>> china weak he was defensive crisis takes its toll. europe.sag it shut in u.s. for holiday. rees may said to give up on cross part talks. the fallout from the longest is widening.istory say they al people can't get to work. good morning, everyone. from asia.g for "bloomberg surveillance" and we will be

chief executives of bank of america and u.b.s. all of the london market action. asia stocks gain perhaps the market focusing on some of the positive signs in chinese economic data we got. n europe the stoxx 600 lower working rates. let's look at dollar and yen with e that is the focus the yen gaining against most and dollar down. the safe haven perhaps with some of the markets taking the half empty in trade talks around i.p. unchanged earlier and 10-year one of the biggest

european down four basis points. to you. >> the trump administration is orking on a second summit with kim jung un expect to take place in vietnam. t said they would meet with than highway, ho chi minh city likely ang the loss venue. they met friday but neither might be on what the agenda at a new summit. donald trump made his first offer to end the shutdown. extend d he would protection to dreamers three years and make other concessions wall.ney for the bother nancy pelosi rejects it hours trump outlined it. the third time the democrats called for a common ground. is said to be

split over delay of brexit by as a year to give them time to win the backing of parcel. theresa may said to brief the cabinet there is little prospect brexit ss party agreement and she will announce changes to the back stop with e.u. and eaching a deal is a predicament. >> a number of countries yet believe there will be a deal and think it is we will come to agreement with e.u. my medgyessy hope you have no rstood from this that deal is a real possibility. the constitutional court opposition the opposition leader president.t the rival rejected the ruling made himself the rival head of state. use is the first chance to the ballot box since they gained

independence. producer of cobalt and copper. he is known for outspoken views and used it to express opinions. not clear what the activity he is referring to and open a he will different account so people could follow him. he said no. global news 24 hours a day on powered by more than 2,700 journalists and analysts. bloomberg. rancine: china has seen [inaudible] president trump has ought to calm investors saying they are making strides. bloomberg understands the two have made little progress on the of i.p. theft.

or more our chief asia correspondent joins us. what are the other key takes from the data? >> good morning, francine. like you mentioned. annual health check said it efrest pace since noon 90 and quarterly since 2009 there was a glimmer of hope in terms of december numbers retail are side or ing up and uptick on igns of stabilizatioin on industrial investment so perhaps economy is nearing something of a turning point. at the same time nobody is bottom given the external pressure and trade war ensions and expectation that there is a lot more work to be ensure policy makers to china's economy gains

transaction. so it was a slower year but dose gives hope for perhaps the worse is behind us. francine: should we be surprised digging in its heels text .p. and force transfer? >> i guess this will be the crunch part of the negotiation. we know that china has said buy e they are willing to more goods and we reported the tkauls of how much they are details of that. there is no doubt on the more entral issues such as industrial and economic strategy and plans to grow china's i.p. y and issues around protection they will be harder to resolve. do more said it will to protect i.p. and open the economy but it is expected when visit of the vice premier to washington that is big ticket the items will be thrashed out and

e will get an indication of whether a doable trade deal is possible between both sides. joining us in london is our economist.ities thank you for joining us. peter, what are you seeing in china? s it going to start hurting world growth because of trade or internal slowdown? i think it is both but the trade problems have added to the economy at the chinese is face. we expect the economy to continue remain willing under and the longer the trade spat goes on the bigger will have to carry. it will hurt growth just by numbers t the overall given the chinese weight in effect on p. but the european markets will be more

indirect. germany will take a hit. think in grand scheme we probably won't notice but if it any prolonged period of time it will be a bigger cause for concern. francine: how do you view china if you look at the slowdown, the biggest since the 1990's but the rate is quite impressive. >> yes, but i think that china aces cyclical and structural head winds. cyclical from the impact of the fights r, the previous oward deleveraging as you alluded to and their growth potential is slowing. difficult transition point for china's economy. china was going toward reform was very slow for various war is an, the trade

opportune moment. perspective our dollar view is quite constructive. we don't see a massive rally in dollar the next three months but because global growth is not even if we don't have a global recession, globall growth is not -- growth is not accelerating so that will make it difficult for dollar it decline meaningfully. so we are kind of stuck and intractable issues to be resolved. brexit is one. eurozone and even in good times. china trade impasse is an intractable issue so we are neutral and that is not good for the global economy. if we can go back to china for a second how much they are o you think put in if it feels different

2016? >> yes, so far it does feel different. the risk that they are aware of is that they do nothing. be perceived to be collapsing. if they do too much they are to have a big mess to clean up further down the road. two steps rds, forward, three steps back. so they have to walk a very fine balancing act right now. dolla evidenced in dollar dollar-ewan. economy em is that the continues it decelerate we could disorderly decline in the r.m.b. so we will think it here and won't haalial lows but to

months.three francine: how do you speck the chinese authorities to react? at much will they throw this? >> quite a lot if the reports true.lieved to be they are talking about cuts in reducing n taxes and social chris on employees to cushion impact on the lebron market. it could be something like 2% of g.d.p. a lot when you have an conomy has been deleveraging years.he past couple of it basically would force policy into prevent that. joining thank you for us. more from our daily coverage at

forum.rld economic coming up. this is bloomberg. ♪

francine: this is surveillance surveillance live in davos, the world ahead of economic forum. we will get to the bloomberg discussion. > communications turned down line network.

in won't help boost competition. is 15 billion euros. posted confidential information about thousands of financial advisor clients on its website. it was in three spreadsheets buy names and addresses who on plaintiff of clients and ppeared to show each by the hand in shares. to sell green light across europe and delivery starting next month. is midsize sedan market so seen as more than twice as u.s. it cited why he is not concerned about the setback in the u.s. following the tax credit on look start of the year. some investors believe

defeat could moon a second referendum or no brexit. we see why some are bullish. >> we would read the development last week as pointing oward a later softer brexit or potentially even no brexit at all so that the distribution of more are becoming favorab favorable. still plenty of uncertainty but a lot of here is outside risk to the pond and high performing go 10 this year. steven, what do you binary?the pound is binary.so much i think 125 in three months is the call. in terms of subjective probability we have assigned we have assigned a 10% probability

an amended agreement that gets through parliament by the or march 29.onth we have assigned a 50% probability to an extension of 15 multiple new brexit perform stations. -- perform nations and 0% probability to a new deal brexit. so leaving on the 29th without a deal. francine: if the u.k. leaves without a deal what happens to sterling? >> 120. francine: and if they leave with it is 125? > if we leave with a deal, if we have a soft brexit, no 135. francine: 135. peter, what does that mean for overall?ts we are nine weeks away and none the wiser. difficult period from that. the cut beforeon

many are ticking the view that a brexit has become less likely and as a consequence panicking but nobody is buying in huge numbers. collapse in sharp thenally that with generally report the earnings of u.k. correspondents correspondents -- corporates. where i'm onment cautious with regard to equities not sure the ft-si is a reat place to be given the asset class generally would be under pressure. in the : what is priced market? there is consensus we go toward is unclear.nd this are markets mispricing the brexit?ity of a no deal >> i think that the market

probability of new deal is lower than the 40% i stated a or so ago. you have to remember in 2016 the didn't expect the referendum result to swing to leave. 150 right into referendum and collapsed because the broader market didn't expect the vote to leave. true now e same is although the circumstances are different. f.x. e most part the market believes career politicians when held over the arrange o speak will their pieces on the chessboard to prevent an immediate economic catastrop catastrophe. that is pretty much where we are. investors y f.x. desire soft or no brexit. that is is why we're closer to 130 rather than 120. what happens to

the gilt? >> in the short trl they hold in the longer term if it is ard brexit you see maybe up to 50 basis on yields. but it is a hard call. 2016 it rally ied. one but i ifficult wouldn't want to hold them under that circumstance. francine: thank you both. speak to founder and chairman of capital partners. ♪

