francine: gray clouds on the slopes. davos kicks off concerns about the global economy worries and political risks are back in full force. bankaul shares sink as the announced funds in the third quarter. they failed to impress. referendum. the labour party comes closer to supporting another brexit vote. prime minister theresa may refuses to rule out the lane and eu divorce.

good afternoon. this is bloomberg surveillance live with a special edition of the world economic forum in davos, switzerland. >> is a lot going on. i don't know if the highlight is china or brexit. everyone is saying it's amazing that the three people who brought us the highlights, , and micron are not showing up because they have so much trumbo at home haslinda: the fact that -- much trouble at home. trumpism the fact that here has an stop anybody from talking about him and his america first policy. we are in a video link with mike pompeo which am certainly looking over to hearing. we have a great line of guests today. philipp hildebrand. as jacob frankel and axel weber.

let's get straight to the bloomberg first word news in new york city. here's viviana. international monetary fund has cut its forecast for the global economy. it second good downgraded three months. -- second downgrade in three months. they will see the weakest world growth in three years. weaker the back of growth across europe and volatility in financial markets. davos, christine lagarde warned the downside risks are rising. ubs saw outflows of almost $13 billion in the fourth quarter. withdrawals totaling was a billion dollars at the bank key global wealth management business and in a sign the worst not be over, they warned increased volatility, protectionism, and geopolitical tensions could -- could continue to way. the outflows are more about market sentiment that ubs itself. u.s., weook at the

have net outflows but if i look at the invested assets, we have manyperforming better than of the four quarters. this is looking like some it is happening in the entire market. i see that are competitive position has really changed. it's reflective of the sentiment that we saw. less leverage and more people going into cash. >> at a meeting of top chinese officials, the president said to have stressed the need to maintain political stability amid an uncertain economic output and a trade war with the biggest economy. this coming as the u.s. is said to still be seen -- seeking to extradite the huawei ceo from canada. she was arrested based on allegations related to the iran sanctions.

however the 2700 journalists and analysts in the -- in more than 120 countries, this is bloomberg. in 2018, davos was basking in a robust global economy and president trump pledged america was open for business. a year later the government set -- shutdown and the enthusiasm in the market following the tax cuts seems like distant memories. once the mood this year? ,oin us now is alexander stubb , vicephilipp hildebrand chairman of blackrock. thank you for joining us. a lot of the dealers in the leaders are doing with proms at home. what does it mean about the economy? philipp: we are slowing the we are still growing. that's the good news. it's a synchronized slowdown. the world will slow down in a synchronized manner. that makes life more difficult

in every way. the key risk is a policy mistake. where mistakes. business model mistakes. i think is the key to avoid mistakes. do no harm. of thee: the question day is whether governments are the real obstacle. this is a cyclical slowdown. that's going to happen no matter what. the key is to manage it. i think that what worries me to ais if you're running serious problem, a recession or something worse, we would have very limited firepower left to respond to it. this is a very different environment than the one in 2007 and 2008. the key is not to get to the place for you realize you should be doing something you don't have the means to do so. that's why the key risk year is a mistake or mistakes whether

it's on the corporate side of the policy side that lead to something worse than a slowdown. you talk about synchronized slowdown. take a look at china, is china adopting the right policies and managing the slowdown of its economy? philipp: over the last 10 years or so, china has been a huge contributor to growth. has come fromwth china. if china were to have a major slowdown, that would have significant repercussions on the rest of the world. when we used to say that when they use -- when the u.s. catches a cold, the world gets a flu, that's the case with china. they will try to reinflate some vigor into the economy we will see how that works. there also have limits in some ways. constrained at what they can do. haslinda: could china be slowing

down more than we think? philipp: absolutely, that is a possibility. i expect some of these measures will offset other things that are going on the world. the fiscal stimulus from the u.s. is using. that slowly disappearing. that's not quite a be in the positive. so they'll be set by china and europe. there are limits we look at global debt levels today. this limits to how much you can do in terms of a stimulus. that's the critical problem here. we are constrained in what we can do in terms of economic policy. won't you say to skeptics who say the free market world isn't what -- working in the wealth cap rousseff? -- wealth gap proves it? philipp: it's true that globalization has delivered in the ways expected of these is way to save -- see that is the stagnation of wages. certainly if you look at various no doubts, there is

