of central banks, including ourselves, have been struggling with lower inflation for a long time. try to get we said,

close to the big exchange rate movements, but we have got to take it into account. xel mentioned, we are getting out of this situation we have an fighting with for a number of years, where interest rates and credit factors will become more domestic. if there is a currency war, perhaps we are getting out of it, rather than getting into it. >> at the end, it is very simple. the market is driven by market forces, as it should be. what we want to see is exhilaration rates reflecting different financial conditions in different places. and different financial conditions affect the cycle. and we have to keep it like that. i wanted to highlight something ray said, which is very important. the dollar remains the main currency for the world, for trade. so, whatever happens to the dollar is very important, which

holds a particular importance to the discussion. it has got to be structured and contained. >> currency weakness at this time -- dollar weakness at this time adds more stimulation to an overly stimulated environment with a limited capacity. that means from a central bank isnt of view, there stimulation on top of stimulation. that will produce a reaction. i mean, how do you as a fed official, deal with a very delicate set of circumstances? i think that's a real thing. >>9 the poin -- the point ray mentioned is a real thing. you have got to look at different portfolios and how they adjust. i will give you one example. when we came out of the financial crisis and europe was going through difficulties, we saw the swiss franc appreciate

quite a bit. it did not come from a flight into quality of global investments. they came from a repatriation of citizens invested in global portfolio who suddenly recuperated some of that money and brought it home. so, the private sector in switzerland created an inflow into switzerland. it was domestic citizens recalibrating domestic portfolio allocations. t swiss franche -- the swiss franc was rising pretty heavily at that point of time. they started an intervention policy, trying to stabilize the swiss franc by purchasing assets abroad. buyingwith qe was european bonds and equities and creating a structural outflow of liquidity. you can see how the two forces ray mentioned will always interplay. very often, they react to a

situation within the private market, rather than the drivers of these other issues. francine: could the dollar actually not be a reserve years?y in five to 10 >> my view is that the dollar is increasing as a reserve currency. many of the banks now holding portfolios will try to make sure that they are liquid in dollar portfolios if we were to face other liquidity issues. because one of the things you have got to fear nowadays is, whatever was done during the last financial crisis when there were currency swap arrangements between the major central banks, the ability of the central bank community to reignite the same instruments to the same degree is more limited now after the financial crisis than it was before. the central banks need to be conscious of that and if we come back to a situation like that, we do to a large degree, rely on the central banks to step in and provide liquidity for central banks. we are trying to make sure that in the core currencies and in

particular, the dollar, we have liquid portfolios. think this is true, necessarily. yes, this is true. we observed that this happens globally. addition to the reserves, what will happen is a swap. it is a huge amount of r&b swap lines. also is very important on the education side. currenciesl reserve -- academically, they are always debating whether one figure is more stable. moment,his particular the confusing comments on the

dollar, not necessarily enhance or stabilize the reserve francine: benoit? >> it's very important, as axel at the wheel of the system. dollar would be used if there would be any liquidity within the system, which is the case today. if he moved to the other side of rulesonomy, you see trade changing. you see trade gaining importance. the importance within the foreign-exchange reserves. we at the ecb have invested 500 million euros, which is small. it's a small token.

it is a way for us to learn about the market. we believe it will improve over time. you see the domestication trends in the long-term. i think it is just notable that as we are having that discussion, what are the pros and cons, and what should be said -- where in the past it was always taken for granted. that means change. if you start to think about, what is the role of diversification, you come up with one big answer like "i do n't want to have nearly as much dollars." if you're dealing with the swap lines, you might want to have more dollars. that will produce a lot of the role of the dollar as a reserve currency. francine: deputy governor, talk to me about how your view has changed on how policy could change in the riksbank. open, um, it's an

economy and 50% of our exports go to the eurozone. we did not have much independence to start off with. but it was there. it got limited as we saw inflation deviating from the target, inflation expectations going south. as i said before, we have to admit that the channel is a vital channel. it can't go too much to the wrong, getting us too far away from the inflation. otherwise we lose the anchor. we had six years of inflation below the target. it took three years to get down to 0% and another three years to get it back. now, i would say we have accomplished the mission we set out to do. so, there, we have some more maneuverability again. francine: what is your biggest headache, when you look at that

appoints? we will talk about the phillips curve in a second, but what do you wish you could understand about your economy? >> it is actually about the phillips curve. we see a good expansion, not only in the swedish economy. it seems that the responsive nature between the inflation growth and unemployment gap was not as clear as it was in the past. so, cyclically, it looks fairl benign, but structurally, there are many forces behind that, in my view, point to a lower wwaage growth in the world. francine: how can you be sure that inflation is coming in 2018? >> let's talk about the phillips curve. [laughter] >> but let's start from the beginning. question a lot of people are asking themselves is, how could we have

injected so much inflation into the system? that is the starting point of the discussion. we have created huge amounts of money in inflation. so, what's happening? here you really have to think about the transition process as a two step process. the first step is transmission from anti-policy transitions to the economy. and the second step is from slacking economy and unemployment with demands on. inflation. the first step has been working incredibly well. the qe has been an incredible success, both in the u.s. and in sweden and the eurozone, everywhere. in the eurozone, we have seen i guess 18 quarters of consecutive growth now. this has been the strongest and

boldest recovery over the last 20 years. s exceeded our expectations. it is a very strong impact. it is mostly due to qe. including the transmission rate channel of qe, which is part of it. which remains part of it. that's been incredibly useful. now, the question is, when and how does it translate into higher inflation? we think of the phillips curve in the eurozone as being very flat for high levels of unemployment because workers have no buying power. they are not in the position to ask for higher wages. they just want a job. then, they move from part-time jobs into permanent jobs and then only they ask for

higher wages. there is a sequence here. we are just turning to see wages picking up in a very tentative way. also, core inflation picking up in a limited way in the eur ozone. we could be at the tipping point where the phillips curve is steepening. we are looking at diversity within the eurozone and that is happening at different paces across countries. even spain now, you see underemployment that is going down. because they are closer to full employment -- were already at full employment in germany, obviously. in france, employment is still higher. you do not see underemployment going down. it is happening at different paces across the region, but