francine: this is bloomberg checking the markets. markets asking whether the worst is behind us in terms of chinese slowdown and asia markets are ower in europe and u.s. some could be on pessimism with trade. outperforming among imagine go 10 and cable lower wti unchanged early and talking a pause. steven gallow

are still with us. e have a snapshot of the risk picture. in 2019 do we see the u.s. down to the rest of the world? >> i think you are seeing that remember i'm but an f.g. strategist so i look lue a dollar and what you need for the dollar it to gorate -- excuse me -- down meaningfully you need mid growth and global growth accelerating and i don't think growth see global accelerating this year. francine: peter. terms of ly in convergence the u.s. will slow global is not picking up momentum so it doesn't narrow a huge amount. the risk to u.s. is on the down side. francine: the market is still dollar. we focus on the shutdown

as longest ever government closure drags on. on "bloomberg surveillance." ♪

francine: economics, finance. this is bloomberg surveillance. first, will get a look at the markets. but also get to first word news

with sebastian salek. sebastian: china's economy slowed to its weakest pace since the financial crisis amid declining global demand and simmering trade war. gdp group 6.4% from a year earlier, down 6.5% the previous three-month period. in december, gauges of output accelerated, suggesting beginning to take hold. u.s. china trade talks are said to be falling short on some key issues. the two sides are making little progress on the issue of china's alleged intellectual property theft. and the nation's practice of forcing companies to hand over technologies to gain access to their markets. meanwhile, the financial times reported huawei's founder has warned of job losses. this is in an email sent to staff on friday, as several more governments banned the company from their 5g networks. the trump administration is

working on a second summit with kim jong-un, expected to take place in vietnam. the white house announced the two would meet late next month with hanoi, ho chi minh city and da nang being the most likely venues. the president senior aide talks on friday but neither side elaborated on what was discussed for what might be on the agenda at a new summit. the european union is said to be delayed on brexit by more than a year to get the government and of time to find an agreement to find the backing of parliament. theresa may is set to brief the cabinet as there is little chance of a cross already talks -- cross party talks. liam fox saying reaching a workable deal isn't a given for other countries. >> don't believe there will be no deal and unwilling to put the preparations and. they think it is inevitable. i think -- hope they are watching and i hope you understand no deal is a real possibility. at least put the effort in.

sebastian: congress constitutional court says -- is the nation's next president. they rejected the ruling and declared himself the rightful head of state. this is the first transfer of box sincethe ballot they declared independence in belgium six months ago. they are a major producer of cobalt and copper. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm sebastian salek and this is bloomberg. francine? francine: thank you very much. president trump lashed out at nancy pelosi over the border wall. the president accused her of acting irrationally and turning into a radical democrat. president trump said he was willing to protect daca immigrants in exchange for funding for the wall. workers say they can't afford to commute to their jobs.

joining us now is our senior editor stephanie baker. why have the democrats refused to entertain the offer? stephanie: having democrats are viewing the offer as a fix for a problem that he created. he's the one that rescinded daca, this program for young immigrants and he's the one that removed protections on certain immigrants from deportation. i thinkst offer reflects on how both sides have very little room for maneuver. trump's latest proposal was branded by his base as an amnesty. and coulter labeled it an coulter labeled it as amnesty. it's hard to see how the two sides can come together. however, a top democrat, jim clyburn, has floated the idea of

a permanent fix for the dreamers in exchange for border wall funding, something discussed many weeks ago. we're kind of back to square one. francine: what are the next steps? stephanie: i think mitch mcconnell is going to try to draw up a proposal that he can try to push to the floor of the senate, based on trump's recommendations. and i think the hope is that they can peel off enough democrats to support that. but i think it's hard to see how they get to 60 senators talking that, which is -- backing that, which is what they need. i think that's going to be a tough sell in the house where the democrats picked up more than 40 seats. i think more work needs to be done. i think the strategy of trying to bank on moderate democrats switching sides is a risky one. francine: thank you so much,

stephanie baker, from the white house administration for us. peter dixon and stephen gallo's are still with us. how much does the shutdown affect what the fed can or can't do? well, i think the longer it goes on the more difficult it becomes. the bigger the drag on the overall economy. let's not forget a large chunk of the data the fed is going to rely on isn't going to be published. the fed is affecting a black hole on one hand. but i do think because the fed said it would be more data dependent, because the data in the early months weren't favorable, the fed stays on the sidelines for now. francine: you agree with that, stephen? i know you gave up your dollar call, but how much of it is impacted by the shutdown? actually,es,

perversely, francine, i think the shutdown in the u.s. is dollar supported simply because it's not good for the risk environment. now, what would change that is if there was a noticeably more dovish fed, even then we've already seen, to the point where they not only start entertaining a reduction of qt, that is balance sheet shrink its -- shrinkage, but also easing of policy. that would be a game changer for the dollar. but we don't see that in the immediate few months. i totally agree with peter's call on the fed. they're basically sidelined for the time being. what they've done, having more importantly, is respond to global risk. they effectively, with what powell put, we saw strength in early january, they thrown a bone to the ecb, to the pboc. they've made the environment a little bit easier for them. but look what's happened.

the ecb has become more dovish. you'll see more hints of the dovishness from the ecb later this week when the next press conference as occurs. so, not only do you have these risks in the united states, political risks and global risks supporting the dollar, but you also have other banks turning dovish. francine: on the fed dovishness, are they dovishness because of stock market going down? or is it because of the china outlook? stephen: i think the stock market has a little bit to do with it. they looked at financial conditions and seen a tightening in financial conditions. they don't want to exacerbate that. the trip and i dictates of the fed is inherently boxed in, if you like, in the sense they set policy to the u.s. economy. but what they do affects the u.s. dollar, affects the rest of

the world as well, because dollar borrowings in u.s. dollars are significant in emerging market economies. that does constrain them edit. -- a bit. but the global picture is what the fed has been reactive to. what that has done is pave the way for these central banks to have more breathing space. if not for the fed, euro-dollar would be trading at 1.10 if not below 1.10 right now. we are currently at 1.12. unless something dramatically changes with the growth outlook and policy stance, we don't see that general strong dollar fading very much. francine: thank you both, peter and stephen, both stay with us. up next, theresa may readies her brexit plan b. the eu says it won't renegotiate a deal. but when it comes to

extending, it. they are open this is bloomberg. ♪

francine: this is bloomberg surveillance. i'm francine lacqua in davos ahead of the world economic forum. we have a couple of heads of state. we will try to figure out china's role in the world economy. we talk about the trump administration, although the trump delegation decided not to come to davos because of the shutdown.

let's get to the bloomberg business flash in london. it's sebastian salek. sebastian: to medication turned down telecom italia's plan to separate the land network. the most vital asset wouldn't help boost competition. estimated the value of the network at 15 billion euros. the world's largest asset manager inadvertently posted information about finance advisors on its website. the data appears in three spreadsheets. assetppear to show the each advisor had in the etf. tesla has ordered a green light to sell the model three across europe. deliveries are expected to start next month. europe is a priority for elon musk, seen as more than twice as large as the u.s. sales in europe and china are the main reason he isn't concerned about potential setbacks in the u.s. following the tax credits of electric cars

at the start of the year. france is downplaying the possibility of a merger, preferring not to remodel the -- between the two companies. he remains in jail after arrested in japan on financial crimes. french finance minister bruno le maire says he wants solid and stable government. they own 15% of the automaker. stores.d to sell 26 the company values at $570 million. this is part of the asset disposal plan. they will pay 392 million euros at the first half of the year and make additional payments of as much as 150 million at the beginning of the year. that's your bloomberg business flash. francine: ukip prime minister theresa may will return to parliament to set out her plan b. she is looking to change the backstop for the lawmakers who

