♪ anna: good morning from bloomberg's european headquartersanna: doesn't like to -- nejra: good morning from bloomberg's european headquarters. the world economic forum opens with a warning of a slowdown as china's president expresses concern over serious dangers to the economy. ubs kicks off european bank earnings. 12.8 billion dollars in money outflows from its wealth and asset management businesses, but says market volatility remains muted. referendum rerun. the labour party calls for a vote, which could open the door for a second referendum, as theresa may refuses to delay

brexit. ♪ manus: it was bad volatility hitting the numbers at ubs. there is no doubt about it. i need the quantum in terms of outflow, but net new money outflows from wealth management at nearly $8 million. -- wealth management asset the asset management side of the business, outflows over $12 billion. they would give more detail on the buyback, and they did, topping that share buyback of over $12 billion in 2018. going into these numbers, a lot of analysts saying that ubs could be a lot more protected than the u.s. banks, because it's u.s. bank division is more skewed towards equities. manus: yes.

if you look at global wealth management pretax profit, it was just a small miss on what management in the fourth quarter -- wealth management in the fourth quarter. they made $30 million. -- the length we are going to stash we certainly are going to -- we certainly are going to keep an eye on that. ficc is where the americans have had trouble in terms of. bad volatility. . ficc does not look that bad compared to u.s. peers, pretax profit of $26 million. manus, we are getting some of the commentary through saying the challenge markets affected. the tliv blog is a great one. here is some of the commentary.

particularly some of the activity in global wealth management we should look as some of the concern, because the end of the year and star of the new year is when you get a lot of those inflows. will bey a lot of eyes focusing on that 12.8 billion outflow number. coming up, we speak to sergio ermotti, the ceo of ubs in zurich. let's go live to davos for the world economic forum. haslinda, great to have you with us. we are heading into this year with a little bit of a downbeat tone from the imf on global growth. what can we expect today? >> the discussion will be on global growth, trade. the warning coming out of china on the back of what the imf says as well. it's cut its growth projection for the year for the second time in three months. that underlines the momentum of this slowdown. hinging on that

u.s.-china trade war, which is a start by the u.s. despite trump not been present here, his america first policy is having great implications. the 3000 participants from 100 countries, 60 global leaders will be discussing the implications. for this particular meeting is globalization 4.0. fourths in mind the industrial revolution that's about to strike the world, the jobs that are at stake. that's another theme and concerned that global leaders will have to address as well. manus: of course, it's interesting who is not there, haslinda. the u.s., theresa may, and macron. have a great davos. we look forward to the conversation. let's get to the markets, nara. jra.ave that -- ne

money goes into the dollar, sterling is on the move as well, as theresa may makes it very clear she is not an advocate of a second referendum, nor taking no deal off the table. she wants some protection. the greenback is where the human is. you see that desk haven is -- haven is. labour party may be setting an agenda, tabling a second referendum. this is perhaps the personification of global growth. copper has been under a little bit of pressure over the as couple of days, but still lme stockpiles are the highest since late november. you are going to get called up and volatility. anna: you are deaf -- nejra: you are definitely seeing a downbeat tone and his global markets. we did not get any indication from the u.s. session yesterday, which closed for martin luther

king day. and of the week, the highest since -- end of the week, the highest since december. these futures dropping the most in about a week. the 10 year yield paints the same picture of risk off today. dollar-yen. lower for a second day. the yen heading for its biggest two-day gain in three weeks. let's check in on the markets in asia. juliette saly in singapore has more. what do you see across the board? juliette: amidst all that bad news you mentioned, no surprise we are lower today, that imf warning. where are also hearing news that the u.s. has a formal request to extradite the huawei ceo from canada. chinese stocks and the yuan some of the worst performers today. japan closing out the session weaker by 0.5%.

south korean gdp actually coming in better than expected for the fourth quarter, rising by about 1%. still though, asian stocks falling about 0.7%, the biggest drop in three weeks. bhp came through with some numbers today, copper production forecast for the -- year was boosted. petrochina also in focus in hong kong. it has seen its four-year profit double, but it is taking a $1.5 billion hit to some of its underperforming assets. .un pharma doing very well nejra, manus? manus: thank you very much. juliette saly in singapore. today we are asking the following question to the market. what will investors be talking about this time next year?

i will get my crystal ball out. you can join the debate. let's get your first word news. international monetary fund has cut its forecast for the global economy in a second downgrade in three months. the lender predicts 2019 will see the weakest pace of world growth in three years. this is off the back of weaker demand across europe. speaking of the world economic managingdavos, imf director christine lagarde warned that the downside risks are mounting. president xi jinping is said to have stressed the need to maintain political stability amid an economic -- uncertain economic outlook. this comes as the u.s. is said to still be trying to extradite canada.eo out of

the u.k. labour party is proposing a series of votes in parliament on how to avoid a no deal brexit. one of those choices would be in a referendum. the times reporting that up to 40 members of the u.k. government could resign next week if conservative mps -- key marketss two announced they would move their operations to amsterdam. one will shift most of its european trading at of the u.k.. terra firma capital chairman says there is massive downside to investing in the u.k.. toet al. most impossible sort of rationally invest in the u.k. at the moment -- it is almost impossible to sort rationally invest in the u.k. at the moment. there is massive downside which is just on quantifiable. the upside is very limited.