wages are going down. francine: but is there a danger that inflation picks up too quickly and all of a sudden? >> i am a central banker. so, yes, it is a risk. there's the tail risk. thee amount of slack in economy shows the amount of public debt that into go down. that's a risk that global financial markets would consider. maybe there's time to come back to that, and higher inflation. in the eurozone, we are looking at the tail risk. francine: axel weber? >> i would be a bit more cautious about the success about the policy we have seen. that reminds me of the success of many fathers, people looking at the current recovery, it is a multidimensional recovery and many things play a role. you look at the u.s. first and foremost. fiscal stimulus is why this has

been driven forward. on the qe side and phillips curve, i remind people that it is a curve. it's not the phillips line. i think benoit is a bit too much "it's a line." i think you can be less sure that central banks have a good understanding of where that inflection point will set in. monetary policy will face difficult challenges. qe works largely by, if you go to 0% on negative interest rates, the credit channel and interest rate channel are largely shut off and monetary policy moves to financial markets and through the exchange rate channels. on the financial market channels, we have seen a massive improvement in market valuations and in the movements of the market. as central things go back to normalizing interest rates, they are switching back on the credit channel and interest rate channel. i would not be as sure that that

will switch back to a more broad-based effect for transmission of monetary policy throughout the economy, including through the banking system, that it will happen as smoothly as the central banks want it to. i think we are in difficult territory here. i think it's been an experiment that was unprecedented. coming out of that, we do not have good guidance on how this will work. is veryendence important. but central bank need to very carefully watch this. inflation could be the big surprise this year. francine: do you want to respond? >> i don't -- i would not disagree -- there are different channels. they are now being switched on, switched back. the credit channel is working. it's up and running. it was not working in 2012. a lot of the exports at the ecb has been about switching the

credit channel. >> in regulation helped. everything we are doing to the revised -- to supervis the npl's, nonperforming loans, we need to be very cautious. i agree with that. there are many ways -- we know the direction. there are different ways to get there. it is a discussion which is driven. if anything surprising happens on the inflation front, it is easy for us to react. it is going to happen, but we have more instruments. meanwhile, we have to be very prudent with the eurozone recovery. >> i don't see the risk in inflation picking up strongly and quickly. i don't see that. the commodity price is relatively stable, ri8ght?

the u.s. overcapacity is affecting many countries and labor markets do have the space. even the monetary policies start to turn. all we can tell you is inflation might not be able to jump up. but that is not the issue. the issue is, and i always ask myself, do we really understand what this information means today? with technology, with e-commerce , with artificial intelligence, this will increase to medically the cost of transactions. it dropped dramatically. 2% inflation target

mean the same as the 2% target 15 years ago? i don't think so. what does inflation meabn today? we all have got to be very careful. we have to think carefully, what does inflation mean today? francine: let me go to the deputy governor, and then ray dalio. what does inflation mean? >> as a central banker, we have got to understand how the economy evolves and how the inflation drivers change. i agree, there are many technological benign shocks which are great for us as a human being. it is fantastic to be a consumer in this economy, but it is one to be on the producing side. i think the reason for why we see quite low wage growth globally, where at least within

the advanced economies is we still have the legacy from the global financial crisis. a lot of people got very hurt there. you prioritize job security ries as ther sala first-order reaction. and then you perhaps, get a more ambitious attitude as the recovery becomes more mature. when it comes to the technological changes, the e-commerce and the greater transparency, i do not believe that means that inflation is a thing of the past. it is gone. we as human beings -- we are maximizing creatures. it has taken us from the cage to where we are today. and in economic terms, it means once we have gone through all of this disruption that technology handle, asive us to

an employee, you want to ask for a higher salary when you have the opportunity to do it. and as a company, he will try to raise your prices to increase your earnings. those are the forces for inflation long-term. in that environment, the best contribution as a central banker is to have a price ability target. wheree in a world everything is uncertain, at least if people can expect that ok, price stability is somewhere there, then you do not have to much about that factor. francine: ray dalio, are we focused too much on inflation? what is the right policy mix for the world we live in today? >> four things that ave to be said. phillips curve. let's agree that any notion that the phillips curve is working,

forget them. let's not be guided by the usual association of linkages between inflation and growth. francine: so, it is dead? it is not even broken? >> it is -- i believe technology and the nature of that is changing completely the relationship between inflation and growth. if you look at the breakdown of followed, itnd what has is in a cyclical pattern, but in a slower than normal pattern. if you look at good inflation, there is goods deflation. the emphasis of the cycle is exaggerated relative to what everybody leaves is the phillips curve. it is demonstrated. if everyone is so focused on growth and that gives way to inflation, yet after all of this quantitative easing and struggling, they are still struggling to get a core

inflation rate in the united 2%.es, europe, and japan of so the headline should be we do not understand that, at a central banker should say we can not rely on that, shall we to -- so we should see core inflation to react to that. how big of a worry is inflation? relative to the worry of a downturn. when central banks are managing these things, they have to weigh one against another. so the asymmetry of that risk. supposing we are wrong and there -- they are easing and you get to 2.5% inflation, is that a tragedy? on theosing they erred other side and they had a downturn -- can you imagine a downturn now? and let me deal with the sensitivity to rate changes. there is a greater sensitivity

to monetary policy changes that there has ever been before. that is because the market sensitivity, if you look at the pricing of markets, the duration of assets has become very long, which means the price sensitivity of bonds and all other assets to interest rate changes is greater than before. there is so much more leveraging up in certain ways. the market sensitivity to a rate change is very high. if the central banks discount that raise interest rates are more than discounted in the curve, that will be priced toward all asset classes, not only in bonds but also through other asset classes. that will hurt other asset classes. classes,rt other asset that is the first stage. we are late in the cycle in terms of operating rates and so on, and we are having a stimulation into that.