voted against her. the eu ruled out reopening the divorce deal .cross party talks. -- the eu is also split on a delay on the block, with some pushing for an extension. joining us from brussels is the head of the europe for global --. thank you both for sticking around. tom, welcome to surveillance. give me a sense of what the eu actually wants. how much do they care about avoiding a no deal brings it? -- brexit? tom: i think we've seen, from the eu's organization the last couple of years, that they are determined brexit should not be too disorderly or disruptive. that's why they've invested in the process and a great on a withdrawal agreement in november. at the moment, there's a sense of confusion and a difficulty in planning, similar to what we see

on the side of businesses we work with. essentially, the eu cannot orlly offer any alternatives any different procedural way forward until they have clarity from the united kingdom. of course, they follow very closely what happens in parliament, and they know some of the reasons why the deal was rejected earlier this month related to the terms of the irish backstop. they also know some opposed it because it was too much of a hard brexit. it didn't give enough certainty for the u.k. in the longer-term. until they know what's in the report -- what's most important in the u.k., which only the government and tell them, people are in a wait-and-see on the negotiation process and they don't have the energy for preparations for a no deal. francine: let's say theresa may could give them assurances as much as she can, that if the

backstop were to be watered down or taken out, she can get it through parliament. with the europeans sign up to it ? tom: i think the actual substance of the backstop is something they said clearly they would not reopen within the withdrawal agreement. but the way they would address it would probably be through looking at the political declaration of the future relationship and finding ways in which that would begin in more certainty the backstop would never need to come into force. he was still have the backstop in its original form, for something less likely out of prospect. francine: let me also bring in peter dixon and stephen gallo. we were talking a little bit about the impact that a no deal brings it could have on the u.k. -- brexit could have on the u.k. how much could it impact the german and french economy? peter: i think the economic evidence we've seen so far suggest the impact on other european countries is limited.

but it is meaningful. if you think that the u.k. gdp could go down by, say, a percentage point relative to baseline, over the course of a one to two-year period, the likes of germany would probably otherwise be a hard brexit. it is significant, but not enough for europe to say they need to capitulate. obviously, the equity markets generally would be in a state of turmoil for a while. i think it becomes clear if the u.k. is taking the pain, the european markets are expected to outperform vis-a-vis the u.k. francine: stephen, we always talk about cable. euro pound hasn't moved that much. you're expecting a more dovish ecb. will that impact euro pound? stephen: i think you've hit the nail on the head. on the one hand, you have this

isolated turmoil in the u.k.'s running brexit. on the other hand, you have multiple instances across the block of political fragmentation. you've got the european parliamentary elections in may. our expectations is this will only make governing the eurozone more unwieldy than it already is. you've got a slowing economy in the eurozone. you've got significant external risks. so range bound is where i think thesterling trades for forthcoming future. basically what that means is that risks on both sides of the channel balance each other out. so i think you're looking at something like -- it's a very wide range, and it varies on a day-to-day basis how you would trade this. on a three to six month basis, i think you're looking at 9050 on the top side, to 8750 on the downside. francine: thank you for joining

us. tom white, head of europe will counsel. thank you to stephen gallo, had of fx strategy, and peter dixon, global economist at commerzbank. as we count down to the start of the world economic forum, we talk about what to expect from the gathering of leaders. later, we are joined by the finance minister of singapore. this is bloomberg. ♪

francine: economics, finance, politics. this is bloomberg surveillance. i'm francine lacqua and london. we are here in the snow here in dallas. avos. -- and maybe darker than a year ago. political risk mounts amid a national trade war. joining us now is the executive editor for economics, the main

honcho in davos. we have great stories. theresa may and donald trump had to cancel their plans. some of the more be here because of their hotspot. what will be the main thing this year? [indiscernible] we've got a taste from the album -- the economic outlook from our things set up for the tone of the coming days. if you look at the market, are we into a u.s. driven slump amid 10 year since the financial crisis? are we going to replay that story? francine: what will you be looking out for? apart from the imf, is it a chief executive? is it the schwarzman's of this world that could give an indication of how the world is? guest: they've got money at stake. a year ago, they did pretty well.

they did a review of the outlook from a year ago. it was pretty accurate. a predicted stocks would decline. the fed would raise interest rates. the question is, where do you see it go? markets are in a different position now. they increased that bottoming out we've seen in recent weeks. data out from china suggesting a weaker end of the year. but some signs of stabilization. that's going to be key for the world economy. francine: how much teasing the top will be on trade in this trade war between u.s. and china? guest: there will be a conversation in the panels. there will be a decision of the trump administration to pull every big -- everybody back. no steven mnuchin, no representative. hard to engage where the numbers are. it will be a big scene. a lot is riding on whether that truce we're seeing, this fragile truth, -- truce, lasts.

great story on the bloomberg, there's very little ground to be made on intellectual property. that's a huge deal for the americans. francine: very few russians, right? guest: very few russians, and definitely a mood. theresa may is not coming, president trump is not coming. people are having tense problems at home. francine: thank you very much, our executive editor. let's head back to nejra cehic in london for a look at markets. nejra: hi francine, and thank you. we saw gains in asia equities, not translating to europe. the stoxx 600 lower. use futures pointing lower. u.s. stocks and bonds markets off for martin luther king day. yuan looking at a weaker for a third day. the yen is outperforming g10

currencies, perhaps a run concern around the prospect of trade talks, bloomberg reporting there has been difficulty between the ip theft issue. cable turned lower. theresa may saying cross party talks might not happen. meanwhile, oil taking a plunge after jumping 3% on friday. bloomberg surveillance continues in the next hour. tom keene joins francine lacqua in davos. later on bloomberg, we speak to -- ofnd, founder and terror firmer partners. this is bloomberg. ♪ this is bloomberg. ♪

francine: china's economy slows to its weakest since the

financial crisis. the trade war takes its toll. b, theresa may is said to give up on cross party talks as she presents options to parliament. the fallout from the longest shutdown in history is widening. the more federal staff says they can't afford to get to work as they risk missing another paycheck. good morning. this is bloomberg surveillance. good afternoon. francine lacqua live from davos. we took the train, oldies. -- oldies. -- no casualties. >> let's start with of the weather. to me, its record snow. i remember there was snow like this. me and robert of kissinger were stuck in a snow bank. i would say for the beginning, record snow. francine: we were here and it

was one of the days president trump was here, which blocked all of the traffic. there was so much traffic we're not going to get because president trump is not coming, president macron is not coming, and theresa may is not coming. -- davos our endeavors coverage gets into full swing. we split to the black rock vice-chairman, and the jpmorgan chairman, jacob frenkel. let's get straight to the bloomberg first word news with sebastian salek. sebastian: british prime minister theresa may told the cabinet there is little chance the opposition parties will succeed. bloomberg learned she will seek changes to the irish backstop portion of the deal. the goal is to get pre-brexit supporters back on her side. economy slowed to its weakest pace since the financial crisis amid declining global demand and simmering

trade war. gdp grew 6.4% from a year earlier, down 6.5% the previous three-month period. those are signs that cushion to deceleration are taking hold. president trump lashed out at nancy pelosi after democrats lashed out at his plans of the border wall. the president accused her of them acting irrationally. president trump offered to protect immigrants coming to the company -- country illegally in exchange for the wall. a last-ditch effort to be relieved on bail. he has to wear an electronic tracker and be monitored by private security guards. he's in a third month of detention. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm sebastian salek and this is bloomberg.

tom: a lot going on. let's look at one screen. i've got a look at sterling. not much going on with euro. oil somewhat of a backstory, 53.64 on american oil. francine: yeah, yen strengthening. it's a holiday in the u.s. looking at european stocks, they're dipping today. a mixed bag of headlines on the economy. if you look at pound, moving sideways. tom: should restart start strong with our surveillance meteorologist? francine: always. always with the snowfall. as the global elite gather in davos, market looks for clarity. talk about china, slows expansion since the 2009 financial crisis. stocks initially higher on hopes of next round of trade talks. concerns about ip. to look at world economic forum

is our head honcho. he's in charge of our coverage. simon kennedy. in london, david riley, chief investment strategy. we first need to go to simon because the snowfall is huge, much bigger than previous years. simon: we've got the numbers, 118 in snow today, twice the average of the last four years. you have to go back to 1951, where it was 200 centimeters. francine and i wouldn't have been born yet. tom: the weather is important, but it goes to the greater theme of globalization. francine, your panel on the oceans, how water matters. you got to have snow to make things go. simon: that's something to look at later in the week, the oceans theme that will be on bloomberg tictoc, definitely a big issue. francine: we talk about global growth and slowing down.