juliette: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. nejra, manus? nejra: annabelle in hong kong, thank you so much. the chorus of economic gloom is swelling. first the imf is slashing its forecast for the world economy, surveyst hours later a of corporate executives was released, or 30% of leaders take the expansion will weaken this year. joining us now from a frankfurt is thu lan nguyen, commerzbank fx strategist. we definitely see a downbeat tone in markets after the imf report and also reports a real concern with xi jinping expressing concern over china's slowing economy. what is your outlook for euro-dollar, particularly as the imf cautions specifically on eurozone growth? thu lan: yes, i mean, we have

been seeing for a while note that there were market concerns regarding -- now that there were market concerns regarding global economic slowdown. i think in the short run, this will remain the case. we will be seeing a strong dollar and the environment but i am skeptical if that is justified over the medium to long-term. if we really do get a global economic slowdown, the federal reserve is one of the few central banks which can actually cut interest rates which should be weighing on the currency. as soon as the markets get that, i think the dollar should be suffering a little bit more than it has been in the last couple of weeks. manus: with that in mind, i will tie those together. yen asi be long aussie the perfect paradigm hedge? thu lan: yes, pretty much.

in my view, the japanese yen is actually one of the ultimate safe havens, because the bank of japan actually does not have any room to become more expansionary. it cannot cap interest rates anymore. in fact, bank of japan has been saying that probably the low interest rate environment, which has been around in japan for so long, is increasingly a threat to financial stability, so actually interest rates in japan may rise in the medium to long-term. manus: i have to clarify myself. i meant to say short aussie yen as the perfect paradigm hedge. veryvery kindly -- nejra kindly sent me little messages. nejra: you actually caught yourself on this one, mattis, so i will give you credit -- manus, so i will give you credit on that. let's just talk about that yuan,

because we have had this unusual meeting that xi jinping held the partyr members of talking about serious dangers as risks melt. aren't -- melts. on -- mount. are there serious dangers to the yuan? thu lan: certainly. hasn see why the yuan recovered, but this is going back and forth. it's quite volatile. it's quite -- it was quite excessive, the recover we we saw in the -- recovery we saw in the yuan. the chinese economy is struggling with structural issues and we have been forecasting a slowdown in chinese growth for quite some time. even a part from what is happening between the u.s. and china. i think it is in the interest of the chinese regime to let the yuan we can in this environment

-- we can in this environment -- weaken in this environment. manus: i was berated by the last guest when i should have asked army under present -- are we under present chinese growth -- underpricing chinese growth. i want to translate this into global risk. this is bank of america is a global financial stress index. it is falling. we are benignly walking ourselves into underpricing risk. is china political risk a big threat and 2019? -- in 2019? thu lan: it certainly is. although, this is not the first time that people have been forecasting chinese crisis. this has happened time and time again, and so far we have not really seen this big crisis.

yes, there might be a political risk. if we canntirely sure forecast a big blowup in china. so far the chinese regime, one has to admit has been controlling the chinese economy quite well. thee think back on 2008-2009 great financial crisis , china has been the one economy that has been pretty stable so far since then, and has been the big driver of global economic growth. yes, there is a political risk and economic risk there. i would not jump on it yet. i would not overestimated at the moment. nejra: yes. thank you so much, thu lan nguyen. i was reading that technology hiring going down in china recently. what does that say about the country trying to move toward that by added economy -- value had economy -- value added

economy? thu lan nguyen stays with us. a big names across the world of industry, including ubs ceo tidjane thiam, bank of america ceo brian moynihan, the list goes on. manus: it does indeed. later on, more conversations. don't miss all of our conversations today from davos. if you are traveling to work, you know what to do. at davos.eaking over we are live on digital radio. join us. ♪

♪ nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: and i am manus cranny in

dubai studio. , isn'tay one of davos it? nejra: absolutely. a littlee into it with bit of a downbeat tone because we had that outlook for global growth downgraded from the imf. we have all digital politics and economics set to take center stage. let's get to the lady in charge of proceedings, haslinda amin is on the ground. good morning. >> good morning. zimbabwe is no different. it is struggling with a lot of to do with its economy for decades has been -- by administration. over the past several days there have been protests nationwide leading to further pressure. , zimbabwe's finance minister, is with us. mthuli: it's a cold morning. >> -13, no less.