the question on central bankers is how calm will you be during that, or will you get it right? central bankers never get it right, because it is not a perfect balance. that is why we have recessions. if you take the asymmetric risk, which side you want to be on? i would not want to be on the "ok, let's see. 2.5%." that would not be a problem. particularly the polarity between the rich and the poor in the world, there is a total difference in the economies when we look at the averages. so i would not want a downturn. francine: ok. i feel like benoit coeure earned his right of reply. ceciliapet -- i guess and i will confirm this -- we are very calm.

it is a balancing act, as ray said. we have to find the right balance. i would frame the discussion slightly differently, starting from the asymmetry of risks. to 10 years, five we have been focusing very much or even only on downside risks. risks to the tail downside. it has been a huge effort to take that risk out of the discussion in europe. in a very forceful action. now, the risks of a sluggish growth, prices remaining low, etc.. and we are slowly moving out of that. so looking forward, we will have to focus more on upside risks. el andd agree with ax

agree there is some complacency in global central markets when it comes to upside risk of inflation. i am talking globally, not specifically the eurozone. if you look at the flatness of yield curves, risk premiums remain very low, even negative in the u.s. that is evidence of some complacency. markets wake up to that risk at some point, the curve it may steepen, risk premiums will reduce, and it is something that will happen. terms of central-bank reactions, what matters a lot is the instruments are different. as he moved away from coping with downside risk to coping with upside risk, we are moving away from conventional policies. all instruments are there.

it is difficult to find tourance -- instruments fight inflation or a risk. have collateral, side effects, that we did not know. because they are sometimes too predictable. and that creates noise around the reaction. and we have lived in that very difficult environment. the we moved back to gradual policy, all the instruments are there. it is a no-brainer to deal with inflation. because all of the instruments are there. >> i do not know if there is clarity in what i am communicating, so perhaps i can clarify. we are in agreement that there are now upside risks because we are at a limited amount of

capacity in a lot of stimulation. and then that there needs to be some kind of tightening. but then, there is a balance you want to try to get perfectly. now let me ask you, if you are going to make a mistake so that you had half a point higher than inflation or an economic downturn when trying to get that right, which would you think would be the worst outcome? that is not the way we look at things, because we do not have a geo mandate. so let's take the question on the core inflation rate. you have been struggling to get the core inflation rate to 2% for a very long time. you will now have a cyclical boost here, right? how much attention do you think you should pay to the actual

inflation rate relative to the cyclical boost in stimulation? i would think not too much, right? benoit: as i said, we want to be patient on that front. >> i am not a professor, so -- francine: you can say what you want. >> i and the press between the sense of banker -- central banker in the markets. the central banks did quite a good job in the past in the sense that they cautiously raised interest rates and it matched market expectations. look at the funding expect to markets raise and converge to the line.

so the line is where things are good. the real issue is if we are looking at the future, the said and all of the central banks will continue to do good can -- communication with the market and how this to line on board the market. francine: axel, do you worry about too quick and interest rate rise? what isat i look at is the guide and what is priced into the market? you see the example in the u.s. most of the market expected up to two rate moves the senior and a bit more next year. the market is currently repricing. the current best the market is repricing by putting in three, possibly four, rate hikes this year. why does that happen?

we are data dependent. the market is reading the data coming in as of the tax reform the next meetings, the fed will see a more bullish set of data and will start to revise their outlook. and a repricing of the market is how central-bank can vacation gets translated into the markets. where i have concern is we are coming out of this qe is how useful -- and i do not think it is any more -- is forward guidance by central banks? look at the predicament of the ecb. tying your hand on purchases for some time and indicating that will be a long delay to move interest rates has probably stopped being as useful as a has been in the past, where a commitment like that would convince everyone that monetary conditions would prevail. the market pricing and how it re-prices policy as data comes

in is the way i look at that. where we are now, i think central banks are on the cautious side and probably how the market is repricing that is the right side to be. as we move into a stronger economy, as fiscal stimulus comes in, as the u.s. might add infrastructure investment, there makeolicies that will monetary policies less required and could turn monetary policies and stimulus could turn into a counterproductive. francine: is forward guidance not good for households and for animal spirit of a region or country? axel: as financial markets are the core transition at the moment, many of the happens through valuations and asset markets. a faster than expected monetary tightening will hurt financial markets beyond what would be required in a predictable normalization.

that is a concern. all agree onwe something, and that is important to agree on -- what we had as far as guidance in monetary something like two years, the federal reserve was wrong. the markets discounting that was wrong. there needed to be less rises in interest rates then were discounted in the market and what the fed said. that was good. we had a bull market as a result of that. there now in a spot where markets are discounting very little increase. and the fed is saying a little bit more. now, the question is do rates rise faster than is discounted than they are told because of a set of circumstances that happened? we could all agree that could be bearish on the markets, is that right? min: communication becomes the

issue. discount verynot much. but in this particular moment, the potential risk of a new fed chair -- i am not questioning the chair. jeremy powell is a very experienced central banker. but he is a new king. so does he leave the market as -- francine: should you care about the markets as a central-bank? benoit: as a fed, i am not commenting. [laughter] to steer that in a prudent and sensible way, forward guidance is a positive discussion. so far.d us very well it really helped a lot with negative rates and all of the rest of the toolbox.