how much talk will be on that, or how much will it be on president trump, who is not here? how much will it be on theresa may, who is also not here? up.n: i think it's all tied the imf will release the outlook later today. you have a sense is the politicians who matter more than previous years. things like brexit, the trade war, they are weighing on growth, adding to uncertainty. the people here, the devils men and women -- davos men and they will beors, asking the politicians for greater clarity. when they get that clarity, when they know it's going on with brexit, the trade war, they will be able to work it out. tom: what does populism mean? this phrase populism, clearly the word of the moment, what does it mean to the elite? simon: there's great confusion about it.

there's a feeling that the financial crisis was supposed to shake things out. if you look at the data the bloomberg team put together, the davos guests a decade ago, the height of the recession, they are actually much richer than they were. you look at the quality, you realize populism is a result of that. tom: i know you want to go to david, but look at operating income as one example of jpmorgan. it's fact is removed from the peak of 2006. francine: david, what do you need answered? as we gather in davos, what is the one question you need answered to make better investments? david: well, i think the single question that i would like answered is, what is actually the prospect for a sustained private investment? because i think with the uncertainty around trade policy, around the populist politics

that we've seen across the globe, i think one of the things that weighs on confidence of sustainability is whether we'll see an increase in, some indication -- increase in, some -- increase in capx, whether around populism or inequality, the focus will be maintaining profit margins, squeezing down costs, reducing employment and wages. tom: let's take it to the immediate. a couple charts within the zeitgeist, earnings more than expected. what is the immediate see of rationalizations? are we going to see more layoffs across the corporate world? more job cuts in the weeks to come? think we're still obviously early in the earnings season. in the near term, i think for

the current rally in risk assets to sustain itself, we need to have a positive earnings season, and we need to have some positive economic data. we've had marginally economic data relative to expectations coming out of china. we have pmi's on thursday. i think if we do see earnings disappointing and we do see announcements of major job cuts related to, for example, u.s.-china trade tensions, i think that will be a significant headwind potentially for markets to continue the rally at the start of the year. francine: talking about china, simon, what does the chinese delegation look like? seems like a little smaller, but all eyes on them. ago, thes, and a year president talked about globalization, opening up. that's up for review.

that's something the trump administration wants more examples of that. the device the president will be here. it's a fairly big name for us someone will be following. they're here and the americans aren't. to some extent, they might be able to set the talking points. tom: what is globalization four point o? i read all --4.0? i had a chance to meet mr. schwab and talk about globalization. translate it for us. what our team says actually is globalization. simon: there's a story coming in the works. [laughter] tom: i know this. i never talked to simon. simon: with respect to the form, what i think they would like to do is come up with titles that are slightly provocative. what does this title mean? lots of talks of resilience, dynamism. richard baldwin, a friend of

this show, has been writing about it. we'll try to grab late with what it means. the next form of globalization is what they're looking at. and that feeling about populism, just how things fit into that. francine: thanks so much. watch out for that story hitting the bloomberg terminal at our website. bloomberg executive editor, and in charge of our alice coverage -- davos coverage, david riley. coming up, we have plenty more from davos. we have the imf releasing their world economic outlook later today. also, city managing director and chief global analyst. this is bloomberg. ♪

tom: good monday morning, everyone. francine lacqua and tom key. first day here with meetings beginning tomorrow. globalization, one of the great things, for many others as well. not only who's here and who's not here. the things you are focusing on is in markets and within politics and international relations. we're going to drive forward that conversation now. tina for joining us from citigroup. she's been with us many times before. david rally with us, as well. thank you so much for being with us this morning. i guess we can dash to brexit here in a bit. right now, on the populism of the united states, it seems to have a different character. measure the theme of populism

and america on this january. tina: i think the most significant aspect of u.s. populism is that the united states has such a wider influence. even can talk about european parliamentary elections this year and whether we're going to see a quarter mps elected from populist parties, or even as much as a third. one of the things i highlighted in my outlook is how popular a risk and traditional geopolitics are converging. that's a direct result of the u.s. withdrawal from globalism. tom: what i find fascinating and you being based in london addresses this uniquely, is we look at the oddities, the realities of the labour party in the united kingdom. how alone is the new republican party in america after the midterm elections? would you suggest it's a different republican party that president trump faces? tina: absolutely. if we were to compare what's

going on in the u.s. political system versus european, with the exception of the u.k., the u.s. and the u.k. both have political systems. that means the changes in the political atmosphere end up being reflected within these two largest parties. elsewhere in europe, you can form a new small party, a challenger party, and be a part of a multiparty coalition. that might be an opportunity to catch a protest vote a bit more easily. francine: how do you see the shutdown being resolved in the united states? tina: this has been fascinating to observe. you're closer to it than i am. but what's really remarkable to me is the unity between nancy pelosi and chuck schumer on the democrat side. i don't think the president is going to get his wall. it's a question of what he might be willing to settle for. he seemed willing to allow this

to continue much further. francine: david, what does the shutdown mean for your investments? at what point significantly impact fed policy? david: well, i do think, traditionally if you like, and i kept myself as part of this, we kind of ignored u.s. government shutdown. they do periodically happen. the impact on the economy is actually very marginal. the difference this time around is, as tina was highlighting, there doesn't seem any immediate end in sight. it's already extending into a very prolonged shutdown. the longer it goes on, the more potential impact it has on growth, at least in the near term. less economic data coming out of the u.s. it puts the fed on hold. i think the fed is on hold, at least until somewhere, and in a

case. -- in any case. but it takes on any possibility that the fed booming rates higher -- moving rates higher. tina: more bumps in the road from the u.s., too. tina, that'sinue fine. continue, please. shutdown big have a in a long period, markets hit a debt ceiling debacle challenge. what i'm calling extra night political measures coming from the white house. markets tend to see these developments as one offs and idiosyncratic. we're in for a nosy year in u.s. politics. david: the debt ceiling is a key issue. that's kind of kicked out for six months or so. what's happening with the shutdown doesn't go well in that respect. i agree with you.

i think we'll get more volatility, probably too complacent. tom: this is great. the two of them are going at it in london. francine and i are like, can we get back into the show? david riley anchoring this morning. david, was interesting, we come to davos, and this is not the first time this has happening. there's a huge disparity to in the bulls and the bears on the economic experiment. what is the attribute that separates 1% or 1.5% gdp people from 2.5%, 3% solid gdp people? what's the thing that separates them? those on thek for bearish side of the economic outlook, ti's the fiscal stimulus was purely a short-term sugar rush. and that's rolling over. then you are lie that with --

online that with weakness. and suddenly the story with eight economic exceptionalism doesn't stand up. for those of us, and i would put myself in the camp where we will have another year of 2.5% growth or so within the united states, is that there's still stimulus coming through in the tariff cuts and increased government spending. we'll also see some continued rise in investment spending. the pickup in oil prices is net positive for the u.s. economy and for investments. tom: let's come back. david riley and tina in london. francine lacqua and tom kee in davos. we're thrilled to cover the meetings. we do this with the senior advisor to governor carney at the bank of england. not on brexit, no, he can't talk about it. not on pound sterling, no, he

can't talk about it. but his on globalization and the new populism. please stay with us, this first day at davos. this is bloomberg. ♪

francine: bloomberg surveillance live from davos. tom and francine from the mountains, where we cover the world economic forum. the first day, first of 2019.