the president decided not to attend this meeting just two days ago. any signs of stability at this point in time? mthuli: absolutely. the president has communicated that he wants to restore calm. he is not the only world leader that has done this during a domestic issue. theresa may come in the u.s. with trump, just -- theresa may, in the u.s. with trump, just to name a few. >> inflation a huge issue for you. 31%. it is the highest since the ipo reflation -- hyperinflation episode 10 years ago. what is being done to address this? mthuli: it is being driven by the -- market in terms of pricing. people speculating, regional speculating has push up inflation. what we are doing about it is to make sure the on the fiscal front, we continue to make sure

there is fiscal discipline, cutting back on government expenditure, making sure it is not the fiscal's outing to pressures -- adding to pressures. we are moving step by step towards full reform, which will deal with these -- currency reform, which will do with these deals going forward -- with these issues going forward. >> this is a country short of cash, short of food. mthuli: what you are mentioning is just the symptoms. these measures will work. we have to walk with this road. it has been high budget deficits in the past and we are dealing with that, making sure it moves to single-digit by the end of this year. cut back on government waste, deficit, the account get on the road to currency reform.

just by doing that these problems will be behind us. >> single digit inflation by the end of the year? mthuli: i'm talking about the budget deficit coming down to single digits. >> how about in terms of inflation? what is the treasury's protection best projection for your and inflate -- projection yearour and inflation -- end inflation. mthuli: we are expecting single-digit. months,ok at months on the inflation figure is actually single digits, 9% for last. > two months at least you have talked about reintroducing your own currency within the next two years. what conditions must be present before that can happen. mthuli: a lot need -- can happen? mthuli: a lot needs to be done for that to happen. making sure we bring the budget

deficit into single-digit. also, making sure there is compliance on the revenue collection front. also, we need to build the micro-institutions for full monetary policy conduct, in the sense of introducing a monetary policy committee, making sure we put in place a framework for inflation tarkenton -- targeting , but also growth targeting in a way. we can begin to address all of these areas. , but fiscal that discipline is key. if you notice, what has happened since october 20 17th, the print october 2017. >> you saying -- you are saying you are making progress. thatstically, when can

happen? mthuli: the first step is to clear what we go to the world -- owe to the world bank. make a sure we are making progress on the macro economy front -- making sure we are making progress on the macro economy front. then move on to the second phase, which is a negotiation with our bilateral partners. we are making steps in that direction. ,> in terms of bailout loans you have approach china, russia, south africa, as they have all failed those assets. are you considering approaching western countries for your bailout? mthuli: we are looking everywhere, east, west, everywhere. without naming any, let me say everybody. while i am here i am hoping to

approach three private sector credit providers who have been keen to work with us, especially in providing fuel, and giving us a couple of credit lines. this is normal. inre is nothing abnormal sourcing credit lines. >> thank you for coming in this early cold morning. thank you for your insight today. you have perspective on zimbabwe and the challenges ahead for the country. nejra: great work. thank you so much. we were talking earlier about the imf downgrading its outlook for global growth. we are seeing some of that downbeat sentiment reflected in equities, dollar-yen, which is lower for the second day. the dollar on the front foot as you as futures point lower. manus: yes, sterling is a bit lower. theresa may rejecting a second referendum. oil down by nearly 1%.

we have hit $54 per barrel a day yesterday. the growth concerns arising. s&p futures are lower. big reports this week. ♪

♪ a bit of a downbeat tone in markets. caution. asian equities heading for the biggest decline in three weeks. the imf has cautioned on global growth, downgraded its forecast, and xi jinping in china said to be concerned as well over the slowing growth there. the start of cash equity trading in about 1.5 hours. ubs will be very much in focus. outflows of almost $13 billion from both the asset management and wealth management division's. ubs seeing asset outflows from wealth management of almost $8 billion. manus: the buyback, they are

targeting $1 billion of share buyback in 2019. that is versus 750 million. the other piece, everybody should hop on the tliv. the investment assets, and other words the amount of money those clients are putting to work, fell to 3.1 trillion, the second drop in three quarters. this is not going away. that is what they are saying. they are warning about volatility, rising protectionism, and geopolitical tensions could spill into q1. nejra: another concern is perhaps the performance of the investment bank unit. so more saying going to head these numbers that ubs might be more protected than some of the u.s. banks. of course, another big picture question that is likely to come up from investors and analysts later today is about session planning. -- succession planning. manus: absolutely.

ermotti, alongio with axel weber seem to be joined. they are focused on the internals. they seem to be a lot of people on the move in ubs. there are issues to deal with about what happened at -- theresa may is still saying that she will return to the eu to seek concessions as she works to rescue her brexit deal. she may not get the new terms through parliament. the main opposition party is backing a plan that would open the door to a second referendum, bringing the prospect of stopping brexit a step closer. is commerzbank fx strategist. she is still with us. labour party seems to be showing some of their color.