inhas been instrumental making sure financial conditions in the eurozone would remain fixed for economic conditions. we want to make sure financial conditions in the eurozone remain for the state of the economy, which is opposite in other places, like the u.s. forward guidance has been part of that and very important in stabilizing and anchoring the short end of the yield curve. it will have to of all. the are in transition. we are in a gradual transition of instruments. we started that. we did quite a lot on the fact that our monetary stance is not only about the also about the butired stock of -- about also by the acquired stop of

but also about qe about the acquired stock of assets. it is agreed that is something we will have to discuss. we said it in the accounts of the discussion. either way, there has been a lot of comments, noise, about governing council members disagreeing around that. the discussions so far is on when to have a discussion on how we change the guidance. francine: the discussion is not on this agreement. on forwardr take guidance? cecilia: it was really for the people in the financial markets

to answer, but for me, we have our version of a forward guidance is, a policy rate path, that we published. at each policy meeting since 2007. it definitely clarifies the discussion -- or we have on the board and in going forward. it clarifies the discussion versus the market players and what is the most optimum monetary policy going forward. it is there to stay. can i also go back a little bit -- i thought your question is a bit mean, to say do you choose %etween going on plus 0.5 higher inflation or avoiding a sick of all downturn. it is important to remember that there are always cyclical reasons for not taking difficult

decisions. but if you are in the chair of having to take decisions, you have to try to look a bit longer. we do not frame the decision-making in that way that you put it. it is about asking yourself, ok, we may overshoot the inflation, potentially. but if that is a temporary thing, we should allow for that to happen. if it is a permanent thing, we have to be a lot more cautious. one of the things we learned in sweden, as inflation deteriorated below that target, is it takes a lot longer to bring about the target, to fight with economic agents and society a lot more about bringing back the trust. if anything, you have to keep your eye on the tour objective stability much tighter than in the past. francine: the london panel is expecting a downturn in the next

18 months? no? possibly? would say there is a question of a bear market within the next 18 months. you can have a bear market in bonds. you can have a big increase in rates. and you could have a big reaction of that. i would say there would be a reasonable likelihood of something like 12 months after that to have a downturn. i would a it would be a reasonably high pop ability -- probability that you would have a downturn in the next two years, three years, which would also be just before the next presidential election. i think there would be a lot of polarity. if you were asked the panelists frankly --t speaking what is the probability of a downturn within the next two or three years, that is an

interesting question. what would that downturn look like? or three years, probably very high. francine: 50% or more? >> more than that. look at horizon like that, that is beyond the usual policy horizon of central banks. if you look at your models, they would usually tell you it would go back to some kind of normal, because that is how these are constructed. but we are in a late cycle stage. this cycle has been artificially prolong. look at the u.s. we rarely had such a fiscal stimulation which will lift in such a.5 to 2.75 cycle. you look at the administration

to look into public-private partnerships, adding more .ynamics of the economy that is where monetary policy comes into the game, because people expect as monetary policy starting to move rates up and up , the only affect we have seen so are is a long and eight and monetary policy at the short end has flattened yield curve here that is not your usual environment. the real question is how is the long end of the market, how is the market repricing that? the market repricing suddenly, the central banks will have a problem. if the market takes it at a steady pace, central banks can continue to take their time and focus on it. but that is an open question. it depends on how convincing communicating from central banks comes in. i think forward guidance is the announcements of an intention. it is not a commitment device. i think the market makes a clear

distinction about this. the longer you pretend to tie your hands, but you actually do not, the market will be price. the central bank has a balancing act to walk. benoit: forward guidance is a declaration of intentions. being said by a flow of data. i have no disagreement with that. possible anyway. it is clarification on how we expect to react, given our reaction function to which we commit. and the expect did flow of data in the expect the course of the economy. cecilia: it is called forward guidance, not forward promise. [laughter] i think it is much less the actions of the central bank that will rid -- determine how markets will react to it, but it

is the reaction of markets themselves and how they look at the ability of liquidity and how they need to re-price an entire set of asset classes where risk is not been adequately priced for a number of years. that repricing will be a much bigger driver of the impact of monetary policy normalization on the economy than actually the market action itself. benoit: there is a lot being decided in markets and politics. as contribution is to be clear as possible on how we would react to that. that is what forward guidance is about. i want to comment on the perspectives. next true that, over the month or years, the global prospects look very favorable. the eurozone is doing very well. the u.s. will be having a big stimulus. emerging-market economies are full of question marks -- we are not discussing it here, but by

and large, so far it is ok. you see the global economy running with all engines being fired. and the imf is upgrading their forecast. so that looks very good. that is also when you can make mistakes. speedou are running full along the highway, you have to be careful the way you drive. that would require a lot of quarter nation internationally. importants me to an point that ties back to the discussion on foreign exchange we had earlier. that is the kind of environment where you need very strong international cooperation. a lot of trust among the main players. to dealright framework with these issues. international cooperation is key. regardless of the central

bank policies, the real issue is how do we end this long cycle? can we have a softer landing? that is the real issue. an issue we will ask the next three or four months. >> i am very happy to be having that this question, but why not have that discussion with ministers? francine: we do. that is another discussion. [laughter] >> i would be interesting. axel: to go back to the scenario of a likely downturn the next two years, the real question the markets are asking themselves -- assume that were to happen. totral banks will be back the table to use monetary policy tools in order to mitigate the impacts. gotten, by now, to a position where they have the ability to use some of these tools, or will it fall back into the usual reaction we saw last time around, another round of

unorthodox monetary policy to react to it. that will determine how markets will be the priced. benoit: that is my point. monetary policy has limited space. you need to see space. that is why we have been urging finance ministers to rebuild. so we agree there is a question of whether we have adequate space. there is also the social political consequences of an economic downturn. that it have to assume will not be a pretty picture. asked the question again. is there a symmetry relative to something that you will be a little wrong, which side would you want to be wrong on? francine: we have to minutes. thelia: i am afraid

discussion is going into monetary policy will solve all the problems in the world. we will not be able to handle the social cohesion problems in the world. each and every policy area has to do what it is best at. it is the joint economic policy of the world that makes this a better place. shouldam not saying you be driving that for social welfare. i am just saying do we agree on that kind of picture? cecilia: there is a number of risks, that is true. francine: 50 seconds left did i want to talk about bitcoin for just a -- [laughter] in 50 seconds? [laughter] ok. let's act on the risks. it is primarily investor

protection, but also has a be in finance and everything. arernational communities shaping and gathering and preparing an answer to that. i would expect a g20 discussion in march to focus very much on these issues with a revelatory answer. how do you understand, control these gateways between the shadow currency universe and the regular financial system. that is being discussed, and that will be answers. but do not lose sight of the opportunities. the flipside of that discussion, centralcoin tells bankers is our payment systems are too expensive and too slow. we need better product payment. ♪