prime minister theresa may is not coming, for sure. she will return to parliament today to set up her private -- brexit plan b. david, are you buying anything in the u.k.? right time to get into gilts? tom: good question. david: surely not a good time to get into gilts. i'd rather be short gilts. in fact, we are short gilts. as you know, we've had that view for some time. two negative, potentially hikes. being short on gilts. as for the way things are developing, unfortunately it seems plan b is going to look remarkably like plan a, despite the fact plan a went down in flames last week. tom: i like that, yeah. tina, pushing for the no deal

idea, saying people are underestimating it. do you agree with mr. munn shall that no deal is more possible that anyone would guess? tina: it's certainly a material possibility. it is a non-negligible risk. the prime minister has to keep talking about no deal because if e,e takes it off the tabl she loses some of her negotiating leverage. markets have not started to price in the risk of a no deal, probably won't do so until five minutes to midnight, which is march 28. but as time goes on, what you can see is that both sides labour and conservatives, are running down the clock. and that should increase our concern about this. at a minimum, what we know is that it increases the risk of an accident. very little room for maneuver. i agree with david, plan b same as plan a.

francine: alright, thank you so much. tina . david stays with us. peter, head of equity strategy. we'll talk to him about brexit. we'll talk to him about some of the globalization questions we're asking ourselves in dallas. that set 6:30 a.m. in new york. this is bloomberg live it from davos. ♪

tom: good morning. and this is bloomberg surveillance. francine lacqua and tom keene for the meetings of the world

economic forum in davos. this is an official snowball. correct make it into a snowball because our chief of production is from memphis and would not know how to make a snowball. francine: it is perfect. tom: it is perfect. it is sort of a log snowball. nice catch. record snow here as well. we welcome molecule as we begin our coverage from tuesday through friday. -- we welcome all of you as we given our coverage from tuesday through friday. all of the challenges of european banking in a wonderful annual visit with someone who has helped me for 50 years, jacob frenkel. here with mr. dimon no doubt. francine: we have great

exclusive coverage. we are speaking to a couple of central bankers. you can follow all of our coverage. go. head on to tliv let's get to first word news. here is sebastian salak. nexttian: a second summit month between president trump and kim jong-un is likely to take place in the anon. the vietnam -- the meeting will probably be held in hanoi. since the first summit, there has been little progress towards the goal of getting new words korea -- getting north korea to give up nuclear weapons. trade talks between the u.s. and china are falling short. there is little progress on decades of chinese theft of american intellectual property. that form part of talks in beijing this month. negotiations resumed at the end

of january in washington. protesters battled police in macedonia. the country will change his name and exchange for greece. demonstrators say macedonia should only be used to refer to the northern region of that same name. there is a battle in parliament over the agreement. in sports, it will be the patriots versus the rams in super bowl 53 after overtime games. they scored from two yards out to give it an upset win. it will be the patriots fifth super bowl appearance in eight years. there was a 57 yard field goal as the rams beat new orleans. the super bowl is set for february 3. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek. this is "bloomberg." thanks.

greatly appreciate that. now, we want to talk to david riley. francine wants to talk about central banks. i have got to talk to you about the death of john bogle, a wonderful friend. you never expect to see him in davos. active and passive investing, can there be a future given the way we see flows now? david: i think there is a future. did was to create the opportunity and democratize getting cheap beta to the market. where we are seeing flows is into alternative strategies into hedge funds, into alternative assets where you are getting alpha access to

opportunities. they can coexist. what will be difficult to trackers who are charging for out for alpha generation but just tracking the market. tom: we are going to be talking about this later. geist was, the zeit bitcoin. what concerns you now in asset management? what is the thing everybody is certain about now? i mean i do think, in terms of the, i do not think anyone is certain about anything right now. brexit does have implications in the near term if it is a no deal

brexit and over the medium-term if it is an orderly brexit. active asset, for managers, it is about identifying where you can genuinely add value and the strategies that can provide that. for the investors to use passive vehicles. one other aspect is the rise of the robots. there was impacted they may or may not have had in terms of the market volatility. is: what is so important that interview with deutsche bank, the zeitgeist is single-digit return and there anda few people like hsbc deutsche bank looking for solid double-digit return. francine: let me try and break some news with david riley. you have been buying periphery bonds.

are you still a buyer of italian bonds? know, we have been and investors in italian bonds and i have been on your show where that has been uncomfortable at times. i am pleased to say it has been playing out as we expected. reducing some of that position as spreads have tightened and been hitting some of the targets we set. we do think that italian and thepheral risk and some of cyclical risk, including european banks, look attractive the cousin there is so much risk premium -- because there is so much risk premium in asset prices. we have seen a rally. do see earlywe elections in italy, does it mean you're more or less likely to add to your italian bond portfolios? david: i do think that, it is

difficult to predict but it would depend what valuations are. that is an important part of our process. and what are the polls suggesting the outcome might be. early elections which led to a more coherent center-right tovernment would be ne positive for italian bonds. we would have to respond to the situation at that time. valuations do matter in the process. riley, thank you so much, from london, with hubei asset management. this is what -- with bluebay asset management. this is one of our interviews i'm looking forward to it, emily carter, dean of princeton's engineering and applied science. on the chemistry of the global order.

stay with us. this is "bloomberg." ♪

tom: good morning. the meetings of the world economic forum begin tomorrow. we decided to come up a day early with all that is going on across economics, finance, and investment and the stories of the moment. that will be our theme. sun breaking and cold temperatures almost below zero fahrenheit. bear in height way the normal world does it. -- fahrenheit is the way the

normal world does it. crude, therent global benchmark is attempting to hold onto a two month high. u.s. production against mixed signals on output from opec. joining us now is the bnp paribas community -- commodity market strategy. where do you see oil headed? it seems like this trade war is putting how much demand for oil there will be back at the forefront of the question we need to ask. areoncerns over trade talks front and center when it comes to directions of the oil market. it bears on demand. easing ofen and the tensions and the u.s. and china allows oil and that to refocus on supply fundamentals. higher froms moving

here, reaching $65 and aiming for $70. how much has the volatility in the price of oil impacted the ability to -- a producers to turn on the tap? the main objective is to reduce excess oil supply and we have seen opec take steps in that direction, led by saudi arabia. we have seen difficulties in iran in reinstating crude oil exports. the objective is to implement those supply cuts and try to the stock builds there were forecasted for the first half of this year. tom: there are meetings coming up, when meeting with opec and the meeting in the anna. do they have import -- meeting in vienna.

do they have import now? they: the first meeting, do not have any policy say, the nna whereng is in vie opec and this non-opec allies will have to review the situation and see whether they choose to extend the supply cut they have in place. tom: you have been following oil for decades. andre here in happy valley everybody is in touch with nature. it is big oil in touch with nature? are they doing climate change or are they faking it? harry: i cannot be a spokesperson for big oil. what we saw in the industry is an effort in reinventing themselves, looking for alternative sources of energy. the first step is gas. a number of oil companies are looking at alternatives such as

wind and solar. i think the energy transition is on the agenda. it is a big industry. it moves slowly. ceos have spoken towards this end are making efforts. francine: thank you so much. let's get back to david riley. there anything in the credit space they you like with big oil? -- that you like with big oil? david: in terms of energy as a whole, we have been underway to neutral depending on the strategy. we have seen a big pullback in terms of tightening of spreads in u.s. high-yield oil related credits on the back of stabilization and partial recovery in the oil price. havethink that where we

saw there has been more opportunities in terms of the credit space on energy has been in the emerging markets, i a lot of those our cause i sovereign. quasise are -sovereign. the dividends of european big oil, is it worth capturing aose or is it too long of wait to see total return? well, i mean, i am not sure if i appreciate your question. where the in a world issues around climate change in the potential for stranded assets, over the long-term, there are challenges for the carbon sector.