if we understand that jeremy corbyn could be pushing forward for a motion on a second referendum, what would that do to your thinking about the u.k.? think actually a lot of people see a positive thing in this, a second referendum, particularly for the pound. this is the reason why the pound has been grading -- getting recently, because the -- gaining recently, because the possibility of a second referendum has increased. i'm not sure a second referendum will bring the result that these people are expecting. there may be now a majority of people who would vote to remain you know, as soon as campaigning starts again, and campaigniteers again again brexiteers

campaign, this may turn again. i'm not sure that the probabilities would change with a second referendum. nejra: how are you taking opportunities around either cable or eurosterling at commerzbank? are you doing get buyer options -- it buyer options? , because theainly spot market is extremely difficult to trade at the moment because we are facing a binary risk. either there will be a deal or no deal, so that is very difficult to change. options markets makes sense because you can trade the uncertainty and higher volatility in the pound, expecting volatilities in the area of two months and beyond that to remain at higher levels or even increase in the near future. manus: thank you very much, thu lan nguyen, commerzbank fx strategist. she stays with us.

we have a bit of housekeeping to do before we get back to davos. tom-tom is to sell telematics four 910to bridgestone 910 millions -- for euros. tom-tom promises to return a majority to shareholders. nejra: we have also got numbers from -- we were watching for cognac and anything they have to say on china with a lot of the data we have been getting through. remy cointreau confirming its guidance. ok, nejra.

we will find out what they are doing on the chinese sales in whiskey very shortly. we are in davos for the world economic forum. imf, the worlde economy will grow at its weakest pace in three years in 2019 and blames a softening demand across europe and market volatility. let's get to switzerland and francine lacqua, who is standing by with a guest that is no stranger in dealing with european risk. good morning to you. have a great davos. >> absolutely. my next guest is indeed no stranger to dealing with tough markets. .e is patrick odier trade concerns, u.s. growth, populism, brexit. how do you change your just trade your investments -- trader investments? thu lan: i think in general -- patrick: i think in general we

are slightly overshooting on negativity. dollar isices, low probably a plus. perhaps a reduction in the rates , and perhaps also from a currency point of the, some hedging strategies like in yen. >> what are the countries where you think there is good value? ifthey have a buffer value goes higher? patrick: there are countries who benefit from this trade environment. -- is where we would favor investments at this time. >> deal by credit, currencies -- dual you by credit, currencies currencies,y equities? i think we will bite -- patrick: i think we will

purchase equities at this time. >> where does the biggest risk and 29 -- in 2019 come from? patrick: i think there may be shocks coming surprising perhaps the markets. i think we are of course very careful about what is going on in the trade disputes. we think ultimately this will be resolved. we think this is not where the risk will be highest. inhaps the level of debt general and difficulties that may arise from different types of economies being sensitive to the interest-rate hikes. >> what does a shock look like? is it a significant slowdown in china, shadow banking? is it the start of a financial crisis? patrick: i think for once we are not expecting a financial shock with major ruptures in the markets, but probably more of a normal economic cycle type of reaction, where we would see the market reacted to the growth

predictions -- growth. predictions will be more negative in the future. brexit is the major source of uncertainty, maybe. i think -- mainly. i think what has happened last week is basically mainly positive news in terms of making possibly -- the possibility of a hard brexit let's. >> that same -- less. >> that seems to be complacency. the clock is ticking. how can we be sure they avoid a no deal brexit? patrick: i think neither the european union or the u.k. have an interest in getting to a clash. i think in this respect, it was probably a normal posture to stay until the end. today the willingness to look for a solution is probably much stronger. >> where do you see value in europe? patrick: i think europe has been restructuring.

they are very strong in fundamentals in europe. i think growth should remain positive. unemployment is nearly second to none in europe, 7.8%. >> the forecasts in europe keep on being revised downwards. patrick: yes, they do. the redeployment of trade is showing positive signs for europe. i think industry and export industry out of europe are to be favored in this respect. >> erdogan -- patrick odier, thank you so much for joining us. i will send it back to you in london and a bite. nejra: thank you so much -- dubai. nejra: thank you so much. coming up next, we speak to sergio ermotti in zurich. of $12.8 billion for the combined wealth and asset management unit. they are targeting a share buyback of over one million --

billion dollars in 2019. what will sergio ermotti have to say about all that and possible succession planning? this is bloomberg. ♪

♪ fourth-quarter numbers from ubs today and some of the headline numbers looking quite dismal. let's talk about outflows first. we are looking at the number of $12.8 billion for the fourth quarter, 8 million of that coming from global wealth management -- billion of that coming from global wealth management. some analysts coming into this said ubs could be more protected compared to u.s. equities. they are targeting a share buyback of $1 billion in 2019, but will it be enough for investors? manus: the investment clients have made is 3.1 trillion.