♪ tom: this davos afternoon, the

president of the united rates will address the assembled global elite. trump america is in america alone, in the wilderness by ourselves. the trump message -- make america great again. the confusion is the message. weak, been more weakness, then strong as an adverb, mr. trump demanding and ultimately strong dollar. and eric schmidt and selected getting ready are for the soiree. the toughest ticket in town. this is "bloomberg surveillance ." i am tom keene at the world economic forum. francine, after that wonderful series, law of monetary she will be here in a bit. there has been a president that

has taken over davos. some of the german papers -- something to see marine one come down onto the snow filled landing pad. four radio london, we are showing these german newspapers. this one a little more direct. i am probably not pronouncing it right -- there it is. trump first. at 8:00 a.m. new york time, we will see his speech. our matt campbell observed mr. trump as he went through the congress this morning. the assembled press. right now, we need a news briefing. let's go to new york city. here is taylor riggs. inlor: there is word that june, the president wanted to fire special counsel robert robert mueller.

that raise concerns that the president would be putting himself in legal jeopardy. the "new york times" said the president backed off after the white house counsel threatened to quit. trump said the story is fake news. the president's speech at the world economic forum today in davos -- he is expected to tell the global elite that his america first agenda will be good for the world, not just the u.s. he will also call for the international community to work together against terrorism and north korea's nuclear program. a fire in a hospital killed at least 37 people and injured at least 130 others. in the emergency room and spread to the upper floors. the british economy ended a challenging year with a surprising pick up in growth. economyof 2018, the grow just 1.8 percent, the worst

performance in five years. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. tom: thank you so much. it is wonderful to be here this friday. an absolutely original friday in the history of the world economic forum. there is no one better to get then sir martin sorrell. he runs a modest ad agency called wpp. leading in the digital age, but he has artantly, global perspective about these events. you said one thing that was important -- you called it trump's davos. he controlled the news flows. it is brilliant stuff. tom: if you are advising the president, how should he approach this? should he lengthen it or really

short and sweet, the martin sorrell way? martin: if you are asking me, short and sweet. which i think he will do, i -- i would like for him to focus on investment in the united states. on trade, he already signaled to competitors that he would look at bp again. maybe, we will see a little bit more in terms of trade. saying as long as america is not disadvantaged. and i think you will emphasize the benefits that will happen from the tax reform see that through. tom: this is really important in terms of there is always an under story here. sir martin nails that. the resurrection of tpp is under story of this davos. in an interview with cnbc, i contrast ofk

multilateral to bilateral. laterale in a multi- world. what is the price america pays if to be bilateral or america alone, unilateral. martin: you have to look at it in the context of the u.s. economy. oft is $20 trillion out seven $2 trillion or whatever. twice the size of the chinese economy. a strong america will mean a stronger world as long as we maintain decent trade relationships. what the president is signaling -- what he will say in his speech, i do not know. this may be wishful, but i hope this comes out. that he wants to build trade. to be fair, the electorate rotated and agreed with it, that america was not fourth -- was not put first.

tom: sir martin got in like this -- [laughter] martin: i did not go. but we did a panel. ist i think he will signal trade, multilateral, bilateral, will happen as long as it is fair trade. tom: for a global audience, particularly those in nba programs, our john micklethwait spoke with the prime minister -- martin: which prime and esther? tom: your prime minister. martin: there are a lot of prime minister's. tom: that is true. .rime minister may about issues thethe incredible story in financial times. you and and l scott -- and scott -- how did you fix

things when that bombshell dropped? martin: well, we terminated immediately, because it was totally unacceptable. but we should have terminated it some time ago. the male only offense. there is no question about where they are right now. it was a question over whether it was right a few years ago. any involvement -- that charity, that event works with a number of very important children's charities. the letter of it -- you did not have to go to that event, what would happen is you would go directly to the charities. the question is you have to deal effectivelykly and if you made a mistake, which we did. tom: in the time we have left, not only the backstory in technology and video and media, the also over the last number of months is the mystery of video and how we will consume video in

the coming years. you have a terrific perspective on this. , is a something the audience wants? martin: it does work there there are two seminal events. the first is the takeover of set theunilever, which mood. the second was rupert murdoch's decision to merge with disney, becoming the biggest shareholder in disney. i think that tells you the content war between what i call the seven sisters, the five big american, biggest value companies, and the top two chinese companies, that content war between amazon and netflix will be of critical importance. so video, yes, we will consume more. actually, television is a more potent medium --

tom: how does facebook respond? martin: facebook hired a -- of the head of what content from discover. the bid $750 million for ticket league in india. star ticket out at $2.5 billion for all right stephen was the content battles -- for all rights. we will see content battles. tom: we will see you again in our studios. thank you. martin: a bit grumbly today. tom: i had too much leave, can you tell? chief executive officer, sir martin sorrell you to get the respect to on our coverage today, it is good to start with a nobel laureate. he owns the idea of exuberance in my panel here. they pulled out a robert shiller chart to the annual visit with

him, of yale university. we will speak to him about assets and about america in a unilateral world. stay with us. this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. dell technologies is considering whether to go public again. by computer company, founded michael dell, is weighing options to boost revenue and raise funds, including an ipo. in 2013. private pershing square management held up a stake in nike, but ordering to persons familiar with the matter, this is not one of

campaigns.tivist shares of nike are up 30% since the end of september. lbmh continues to get a boost from the luxury rebound in china. fourth-quarter sales rose a better than expected 11%. lvmh says it is cautiously confident about this year, despite currency issues and geopolitical uncertainty. that is your bloomberg business flash. tom: thank you. we would like to reach out from davos, reach out to montreal, canada, and also washington. our michael mckee, bloomberg international and policy correspondent knows more about linkage. and we are thrilled to bring in our congressional reporter in the marble hallways, if you