in that basis, you want to look for opportunities which are broader in terms of the energy sector than simply looking at a coil. atncine: -- simply looking big oil. francine: thank you. up, a thing or two about brexit. that is it :00 a.m. in new york, 1:00 p.m. in london -- that is 8:00 a.m. in new york, 1:00 p.m. in london. ♪

sebastian: this is bloomberg surveillance. i'm sebastian salek. tesla has been cleared to start delivering its model three electric sedan in europe. delivery should start next month and selling them in europe is a priority for elon musk eric musk said the market in europe is twice as big as in the u.s. is leavingjust eats the company. eat is facing growing

competition from uber and deliveroo. a once the company to speed up decision-making. -- it wants the company to speed up decision-making. a requestturned down to separate its network. it would not help boost competition in the domestic market. the network is worth $70 billion. telecom italian has one of the biggest debt burdens in the european telecom industry. francine: the world economic release jobsto information. it is required to ensure millions of workers do not lose their livelihoods in the economy becomes disrupted. thisng us now to discuss is the managing director at the world economic forum. thank you for joining us. you do amazing work trying to

figure out the public-private partnerships and these big issues. why has not more been done from governments? >> one big reason is the cost. for the 1.4derstand million workers that are supposed to be displaced in the next 10 years, what would it cost for them to be rescaled? we are talking -- re-skilled? 86% is likely to fall on government because businesses thosely likely to reskill that are going to give them return. this is mainly artificial intelligence, technology, displacement of workers. how much will that accelerate? 1.4 million. >> 1.4 million is conservative.

with forr we came up about 20 economies is 75 million workers are likely to be displaced. 2025, robot, ai machines are expecting to be able to displace people. tom: it is a little early in coverage. studypossible to say this is the most important for americans. americans are aware of the failure in america of reskilling. at is america so bad reskilling? >> this needs to be seen as an investment. this has to pay off. from aoing to a are government perspective, you're talking about a higher texture -- it is going to pay off from a

government perspective, you're talking about a higher tax. tom: they live this every day and there always a reason in the united states not to reskill. why? >> the first part is public sector. the second part is why are businesses not reskilling. they are reskilling only the smallest pool of high potential employees. because benefit analysis is not working out if they are thinking about a broader group of workers. one of the things we tried to do is think about what would it take to lower those cost. another weight to lower them is instead of competing, working with each other. tom: are you kidding? francine: the private companies that need to reskill, aren't their business models, is it up to someone else to reskill? term, you'reger

getting into a vicious cycle of businesses are not doing reskilling. you're getting into a situation where for your people have the skills you need we think there is an incentive -- where fewer people have the skills you need. we think there is an incentive. tom: we have got the most important paper on a monday. why don't we just do a tax credit to incentivize corporations to reskill? it is un-american. >> you have mentioned one strategy we are proposing. there need to be either incentives or a lowering of the reskilling costs by businesses working together because they have to deliver that no matter what. if they work with each other, they are going to be able to lower the cost. to accept this is an investment and start paying for it from a public point of view. francine: who is getting it

right? are the nordics economies and singapore, doing what needs to be done in terms incentives, and bringing the unions and government together. that is the only way this happens. tom: you bring up a brilliant point. we have atomized the labor force. withannot compare us finland or norway because it is vaporized in america. what do you do to reskill? look at nafta, the textile business of 30 or 40 years ago. it was adam eyes to, wasn't it -- atomized, wasn't it? the fact that businesses are

starting to realize that in the longer term they are facing an upward battle, they have got job shortages for jobs they want to fill. in the longer term there is no choice. tom: we have got to leave it there. thank you so much. i will put this out on my twitter feed as well. it is downhill from here at doubles. .o -- at davos no it isn't. we will talk to huw van steenis. stay with us. ♪

i am a family man. i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience.

my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. tom: this morning, it is good

monday as prime minister may redirects the good friday agreement. irishoubles begin, the labour party michigan action. tomorrow may bring -- party missing in action. tomorrow may bring no deal. there is no deal in washington, a paid holiday for some, no pay for others. nfl, new orleans was robbed. day one here at davos. the hills are alive with nothing but the sound of brexit. good morning, everyone. this is bloomberg surveillance live from the world economic forum in davos. every conversation i have had, including my run in with charles ends up on brexit. francine: because it goes to globalization, what can the

people here do if anything, about it? theresa may pulled out. the same for your president, many not coming because they have to deal with things at home. it ties in together, right? tom: i agree. francine: you see little commonality because people are pulled from domestic situations. you haveof the themes, read about the record snow in austria. we are above the border with italy. i'm going to try to pronounce it now, south of liechtenstein. francine: tomorrow, we have full coverage where we speak to newsmakers, philipp hildebrand u of blackrock. right now, in london, here

is sebastian salek. sebastian: theresa may has told her cabinet there is little chance the brexit talks will succeed. instead, she will seek changes to the irish backstop deal she negotiated. the goal is to get enough supporters back on her side. in china, the economy grew at the slowest pace since the 2009 crisis. gdp rose at a rate of 6.4%. consumption and factory output picked up in december, signs the chinese government assets to cushion the did celebration -- to cushion the deceleration are taking hold. president trump lashed out at nancy pelosi after democrats rejected his latest plan on the border wall. the president accused pelosi of acting irrationally. president trump has offered to temporarily protect young immigrants brought to the country illegally in exchange for money for the wall. carlos ghosn is making a last ditch effort to be released on

bail in japan. he has offered to wear an electronic tracker and paid to the monitored by security guards. ofis in the third month detention on allegations of financial misconduct. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek. this is "bloomberg." thanks. markets closed in the united states. equities, bonds, some stable. have got one screen with not all that much going on, futures moving a little bit. , $53.69 on west texas intermediate. francine: if you look at some of the things moving the markets, it has a lot to do with trade concerns. andad data from beijing

that helped ease concern in a continuing deterioration of the economy. we had a story about ip. i am looking at european stocks but the yen strengthening. tom: let us begin our conversation this hour, good conversation on monday to get you ready for the week. we begin with ubs in london. put together a great team at ubs which takes china and filters it differently, i would suggest, through em. how does china fit into the rest of the emerging markets, those adjacent and those less than adjacent? ? -- >> there are a couple of angles. on the china side, we are seeing

the lows of the data are going to be bottoming out. the government has underwritten the economy. ing.e is evidence of eas that is important in terms of investors appetite. it is not sufficient. if you couple that with the fact peaking have treasuries in terms of 10 year yields, you create a better set up for a number of emerging markets. of stimulus china is doing is not benefiting emerging markets as much as years in the past. some of its neighbors may not benefit as much. not the: this is distress level we saw in 2016, right? construction,

real estate, it is holding up. how much can they put on this economy? not just far from that in terms of growth rate but in terms of balance of payment dynamics. a leveltill tracking at which is lower than what a policymaker would like to see. level whiching at a has not benefited chinese assets and has led to them cheapening quite a bit. it has led to a tightening in conditions there. ae policy maker wants to see level closer to the targets, something that supports social cohesion and this is just starting. this is just starting to play out. francine: what does that mean for remnimbi? rangehink probably in a and there is some downside risk because balance of

payments is a lot weaker now than it was in previous episodes. it is not going to be the strongest part of the complex and if the dollar is stronger than we expect, it is going to be weaker. we are not going to be talking about easing because of growth concerns, nothing of that nature. attendees at doubles are flying in right now from geneva. they are watching you. what is the ubs dollar call now? >> the dollar has peaked. some carryy gaining in emerging markets. as treasuries have topped, you risko get income and recovering helps that. againstdollar to weaken the euro, what we need is

evidence that europe is starting to grow faster. that is not going to come imminently. sometime during the second half of the year, enough evidence will come. , yougrowth comes back in will have a more convincing dollar selloff in the second half of the year. francine: what does that mean for emerging markets? >> i think emerging markets are not one thing. kerry in emerging markets, things like russia, even some of the riskier parts of emerging markets make sense. if you think about asia and currencies, where central banks are using, they underperform in relative terms. context, asian high-yield credits make a lot of sense and within this process,

of have to buy the nature the easing of the still is you --e to buy chinese stocks easing of the stimulus, you have to buy chinese stocks. tom: thank you so much. we are going to begin with huw van steenis, bank of england senior advisor. look forward to speaking about him -- to speaking to him about anything but the themes of the bank. please stay with us. keene inlacqua and tom davos. this is "bloomberg." ♪

sebastian: this is bloomberg surveillance. let's get the business flash. iscater pharmaceuticals continuing to sell about $3 billion worth of emerging-market assets. the company is working with bank of america to gauge interest in medicines. it is trying to cut debt after shire.eover of investors of nintendo are starting to feel optimistic again. it has steep share declines. cuts arebility of boosting confidence. shares are up 22% since december. ei is bracing for the impact of being banned from five g networks. it has warned of job losses.