the volatility was the wrong kind of volatility. contagion could flow into the first quarter. the battle in the market is between the buyback and that outflows. let's listen to sergio ermotti, who spoke to francine lacqua. q4 has i am pleased that delivered a resilient result despite the challenging market conditions, which translating into the kind of bitter cocktail in the quarter. it's way too early to talk about first quarter. last year at this point in time it was a totally euphoric environment around the beginning of the year and the prospect for the full-year 2018. it is too early to make adjustment about q1, but also for the entire year. what happened in december, particularly in the , that quarter in general

remains at the very i level -- eye level. >> do you expect difficult markets to continue? sergio: as we mentioned before, it's way too early to call. the outlook -- called outlook for the year -- call the outlook for the year. in the last seven years and laughter particularly, we saw so many movement -- last year particularly, we saw so many movements in sentiment and outlook that to make statements about how the quarter will look after three weeks in january is way too early. >> talk to me about outflows of client -- net outflows of client money. how big was that and will that continue? sergio: if i look at the two segments, i would say they have a quite different trajectory. in wall to management, partake

-- wealth management, particularly when i look at our overall results, of course they are not up to our expectations, but when you look region by region in asia, we still had almost a 5% increase on a year on year basis. risk adverseery sentiment by clients, they basically took out there leverage, and that was one of the main factors. if i look at the u.s., we have met outflows. we have been performing better than our peers in the fourth quarter. it looks like this is something that happened in the entire market. we are the only firm reporting new money in the new us -- u.s. market. it is reflective of the sentiment that we saw in q4, less leverage and more people going into cash. ubs ceo sergio ermotti

speaking to francine lacqua earlier. good to see you again from davos . hi. another big question on investors minds today will be succession planning. did he have anything to say about that? this is one of the big stories that bloomberg tried to figure out what was going on. we heard right from the top that there was a risk between axa labor and mr. ramadi deked axel weber -- axel weber and sergio ermotti. he seemed to suggest he is on the same page as axel weber. he was really at pains to try to figure out what the outlook for the markets was an saying it is difficult to predict at the moment. i think he was trying to brush the succession question to one side. manus: he says he has a very good, strong team in the

executive board. this is going to be the story we are going to run, whether they look internally or drop extra -- draw externally. those outflows are going to be what the market focuses on, and the volatility spill over into 2019. >> i think the market will basically focus on market conditions, some of the concerns regarding trade. he also mentioned populism and exactly what the world will look like in 2019. one of the big things we have been trying to figure out is of course net outflows. he says clients at the moment prefer to be in cash, but it could turn very quickly because of market sentiment. it's interesting to see that ubs is not alone in seeing a lot of client activity take a backseat. we heard from tidjane thiam similar things last week. it will be interesting to see

how their rivals and competitors do and frankly a difficult market environment. it is the wrong kind of volatility, or you can be on the wrong side of the trade and lose some pretty big money. nejra: francine lacqua, thank you. we look forward to lots more coverage from davos. coming up, an exclusive conversation with the ceo of credit suisse, tidjane thiam, from the world economic forum. let's get more from the senior eu banks analyst at bloomberg intelligence. thank you for joining us on set. first take on these numbers from ubs. are investors going to be focusing absolutely on these outflows? >> not just on the outflows. if the guidance. the disappoint -- it's the guidance. . the fact is that the recurring income is off of a lower asset-based and the transaction-based income is at

multi-quarter lows. you look at the outflows, not so good. you look at the investment bank, a big miss on equities, certainly versus the u.s. as well. i don't think the buyback will be enough, the small increase in the buyback. will all be about how he can convince investors about the outflows from here, but also the recurring income in global wealth management. manus: they just had a big investor day where if you remember last year, they were -- for not being overly precise on the targets. numbers kind of remotely interfere with that strategy to return on capital? he has gone down the buyback soothe this and outflow information we have this

morning. >> if you do a buy back and canceled the shares, you boost capital. the other thing we will all look at now, if your revenues are going to struggle, what else can you do with costs? it makes sense for buybacks. , 1.5 billionyield special dividend probably coming, market does not care. the big story at the moment is not attractive, because we have no have -- big story at the moment is not attractive because we have no handle on the top line. nejra: when i was talking to sergio ermotti towards the end of last year, he made some of those comparisons. share this year, ubs' price is outperforming the broader stoxx 600 index. >> i think this will be very

symptomatic. -- things could turn. client transactions could pick back up. that's very symptomatic of what we will see for the next four to six weeks. manus: they have set a target of a hundred million in terms of costs cuts. --y are committed to cutting 800 million in terms of cost cuts. do you think are mati -- sergio ermotti and axel weber will do one big deal? do you think they could go after deutsche bank one of the german institutions -- for one of the german institutions -- or one of the german institutions? >> i cannot say. why do you want to take on the additional risk?