will, a fractured washington. michael mckee, let me start with you in montreal -- one example of a president who wants to go it alone. that is not there. there.s terrific tension how are the americans being greeted in montreal? well, we lost michael mckee in montreal. we lost michael mckee there, sort of like the montreal adiensans have -- can lost their hockey season. playing to the home audience, what will congress be listening for, what will republicans and democrats be listening for from the president? >> they are going to look for some guidance on what his agenda

is for 2018. republicans are coming off of their one major legislative victory last year, tax of war. that is expected to be one of three key things he will talk about. one is that america is booming and that other businesses should come here and do business. congress, especially republicans, will be looking for him to hammer down as much as he can we passed tax reform, tax form is great. tom: i spoke with the secretary of transportation, elaine chao. at the end, we spoke about immigration. she was impassioned about the differences within her republican party. give us an update not on immigration with the president of the immigration debate on capitol hill. arit: there are several factions. there is the common sense

democraticled by senator joe manchin from west virginia and republican senator susan collins from maine, both true moderates. they are working on a deal. some form of an act that they will get 50 votes in the senate. then there are people like tom collins -- they want a path way to citizenship or dreamers, but very limited. whatever bill comes from their route is not something that can get 50 votes in the senate. it is not something democrats would ever vote for. and then there is dianne feinstein's 2020 congress, if you will call it that. kamala harris, bernie sanders, who want a clean dream act. they do not think we should pair giving rights to dreamers with building a wall, what

republicans call chain migration. tom: that is a beautiful walk through of the factions. and clearly the zeitgeist i read is we will -- it will be a miracle to get something through. complexitiesh the of immigration in america. you wonder if the president will speak of that today. we are told it will be somewhat short. there are many things he can go with, many ways it can go. most certainly, it will do with make america great again k look for that at our 2:00 p.m. our -- hour. this is bloomberg. ♪

♪ guy: i am guy johnson in london. this is "bloomberg surveillance" in london. as we the way the president's speech, in the treasury market right now, the u.s. 10 year at 2.64. a little bit of movement bear -- there. the euro dollar, continued strength in the single currency following draghi's speech yesterday. european stocks generally good. luxury stocks, led by lvmh,

having a very strong day. minders adding some week's to the european story. iron ore under a little bit of pressure. felt that certainly pressure this morning. all in all, a market that, after a lot of turbulence, just calming down a little bit. the focus of that largely driven by the u.s. dollar. let's find out what is happening in davos -- a fantastic panel with francine earlier. tom: it was a really good panel. what did you learn in the panel about the sensitivities of monetary debate in central banks? itncine: if you have to boil down, it is basically the markets think one thing and the central banks ought another. you saw the tension between benoit coeure and ray dalio at the war front. if you had to have half of basis

point more of inflation or downturn -- benoit coeure refusing to answer. tom: you can leave that in about an hour, the entire panel that francine lead. a must listen for anybody in macroeconomics. what we know for certain is ash carter, out of yale, is the one you listen to on technology and defense. he is the former secretary of defense, but far more than that, he is rich in the complexities of modern defense. he joins us today in davos. this could easily be an hour conversation. let us begin with china. basis, tpp has really come to the forefront in these final days of davos. give us your interpretation of how this davos is looking at china as a unique government with a unique relationship with

america. ash: there is a lot of discussion on that. obviously, president xi is not here, when he was last year. our president is here. i do not know what he will say about the trade relationship china, but that is center here. we have a strategic relationship with china that is partly military. i do not believe cold war is inevitable or even likely with ense inbut there is a s which to keep asia peaceful. half of humanity, half of the economic activity of the globe for ourve to stand up principles. that is what we were doing when we were so-called rebalancing, putting our most modern equipment into the asia-pacific. there is a trade dimension as well. there is no other way to say it.

china is a communist controlled economy. we have never been in a sustained economic relationship with a communist controlled economy before. we had, with the soviet union, a long, testy relationship, but we did not trade. it was all a strategic and military. we did not trade. instead, we put a membrane around -- francine: so what about 2018? ash: this has been building for some time. the chinese government has the capacity to bring to bear all of the tools of a centralized government, economic, political, and military. to establish coercive relationships with companies or with individual countries. i'm not saying anything new here .

you see repression of the internet and efforts to squeeze out american companies. these are not the principles of trade that we stand -- we need to stand up for principle and multilateralism. that is what he was. we cannot cry over spilled milk, now came we walked away from that. but that was a mistake, but we have to pick ourselves up. tom: but it is for collating now in davos. i must ask one question, which goes back to the soviet union. do we have good intelligence on china? summary of history was we really did not have good intelligence on the soviet union. do you have a confidence that we have a knowledge within our belief structures and myths about china? ash: the information is out there, we are just largely unwilling to acknowledge it. if you look at the beaches of xi jinping and go back to hu jintao speeches of xi jinping

and go back to hu jintao, they have grown bolder and also more truculent. francine: on the defense side. ash: and in the trade area. and willingness to go into countries, particularly small countries, and muscle them around in trade. ceosan talk to company about getting muscled around are that princess at disadvantage economically. our country owes it to companies to stick up for them. i am not talking about a trade war, but i am talking about our economic policy having a playbook. is there something in our playbook to deal with a common is controlled economy. francine: should we not worry more about korea and our relationship with north korea? ash: we worry about korea a great deal. there is a lot of discussion

now. we do not have much of an economic relationship now -- that is a purely dangerous military one, where we need to stand strong, deter, maybe try some diplomacy. but china we want to have an economic relationship with. it is too important to ignore. you have to settle it on a basis that is there. -- fair. tom: here is the number one question i get -- with your term is general matters, that exhaustion. exhaustion in troops, in staffing. navy deeply the prone to accidents of some type. the fine for us quality and character of the modern exhaustion of the military. ash: it is very real. i spoke about this all the time. jim mattis does as well. all the chiefs have.