it needs to give up mediocre employees and lower labor cost. that is the business flash. tom: thank you. at the world economic forum strong, we begin with someone who has a fabric of the history going back. huw van steenis was acclaimed that morgan stanley per investment banking and talking strategy and deals within europe. he is one of the few people that nailed the moment and the amplitude of the financial crisis. he is working with governor carney at the bank of england. there are a host of things he cannot speak about. i get that. i was sitting at the belvedere hotel before the crisis and robini nailed it. everybody struggled with the size of the crisis.

were you thunderstruck by the amplitude of the crisis? shocking.the size was i think neil ferguson put it nicely, anyone just missed it. if you studied the history of emerging-market crises, you knew something big was coming. the size was dumbfounding. francine: what is the governor pushing you on now? finance, -- ch?ncine: things like finnte huw: exactly. spending a lot of time thinking about the payment system. how the financial system is adapting. globally, banks are only spending about 25% of their tech budget and that needs to come higher. francine: they could become

cryptocurrencies -- cryptocurrencies could become a serious threat to the central economy. do central banks need to look at that? huw: i am not so worried about cryptocurrencies. i think they fail the test of financial services. they do not hold value. but they are a threat. the bigger threat is how do you , as it moves to tech how do you keep supervision over a more complex set of companies? banking, andigital this goes back one year where everybody last year was bitcoin $14,000. that was last year as well. it facedanking, does the same challenges as the volatility of bitcoin?

does it have a staying power in em? customers want something cheaper, faster, better. it is the larger banks who are investing. that is great. tom: aren't they doing that now? huw: they are investing and when i talk to the banks, their number one topic is how they can invest in technology and fend off the threats from big platforms. there are risks from new challenges. cryptocurrencies are not high on my worry list. francine: who are the banks of tomorrow? huw: it is too early to say. they large firms have advantages in terms of size but they need to innovate. there a recession with customers.

their challenge will be -- there obsession with customers. i look at the failures that have seen -- that i have seen in the digital space. that is the supervision that you are speaking out. it is almost shadow banking in another way. you supervise these digital cowboys that sometimes fail? huw: you know from banking some of these new entities are not in the banking system and are not regulated. come of these need to inside supervision and which remain outside? francine: thank you so much. to the bank of england. here, we willt

ask about brexit. this is "bloomberg." ♪

tom: good morning, everyone. our first day in davos. the meeting start tomorrow. is a theme.n 4.0 ,ight now, it is populism 4.0

40.0.own 4.0, brexit notcine: the e.u. says do look for brussels for answers on brexit. let's bring down the ubs head of fx rate strategy. when you look at some of the anye calls, is there movement on euro-pound. it seems to be stuck in a range. i'm not sure what needs to happen to break away from that range? some kindd to come to of conclusion which outcome is likely to dominate. .able is something is main barometer euro-sterling. people have been trading within a range because when you get too

peopleve for the pound, are starting to think negative scenarios. overall, we have not seen decisive turns or any convictions so sterling has remained range bound. thatof our analysis shows even in softer brexit outcomes, there is more downside for the pound than upside. francine: where are we headed? there is a concerned about pound the traders are not pricing in the possibility of a no deal brexit. is that right? a no deal brexit was a likely outcome -- if a no deal brexit was a likely outcome in the minds of the market, it would be trading higher. importantly, people read the recent negative votes on

theresa may's plan as something that raises the probability of a smooth outcome or reduces the probability of a hard brexit. this opens up scenarios which have downside for the pound. there is a lot to be seen yet. tom: i know that your offices are over by liverpool station. when you get to the mcdonald's and you have a strategic meeting at ubs, what happens to flows into the united kingdom if there is a no deal? whatever that means, what does it do to flows of capital in and out of the united kingdom? >> you are hitting the nail on the head. of the structure of the balance of payments of the united kingdom. you have a large deficit in goods which is financed two

ways. first, you have a large surplus primarily from financial services and you have a large inflow which has historically been foreign direct investment into things like infrastructure, real estate, and so forth. if you get a hard brexit and you have a big downsizing of , you have arvices big gap opening up which will be resolved by weaker growth and a weaker pound due to the balance of flows. worst-case scenario for the pound, what is it? probabilities are different than certainty. brexit,ad a no deal

most of our analysis show that parity for euro-sterling is conservative. tom: thank you so much. greatly appreciate it. he is with ubs. we are going to continue on the equity markets. remember stocks? peter garnry will join us of saxo bank. more to come, including important interviews tomorrow including philippe hildebrandt. this is bloomberg.

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we are getting long. tom lentz me his charger. his charger. tom: this charge is your phone. she steals it from me all day long because she is on the phone nonstop. francine: from tomorrow, our coverage. tom: did you do your homework? blackrockthe vice-chairman and jpmorgan, jacob frenkel. we have a lot going on. for those of you who want to follow our blog, it is outstanding. .n go on to tliv tom: let's go to london. here is sebastian. sebastian: a second summit next

month between president trump and kim jong-un is likely to take place in vietnam. the meeting will probably be held in hanoi. since the first summit, there has been little progress towards the u.s. goal of getting north korea to give up nuclear weapons. trade talks between the u.s. and china are falling short. there is little progress on decades of chinese theft of american intellectual property. that formed part of talks in beijing this month. negotiations resume at the end of january in washington. protesters battle plays. the country will change its name in exchange for greece locking up its bid. demonstrators say macedonia should only be used to refer to the northern region of that same name. there is a battle in parliament over the agreement. in sports, it will be the

patriots versus the rams in super bowl 53 after overtime games. they scored from two yards out to give new england an upset win. it will be the patriots fifth super bowl appearance in eight years. there was a 57 yard field goal as the rams beat new orleans. the super bowl is set for february 3. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm sebastian salek. this is "bloomberg." tom: tanks. there -- thanks. there is no global warming here in switzerland. you got no sleep last night because it was jon bon jovi until midnight? francine: it was. tom: welcome to switzerland.

the serious issue of climate change is tangible. one of the things we learned is you've got to count it to know if you're getting anywhere with climate change and that is this word, sustainability. huw van steenis is with us. this is front and center for the governor. why is this important? the financial system can manage through the next 10 or 15 or 20 years without big pressures. it is about helping the financial system navigate. francine: how do we major sustainability? do we have the right data? huw: investors say they do not have the data. i think the data is in its infancy. there are surveys and it is difficult to measure. plea toy should make have a fewer high-quality

standards. if you cannot measure it, you cannot manage it. ofncine: we have a number people wanting to talk about sustainability and we have to a choice about whether they are legit. huw: that is right. there has been good days work done. -- basework done. talking about the climate change, some accountants are not there yet. tom: this is way better than the math. is the issue, we are dealing with analysis where this is too sian math?us are we asking too much? huw: we should not make the perfect the enemy of the good. it is true the for climate change were, you need to have a

run through, you need to work out which asset is in which bucket. one of the biggest problem is what supply chain stew. -- isnot have a way to what supply chain sue bird. we do not have a way to work through that. -- supply chains do. we do not have a way to work through that. new distinction is supplied chains and so many political leaders they do not understand the supply chain dynamic has changed. what is the knowledge base that we have? huw: it depends whether you want to take this european or global? doing,k that i have been the best way to break a company is through the back door. there has been good work done around is how you make sure the

supply chain has security. a company may have 10,000 suppliers and they are all cross-border. the way trade is done is complex. francine: what are you most looking forward to in dabbles? -- in davos? huw: there is a lot of work around the ethics of ai. it is all about cloud. it is about automation. get out of low returns into high ones, they need to invest. francine: that is job losses. we have this wonderful discussion about how you retrain displaced workers ahead of the fact that they get this place. do central banks need to look at that? huw: the third industrial revolution gave us degrees.