it strikes me as unlikely. you will see more transactions this year and more shuffling of the deck hands. nejra: thank you so much. we already have some of the broker calls in for the stock. european equity markets start trading in just over an hour's time. some of these brokers calling ubs lowered. let's get the bloomberg business flash. -- says it's considering pulling -- google says it's considering pulling its news service from europe. -- one smallts fragments of their articles it show up in search results. this follows google been fined right europe's privacy regulator. and -- are not among the

publishers whose video games have been approved by the chinese regulator last week. this follows both companies not having any game titles approved in december. the chairman of -- and his wife cut their stake in the company just as the stock plunged. shares have been halted from trading after sinking again this morning. up company's trade made about a quarter of the entire volume in the stock for that date. traders have struggled to pinpoint the reason behind last week's route. despite all the downbeat news about london's housing market, there are still buyers out there looking for homes. citadel founder has bought a home overlooking saint james's park. the billionaire paid around 95 billion pounds -- million pounds for the property. that is your bloomberg business flash. nejra: thank you so much. global growth worries weighing on markets.

today we had the imf downgrading its outlook for global growth. the msci asia-pacific index heading for its biggest drop in three weeks. we also see european futures point lower after some weakness in the session yesterday. manus: yes. it's going to be interesting to see how ubs actually opens a little bit later on. euro stoxx 50 down. value of s&p 500 index stocks relative to the european counterparts is back nearly at record highs. we have the ecb, bank of japan meeting this week. those asian stocks are lower. south korea finance minister warning that his growth could be anywhere from 1.5%-two .2%. xi jinpingo that warning about the situation in his country politically. of a: we will have a bit catch-up because u.s. stock and bond markets were closed yesterday but futures firmly in the red. coming up, live from the world

economic forum in davos. we speak to big names across the world of industry, including tidjane thiam, axel weber, and brian moynihan. this is bloomberg. ♪

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manus: good morning from dubai, this is "bloomberg daybreak: europe." opensrld economic forum with a warning of a slowdown. china's president expresses concern over serious dangers to the economy. high flows rise. ubs sees assets with draws of almost $13 billion in the fourth quarter. the clients take flight. >> when you look at some geopolitical and geoeconomic clearly re-converging into a mix of [inaudible]

that can destabilize market conditions. manus: the labour party call for a vote which could open the door for a second referendum. theresa may refuses to rule out dealing brexit. >> let's get you some easyjet numbers. easyjet numbers coming through saying that fx is to have a 10 million pound roughly adverse impact on headline pretax. abuse are broadly in line, this is what is coming through from easyjet. 60 fuel bill is likely to be million pounds and capacity to

grow by 10%. one of the equities to bear in 21.6 million.n at more even in focus for equity markets in europe will be what we got from ubs. net outflows coming in at $12.8 billion, 8 billion coming from level wealth management and a bes in the pretax, ubs will in focus for the european markets and the focus is downward, we could see your equities build on the losses from yesterday, with this with a backdrop of concerns around global growth, the imf downgrading the global growth or cast and shooting europe, ftse, that, -- dax, and cac futures lower. we could see a down day after they hit the highest since december on friday. with fright, take flight,

that is the message in the bond markets, money going into u.s. treasury bonds and some calls on the funds as well. the treasury market up, they call from citibank on the buns, economic winter is ripping the below zero.als and turning negative within six months. citibank, top jen said they favor the short position in the euro versus the pound. you're seeing this flight. the bank of japan, this is what they are saying, the jgb are focused on the difficulty on the balancing act between monetary expansion and yield curve control. there is one place to discuss many of these things, it is on the slopes of davos. it has begun.

francine, good morning. francine: it has begun, it is day one, we have another four days of davos, it is pretty exciting, a lot of the talk is on the world economy. the mood is subdued and a number of heads of state not showing up in a president trump. no one from his administration will come here although we will have via satellite a conversation with mike pompeo. i am joined by the chair for institute for new economic thinking. he said we must talk about brexit. this is forefront. i am kidding. we do need to talk about brexit. that is all i keep on hearing in the corridors is brexit, the u.s. shutdown command china. out of those three, what are you the most worried about? story is thet china slowdown, the chinese are dealing with a difficult situation. they were trying to get the debt under control, the shadow banking system under control,

they were trying to do every balance of the economy away from too much construction investment, too much debt finance investment and in the middle of that difficult transition which i think they were managing well, there hit by the tariffs, by the trade war and this is a significant slowdown of the chinese economy which is having major impact on the rest of the world, we are seeing impact on the german economy. the biggest story in the global economy is the china slowdown. how much more stimulus can authorities put in china? >> they can put more stimulus in, the chinese authority can pile on more infrastructure investment. the challenge is the trade-off between the short and long term. pour more concrete into an for more property. that is producing a mal investment. china has property in the second or third tier cities which will

never be occupied. it has infrastructure which is in excess to what will soon you declining population. we have seen the latest earth rate figures, very significant, the number of live births fell last year. china is moving into a demographic slowdown. francine: will we have a new trade deal between the u.s. and china and will it be meaningful that will last? do witht has a lot to the inside of the brain of donald trump which i have less access to then you do and you probably have fairly little as well. a lot of people who know it say there will be some sort of deal, there will be a pulling back from the brink. i think even so, the slowdown in the chinese economy will continue. they need to do a rebalance of the economy which was always going to produce a nontrivial slowdown.