there are two ingredients. one is a very high up tempo we have imposed on our forces. take special forces gave these guys are deployed all the time. very short periods in between. they are highly dedicated and skilled, but they have families, children, a life to lead. it is very hard on them. our air force is -- francine: do they have the proper equipment? this is the number one thing. ash: the thing we are talking about here is mostly readiness. sometimes, when you have old equipment for which is inflicting the marine corps at the moment, you cannot be ready, because your airplane or helicopter is broken. modernization needs to go forward. one of the problems i used to say about readiness, which is training -- you have to have the claimant, people, and training. training is the orphan in the

defense budget. it is not what members of congress like to we want them -- they liked and new weapons system, particularly ones made in their district. there is a constituency for training. to add the budget turmoil of today that my successor is having to manage through it. it's wasteful, it's disgraceful that we have this gridlock. tom: this is so important, the gridlock that administrators have to work with. one of the high points for us mr. secretary is meeting with the minister of defense for germany. i asked her about the generational shift in germany, coming of the 20th century into a new germany. what should be the appropriate onucture of nato military

the soil of germany, how should the germans project their new defense? welcome that. defensextremely skilled secretary and somebody i worked with quite closely. japan is coming out of that processed world war ii defeated crouch. i welcome that. i think they share a lot of our values and commitments in the region and they ought to be militarily be proportional to the other forms of power that they have. since they do reflects a much our values and interests in europe and asia and around the a forceor us, they are multiplier. that's what good allies do. tom: you are the leader of technology and defense in the nation with your background in

physics and teaching at harvard and such. how we keep kids engaged in science? france sign and i want to know how we can get kids on that password they take physics and 11th grade and they attack it in college? ash: you've got to start when they are young. francine: there you go. tom: slide rules. starts with good quality secondary school education. one of my concerns about our country competitively both economically and militarily is education. defense,e secretary of you are secretary of defense for today, but also for tomorrow. my job was to hand onto my successor. that's technology, but it's also

people. i took an interest in the educational system. principally, i am advocating for the defense budget, but our national strength the long run depends on other things. science and technology and training of young people, our education system is not where it is. than is nothing a better taking somebody who is at that stage with it got so much potential and so much malleability and giving them that one knowledge that will encourage them. it makes such a big difference. tom: thank you so much. we greatly appreciate it. ash carter is the former defense secretary. i want to say here is someone working closely with the

president, it is someone all of washington is speaking with, someone unique in the white house. thomas. is i spoke to him yesterday on an america first message. president has a clear message and for me it helps me lead the way online. cyberspace is a medium. we need to establish rules of the road that benefit companies that want to end of doing business around the world. it's no different than our leadership role in the economy. tom: i saw your interview with jake tapper. not that it's old news, but i think it's been uncovered. not been covered is the immediacy of cyber issues and fair elections in america. toyou have an action plan make 2018 not like 2016?

how you going to do that? once the path to get to a better election? >> with all due respect to jake tapper, his narrative suggested american people will ruled by what they saw online. i don't see any evidence of that. they saw what he wasn't hurt his message and voted for it. the next time, they will make the same choice. tom: they are going to intrude in the process? >> one of the first thing president trump did was reestablish and reinforce the sanctions against the russians. there is no appetite for any nation hacking into our system. let's say something we can agree on. how do we get to a bipartisan 2020t to make 2018 and

more confident process? >> i think your question is about the assurance of the internet. we have to take quick measures to increase our defenses. you will have heard that for some time. i have not had any opposition. those hackers that are responsible for disrupting us. tom: you told me one of your key employees, you've got a great affinity with president bush and the president trump did -- trump. a guy with 30 years experience dabbling with bad people. once going to happen in the next 24 months to americans in the trenches of battling cyber goodwill? >> i try to surround myself with people smarter than me.

by deputy is also the cyber coordinator. policy. me make good tom: is it talking companies? is it more equipment? craig gordon in washington wants to know what still factor that you are going to move forward so there is better confidence in cybersecurity? negotiations and conversations with business. tom: can you give me some names? minister'sth prime and foreign ministers and business leaders. we've been meeting with them on a regular basis. newre going to see opposition. companies can no longer work in a world in which foreign companies -- governments are cheating. this is homeland security.

what did you observe? we are on the roof. was right campbell down or the president was when he came in. was there more press than attendees? francine: i've never seen that crowded center. there were 300 people between participants and the press. he talked yesterday. he talked about the dollar. he is more community than other presidents in the past. the last resident we had in davos was 18 years ago. let's bring a nobel laureate. there are too many themes to talk about. recentlya big splash

in the courts, saying you would flunk the president on economics. how have they done the last few days on econ 101? the foreign-exchange chapter? the weak dollar chapter? i wasn't there last night with trump. tom: lucky you. the president said a strong dollar. >> the weak dollar does promote exports. it would be in character for the trump administration to promote a weak dollar. francine: if you look at it from an economics point of view, the fed is trying to tighten gradually. that goes against what they are trying to do. you are overlaying stimulus with another stimulus. robert: the long rate is already up. what's going on here?

why do we have a week dollar? people are losing interest in our exports. the trump administration won't put that interpretation. francine: how are they interpreting it? robert: i can imagine they don't want to push too hard for a strong dollar now ready to beginning of the administration when he is wanted to create jobs. francine: it sounded like currency wars. you had the european central bank having to respond to that. robert: it's on my agenda to read up about the 30's again. my impression is it takes a while to take hold. people have to get a little angry and eventually it will happen. abn another year. tom: this goes back to the book

on four-baggers a decade ago and themessage of the 19 30's, french central bank. who is the adult in the room? if we have a president who is bilateral, even unilateral, he's talking about being off in the wilderness. who is the adult in the room like the french bank was the adult in the room in the 1930's? cohen -- heard robert kerry cohen speak. he was a perfectly reasonable man. trump is a little bit of a rabble-rouser, as you may have heard. francine: what does that mean for trade? it's going to be the year where protectionism is back. from theme statement depends on the -- i'm thinking

back to the stock market crash. 1987. as that was happening, there were people looking around for what caused it. it must be a good reason. one of the things i remember from that day, i still remember that day, treasury secretary baker said something about the dollar. people will search around and try to make these things important. let's actually changing is the market psychology. tom: this goes to the moment in my panel the other day where china put up a powerpoint presentation. it was picked up by all the media. he put it up like this. it was a robert shiller chart. shillerour chart of the pe.