the fourth revolution is job training. you take people who have got can trainskills, you them to be a data scientist in less than three months. there interesting ways to retool folks who have got great skills. tom: i had a nightmare about a panel on thursday. it is going to be great. reskilling for corporate bankers. there may be some bankers there and even a few american bankers there as well. thank you so much for being with us today. working with mark carney at the bank of england. panel?ut a francine: away from retraining bankers, on wednesday, taking action for the ocean.

that is wednesday. have many joining us. this is "bloomberg." ♪

sebastian: this is bloomberg surveillance. i'm sebastian salek. cleared to start delivery of its model three electric sedan in europe. start nextould month. it is a priority for elon musk. the premium is more than twice as big as it is in the u.s. the ceo of just eat is leaving.

replaced.b will be just eat is facing growing competition from uber and deliveroo. company to speed up decision-making and consider the sales of non-core assets. regulators have turned down telecom italia's plan to separate its landline network. it would not help boost competition in domestic markets. the network is worth $70 billion. telecom italia has one of the biggest debt burdens in the european telecom industry. tom: thank you. d.c. and washington, it is martin luther king jr. day , 51 years on from the killing of martin luther king. a day i remember from my childhood. a beautiful sunrise, live here, congress as well. it is a washington in shutdown.

we will do more on that across our coverage here. markets continue to look for clarity. china has reported its lowest expansion since the 2009 financial crisis. there are concerns over ip. let's get straight to your markets. joining us now is peter garnry and he joins us from copenhagen. what is the market latching onto? it is all about china. fed because to the china is the next is of everything that goes on -- is the nexus of everything that goes on. i think the fed is on pause and that is good. everyone is looking for some

kind of trade deal. it will be some kind of temporary deal with key items and the chinese can go to their holiday and we will resume these talks on the other side of that. china and china is slowing rapidly. we are focusing on three things. the credit transmission is likely balk -- broken. the credit impulses falling rapidly. -- impulse is falling rapidly. ,lso, we look at the auto sales the best indicator of where people are. -20% annualized on a three-month basis. francine: is there a concern that china has to stimulate its economy more. it will pullout from the reforms they promise? i think china is finding

itself in a difficult position. they have too much debt. how do deal ever while keeping growth at a certain level? while do you delever keeping growth at a certain level? when you see this rapid decline in auto sales, it has meant a recession in a western economy. i am sure china is close to recession if not already in a recession. i do not look to overall statistics. auto sales capture the mood and credit is worsening. the fact that china has cut taxes but made an injection in money markets is a signal that things are deteriorating. tom: i want to switch gears to one of the great conundrums in january. aeryone is believing it is

single digit world and there are any number of houses saying, things are not as bad as they look and it is good time -- it is a good time for a double-digit 2019? . which camp are you in? the camp that we are slowing down, i think we are in the final act. if the fed is getting it right together with china, this is a 1998 moment. if they can get it together, there might be one or two more years of growth. if the fed has miscalculated the effect, we will be into a global recession by the end of this year. have and much debt we the real estate markets around the world, it could be nasty. you are seeing real estate markets ticking down.

should be defensive and cautious at this moment. francine: let me ask you about brexit. let me bring you to breaking news. the u.k. government says the parliamentary vote on brexit, scheduled for january 29, is not binding. they are saying it is not looking for a bilateral deal with ireland on brexit. they are trying to give clarifications on this vote. it will give parliament a chance. we do not know what they will be voting on, a new deal. they have to come up with something. may willch by theresa give us an indication of what parliament will vote on. tom: this is critical, who she is speaking to in the tone she will give to her conservative party. they are asserting they want

more decision-making in this. francine: this is mainly a constitutional crisis. we do not know who can revoke article 50, who can extended. -- extended. peter, what is priced in the markets now? in stress're pricing but the european side does not seem to be looking at a no deal scenario. peter: know, exactly. there are a lot of moving parts. the norway model is slightly different. nobody wants a hard brexit. they have cut the labour party out of the equation. may wants some sort of solution inside her party. withny probably floated the recession in q4.

there is stress by slowing growth in china. there are incentives to strike some kind of solution. the 11th hour, close to the 12th our and we find a solution. that is what is going to happen with his brexit. -- with this brexit. we will see some extension on article 50. i do not want to be sounding like an expert on brexit. there is uncertainty around the deal. francine: there are very few experts. thank you so much. peter garnry of saxo bank. at the world economic forum, we speak to emily carter.

tom: good morning. tom keene and francine lacqua where we begin the meetings of the world economic forum. it is a cross-section on economics and politics. there are any number of thrusts.

what is so important's educators to send to try and figure out their future. it is something we have said in a number of times with the new jersey institute of technology. how about a stem reality? emily carter. is truly one of the foremost chemists within the nation, linking that into mathematics and physics. more's and boyd in organic chemistry which was beneath -- morrison boyd inorganic chemistry which was beneath dean carter. ?ow do you fire up people it is different than when you and i were studying. how do fire students up? emily: the best example i can give is a new effort we have inated here at princeton

terms of a new way to teach math and physics to first-year students. things we learned is that students they come in and think they are interested, get discouraged because they do not neering coursegi and so they do not see the meaning yet behind the courses they are taking. we have a new curriculum where we teach math and physics through the lens of examples. we feel that offers an opportunity to inspire them. even while they are struggling with the difficult math and physics, that they have a chance to see it is worth the struggle because look what i can do in terms of contributing to society. tom: within this is liberal arts as well. princeton has led on that.

you cannot do this without the liberal arts curriculum, can you? emily: that is music to my ears. it is essential, i believe, and people are realizing it, thinking about design thinking. what does the client need? with thef an engineer typical white coat being often a corner somewhere, and said, what needs to happen -- instead, what needs to happen, is we need to be thinking about what are the challenges the globe faces and use that as a way of inspiring and educating. francine: is in the biggest challenge inclusion? what role can education play? emily: that is the point. i think, we are making a big

push at princeton in that area, recognizing, even if i think about it from a selfish point of view, the fact is we want to the serioushat are problems that different areas of the country, the world face and that people face on a day to day basis that help us understand where we should be looking for solutions, right? by bringing in people with different perspectives and background into the field and showing them that injured ring, it-- enginee provides an opportunity to address real problems with impact. in france, engineering is the highest form of studies. how can you translate that for americans? emily: i was looking at the

statistics that is close to a decade old. of theunited states, 4% population are engineers. need to reach out, starting even in elementary school, talking about -- tom: i do not want to interrupt. it is important to have a slide rule app on your cell phone. emily carter, princeton university. what the children need is to learn how to use a slide rule. stay with us. this is "bloomberg." ♪

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welcome to a special edition this martin luther king day of bloomberg markets. welcome to the program, everybody. let's get straight to the markets and have a look at what is moving here in europe and beyond. halfway through our session here on european equity markets. let's start there. stocks under pressure. down by about .2% this hour. moving lower. the session over in asia, where -- was a slightly more positive one. here in europe we factored in of course a lot of the more positive news around trade in friday's session. friday was a strong session for european equities. we slumped at the opening in europe and have gone effectively sideways. some of the positives coming to the market, around what china can do to reduce its trades imbalance with the united states, that's factored in. that was pricing over in the asian session. not being put off too much by the other headlines around weather these trade talks would stumble on intellectual property concern. we have the y