i get asked every time i come on an interview like this. i go to the other end of the world to get away with it, it is like groundhog day, you wake up and the papers are full of it. what will happen? >> there will be a delay. the situation is parliament is gridlocked, there is no majority for exiting on a no deal, there is a firm majority against and that majority is organizing wind downlegally theresa may and force the will of parliament that she cannot leave on a no deal brexit. what should happen now that we have got to where we are is that she should reach out to the opposition and create a new deal which would be a softer form of brexit,'s day permanently in the customs union. she does not want to do that , thate the right wing

could split her own party and she fundamentally has a choice as to whether she will put the national interest first or the party interest first. francine: she seems to be putting her party first. is determined to keep the conservative party together. she does not want a split but intoarty is deeply split several groups. she has to keep asserting that she will get the deal that she has on the table through and there is no clear route to get it through. francine: if you delay, don't you need a unanimous vote from the european side, what is the likelihood? eu is really good at kicking the can down the road, it has use that approach on a number of difficult problems. i think that if it came to it, and there is so much interest across europe in ireland, france, germany, in all the different most affected

countries in avoiding a hard brexit that it comes to a situation where legally we will have a hard brexit or we will have a delay. i think it will be extraordinary if the eu did not agree to a delay. francine: we are trying to figure out what the impact on growth is. our governments the real hindrance to growth? to be there do appear some ground stuff about the country. we still have this extraordinary phenomenon of these incredibly low real interest rates. which suggests that there is not enough investment out there to balance the amount of savings. what has happened over the last that is offset by a massive u.s. fiscal stimulus but thinkt stimulus unwinds i

we are bound to see as we have seen in the latest imf forecast a significant slowdown in the global economy. i think unless we can find ways to address some of those fundamental structural problems, we are going to see a slower growth over the next three years and we have seen in the last year. francine: when you talk about a significant slowdown is it to a recession point? adair: it is not, i don't think there will be a chinese or global recession. when china slows down 6% that does a lot of stuff to commodity prices, it does a lot to the demand for german capital goods, germany is an export machine which exports factory automation machinery to china. you get a slowdown in chinese manufacturing, you get a slowdown in germany. we will see not a recession but all the forecasters are right, we are highly likely to see a significant slowdown in the global economy.

ner, thankadair tur you for joining me. back to you in london and dubai. let's check in on the markets, juliette saly in singapore has more. very red today, we are seeing asian stocks posting the biggest drop in three weeks, the msci asia-pacific index off, the warning from the imf about global growth, and the fact we did not have our lead coming through from wall street. and then report that the u.s. is exit guiding -- expediting the while way ceo. you have chinese stocks down by 1.3% on the close, also lower by -- japan .51%. it has been a move into safe havens. the dollar.against

the offshore renminbi had its biggest drop on its -- on the huawei report and the korean won under pressure falling for a second day. we had gdp out of south korea for the fourth quarter rising by 1% but that disappointing momentum on the export news yesterday all about laying into the concerns over the u.s.-china relationship and how it is weighing into asian markets. thank you. that talk about ubs, we have talked about it a lot to the show but it is worth doing talking about that fourth quarter. this could be symptomatically the rest of the bank as we get the earnings or so for the fourth quarter those outflows billion,n focus, $12.8 $8 billion of that coming from the global wealth management. we talked about the share buyback but is that going to be

enough to give a lift for investors? probably not. manus: it comes down to the concern about good volatility, bad volatility. december was torturous for everyone. that volatility is the reason why you see the outflows, the question is does that spillover? that is the decline we have seen. this is a bank which is fundamentally going through change. there are cost cuts, there are succession planning to be discussed. , the ceo talked about it and said it is a bittersweet set of numbers, you have the share buyback and volatility and that return on equity. you have a little bit of easyjet as well. we broke those at 7:00 a.m. the top line for those. nejra: looking at easyjet, this comes after we got the cut in the profit guidance from ryanair, easyjet said the