here we are in davos. schillergiving us exercise, holding up the chart. tell us about your recent belief in the index you have made famous. toert: my data goes back 1871. tom: unfortunately, so do i. continue. span, theer that ratio explains one third of the variance of 10 year returns. it suggests now the tenure return on the u.s. stock market is very low. it's not the kind of expectation. francine: what does that mean it? do markets continue to rally? robert: it's not a short run.

you can forecast really well for the next 24 hours. it's reversed in forecasting the stock market. francine: what does it forecast? robert: weak performance over the next decade. that's all we can do. francine: we will take that. tom: professor shiller will be forecasting avalanches here in switzerland after the historic snow. robert: that's what people want me to forecast. conditionsk about are right for an avalanche, you can't say exactly when it will happen. francine: it's the canary in the coal mine. you catch it before anyone else. naives this president about things it could upset the apple cart? whatt: the question is drives the stock market or the high levels of confidence around the world today.

this is one of the least conspicuous successes. we don't know what drives these things. francine: thank you so much. atis the economics professor yale university. we have a market check from london. y: the dollar indexes trading near session lows. we've got the u.s. 10 year trading near session lows as well. the yields are not at the level we saw. u.s.e trading to 64 on the tenure. there that in mind when we think about what is happening with the dollar yield. what we have had out from the treasury secretary and mario draghi over the last 40 hours. we are up .5%. dollar weakness is definitely a theme at the moment. european stocks are outperforming. luxury stocks are doing well.

we are seeing them being led by lvmh. they are selling very well. at the moment, futures are up, that's a positive start. you're going to see a stronger start later on it. but aot a big move up, little bit on the story. back to you in dallas. is off in theckee land of nafta. that would be montreal. we speak and now. we speak about the recent dollar gyrations. experience,cades of what do you make of the weak dollar policy that at this moment before the president speaks is ultimately a strong dollar policy. we've never heard that. mike: it's the way

administrations try to try things when they've got themselves into a hole. you try to climb out. i'm not sure steve mnuchin meant to send a signal that the u.s. is a weak dollar holocene. the market's take it that way, even after the present try to clarify the marks -- remarks. the problem is right now, the market is looking at the trump trade policy and saying if we get a trade policy, we will sell more things overseas. we don't need to buy them right now. at the nafta meetings, how are the canadians? how are they reacting to the digging of a wall in this latest news from washington? mike: the wall is a nonstarter with either side. they are not even going to discuss it in the context of nafta. than is more optimism here

there has been in previous rounds of negotiation. hererday, when she met with counterpart, she presented creative proposals to some of the more contractible problems here. rejectadian side did not those out of hand. given the acrimonious nature of these talks, that does count as progress. francine: mike, i was speaking to the canadian finance minister. we also heard that donald trump was talking to ceos yesterday. he is soft spoken, but usually gets what he wants. renegotiate able to and keep the agreement in place? it's hard to say. it's beginning to look like there is momentum to keep the becauset in place, not of anything it are doing but because the mexicans and canadians in particular have been successful at ginning up

lobbying pressure in the united states did they been working up american ceos to keep nafta benefiting the united states. farm states are very interested in the export possibilities to execute and canada. we have farmers arriving here tomorrow to be able to pressure the negotiators. a lot of pressure within the united states may have more impact than donald trump tom: once. tom:very quickly, with your decades of experience in washington, the president will fly home. what does he fly home to? capital flies into a that is consumed by his scandals. the new york times story this morning that he tried to fire robert mueller. we don't of how that will impact his ability to get things done. they put out the idea of a

broader immigration policy. it is a starting point and maybe they can work from there. stuff keeps getting in the way of everything he tries to do. tom: michael mckee is in montreal. a conversation with stephen wycoff. consumed. we are with you and president trump will be with you. we will do that in a few hours. stay with us. this is bloomberg. ♪

francine: good morningfrancine: everyone from davos. this is our last day. tom and i are going back to our respective homes. tom: we are working monday. francine: we have talked to some heads of state. take a listen. >> we are working with a lot of car manufacturers. we're working with many tech companies. >> we're not going to re-industrialize.

it will be jobless manufacturing. >> there are good people in congress in both parties. the business model is broken. there are very few ceos that jump out. it's been quite some time since it happened. we need to get down and dirty with the details. talk into at certain level. >> the wheels of change are moving. they are going to lead us. >> you can't be great alone. you have to be great with others. francine: it was a fun week. we expect the u.s. president to give another message. we have to work together to get stronger. if the president comes here with an american first agenda, the

tonal shift. tom: there are little moments. let's not forget 2006. madame lagarde, she was working on the question, she said we need a new global contract. that's a phrase i think is important. tom: i think you are right. francine: the tone has shifted a little bit too globalization. year, with the heads of state and ceos and the trump agenda, they do need to reset the relationship with china. i hadn't heard that in a while. triedench president has to fix the trade imbalance. am: two quick ideas and massive victory lap for mr. macron. said to secretary carter,

the last 40 hours has been the resurrection of tpp and the president picking up that very delicate baton. francine: all of that overlaid with the possible specter of a currency war. that's one thing that makes everybody uneasy. there is too much euphoria out there. tom: i'm going to get emotional about our tv coverage. there is a speech here in a few hours. he will be speaking across all of our bloomberg platforms. from davos. ♪

president trump as a america

first speech. the greenback has its lowest level since 2014. the u.s. economy is expected hit 3% in the fourth quarter. tammy tax cuts keep growth growing? david: i am delighted to be here with alix steel. welcome back. this is where we stack up. we are grounding out higher. we are seeing the best start to 1997.p since the euro dollar is up by .3%. that is a 2014 high. the yield is grinding higher. level for mr. dunlop. david: i can't believe that's when you graduated from high school. nicely done.