full-year is in line, it sees its full-year capacity up 10%. in terms of some of the numbers coming through, first quarter revenue per seat came in at 53.89 pounds, first-quarter revenue at 1.8 3 billion pounds. first quarter passengers 21.6 million but the views are in line broadly, that might be the line the markets hang on here. manus: we will play a game and you can join us on twitter as to news anchor where's hugo boss. not me. let's talk about the numbers. they see their business for 2018, it is all about athleisure. are you an athleisure girl? nejra: absolutely. operatingo boss 2018 income roughly on the prior year. what they are saying is that

their income will be similar to what we saw in the prior year. they talk about pretty much the quarter, christmas and they saw a sales acceleration and they revamprevamp, a brand going through, that has helped to them. the final three months of the year compared to 4% rise 12 months ago. i know you like a bit of luxury. scioscia we dive into it? third quarter number, what was it held -- helped by? chinese new year. likely -- do you like me taixa? it was an acceleration in that third-quarter revenue helped by an earlier chinese new year and we have to focus on the cognac. that is something that investors were looking for ahead of this. china has been in focus generally as we are talking

about that slowdown, the concerns voiced i president xi against a backdrop of concerns about global growth. their they reiterated full-year outlook for some of the brands. coming up, it is all about dallas, we are live at the world's economic forum, we continue to talk to the see sweet gas -- guest list. including the ceo of credit hande, and brian mooar in -- moynahan. those interviews at davos today. ♪

nejra: 7:19 a.m. in london, 40 minutes away from the start of cash equity trading in europe,

futures pointing to a second day of declines or european equities, bank stocks will be in focus with the disappointing results from ubs. that's get the bloomberg first word news. has cut its forecast for the global economy. in its second downgraded three months they predict 2019 will see the weakest pace of growth in three years. this half the bank of weaker demand across europe and volatility and financial markets. the managing director christine lagarde warned that downside risks are rising. u.k. is preceding -- proposing a series of votes. one of those would be a new referendum. up times is reporting that to 40 members could resign next are if conservative mps

banned from voting. this comes as to keep markets part of they will move their trading operations from london to amsterdam. moving the foreign exchange swaps which trades $15 billion a day. and the other ships must of its trading out of the u.k.. said this is a massive downside to investing in the u.k.. >> it is almost impossible to rationally invest in the u.k. at the moment unless you are looking at distressed. there is masses of downside. which is not quantifiable. you do not know. and the upside is limited. >> global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. manus: thank you. a deeper look into

the ubs numbers, we have been talking about them throughout the show. this was bank sought asset outflows of 28 and dollars after the rich clients took flight from the volatile markets and rising trade tensions. the ceo told us wealth management result was up -- not up to expectations. good to see you this morning. the outflows on asset management and wealth management, typically you see a little bit of lightness in the fourth quarter but this was quite dramatic. how would you describe it? thet: you're right, this is q4 is a week quarter for wealth management. result,ould after the december was a pretty tough month. see netsappointing to

outflow especially in regions such as america. it is a difficult year for ubs and switzerland. nejra: ubs has been celebrated for the affected put this focus on global wealth management over investment banking. result show any crack's and the strategy? guest: they have pursued the strategy first and that is what [indiscernible] at the moment at this juncture as we have seen with the imf's --t recent announcement, that is dependent on the

external environment. rather -- it is closing the gap. the fact that we are first and dependent on a conducive environment. that is putting the brakes on ubs. the proffering to the market was on the buyback but this $1 billion buyback the announced, you are worried, it sounds like they are cap and get out. ubs, it isre in on indicated at the moment, one of 10.5%.ls down what did you make of the buyback? there is some outcome in terms of litigation coming up. in the first half -- to some extent it is sensible.

they do not want to overpromise and and up having to under deliver on the share buybacks. increasinglso an risk asset. that is above the 13% target. -- they are not taking the share buybacks off the table. it is something that investors will focus on, somewhere pushing on that for more of that last year. the ceo said it is too early to discuss first-quarter performance. investors always want to look forward, what do they need to hear from ubs to feel at all assuaged about the numbers? need in one word a better alignment between the global economy and the rate of

expectation. we have a better alignment than last year. we can see the kind of ubs andnts taking more risk putting their money at work. done, iwhat we have think it is difficult to see the reverse of the trend. visibility is the byword in this reporting. guestyou for being our host this morning. socgen talking about shuttering are we in for a big structural shift on the european banking landscape as the curtain raises on a beautiful that most? in theall that happening shadow of what we heard from u.s. banks in terms of the trading environment, we look

ahead to the european equity market open. that is it for daybreak. futures are pointing lower with concerns over global growth weighing on markets. this is bloomberg. ♪ [inaudible] [inaudible]

anna: welcome to bloomberg markets, the european open. we are live from our european headquarters here in the city of london. i am anna edwards alongside matt miller in berlin. matt: run for the havens, treasuries and the yen gain as equity markets sink into a sea of red. the cash trade in europe is less than 30 minutes away. ♪ anna: fling the risk rally. european futures fall alongside asian stocks after the imf cuts