that for the middle five, globalization has not delivered as we hoped. this is what lies behind or at least is part of what lies behind much of the popular unrest that we are seeing in may different parts of the global economy. are people talking about china or the shutdown or brexit? philipp: a mixture of all the things and that's the problem. at least we're still growing. we shouldn't underestimate that. the chance of a recession short of a major mistake or an accident this year are limited. i don't see that. but there are a lot of problems of their the ones you just mentioned are the ones that are certainly going to dominate the discussion zero the next couple of days. haslinda: how close are we to peak growth? francine: peak growth will peak again -- philipp: peak growth will peak again at some point. next you will most certainly going to see a synchronized slowdown. but given it to realize is,

everything is more difficult. if you have oh week business model as a corporation, he will suffer more in of environment of the slowdown than one where growth is picking up. haslinda: have you been surprised by the quick reversal of fortune? talkings ago we are about how cylinders were firing. so much optimism, euphoria even and here we are talking about, yes, there's still some growth but slowing. i'm not that surprised. one of the things that happens at and like this you get groupthink the dominates. you are often well to take the other side of that. we know the big consensus is that comes out of davos since early last year it was too optimistic. it was clear that this radical change in trade policy would represent a major risk. it was also clear that the policy adopted by the new illustration would lead to complex for these confrontations at the strategic level which exactly what we are seeing.

that's probably the biggest risk today. it's broader than trade. it's in fact strategic androntation between china the u.s. the goes much deeper than trade. trade is in a sense the tip of the iceberg. it's changing dramatically with technology. what is really at stake here is the strategic confrontation at the heart. this is about supremacy in technology and artificial intelligence. me limit bitk to about blackrock. i remember a pretty substantial interview we talked about active versus passive -- passive investment. we are seeing a lot of volatility. does that mean for blackrock? philipp: -- blackrock? a diversified model is the way to serve in the best interests of our clients. and do the best possible job for our clients. clients are equally challenged

by the world. then he to the of to turn to us and of multiple solutions that they can offer. we try to do is provide choice to our clients. whether it's passive or active, and have an and be offer that reached across all these possible dimensions. .any of these are difficult traditional active management in the equity space at least is certainly not lived up to what it should deliver in terms of performance. that's why we are seeing a shift away more and more into passive. that's something we have to manage and address. francine: think is so much. the vice chairman of blackrock stays with us. we will talk about brexit and so the other risks we're seeing here. we speak to many guests, many chief executives including the chief executive of credit suisse. the chairman of ubs. and the chief executive of bank of america. don't miss those interviews. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." the vice chairman of blackrock is still with us. good to have you as always. almost brexit.nd seeing the play out in the market. a it's a sad story

for everybody particular those in london for a long time. areuld say today, if we realistic, we have to say that there is very little chance that the deal, the current deal goes through in this form. amended form. which basically takes us to a place where we have to corner -- we have to options. no brexit which could have various forms. the most modest would be a delay. or hard brexit. a hard brexit would be a dramatic event. we talk about risks and something going wrong before. that would be a very significant event which i believe is underappreciated by the market. if you take a look at the pound, you don't get a sense that anything is wrong and that the market is prepared for it. philipp: markets have a hard time pricing in. they think something will be sorted out. they don't pay too much attention to details. i think we look at this, we have to say its either no brexit or

hard brexit. should payething we attention to because were that to happen, you can be sure that the market would react violently , perhaps of the last minute. thecine: do you think market is complacent? a lot of institutional clients are held by people who thought they would remain. i feel like sony people save really want a brexit, the eu doesn't want it so it won't happen. the procedurally it could. -- but procedurally they could. philipp: wishful thinking is always come true. when you look at european crises, things do come together at the last minute but this feels different. time,utcome in two months today, is basically a hard brexit. i would caution against excessive optimism in the sense

of, oh, something we worked out. perspective, legally today, the default option in march which is in two months time, is basically a hard brexit. in the something else comes in, which is why think the other option is some form of a delay which could be another delay, or new extreme case no brexit at all. we will see. it's hard to tell which outcome will materialize. we do have a situation where a hard brexit is a possibility. is clientwhat sentiment like? you go to top clients and they said 10 minutes with philipp hildebrand. what are their top three questions. philipp: brexit comes up. most of them think it down this can't be. so surely something will be worked out. without necessarily getting into too many details. i think the biggest concern that i see is the strategic confrontation between china and

the united states. how does this get managed? we are back to a kind of a great power competition kind of world. as we know from history and previous. of greats moments competition, you have to carefully managed that to avoid bad outcomes. if we think of one meta-risk or meta-theme, that must be the one. francine: what would be a bad outcome? -- that china has to stimulate some estimates we forget his neighbors or they forget the reforms they promised in 10 years is a have to focus on the here and now? the worst are clone would be that the conflict turns into real conflict, of course. another bad outcome would be if the conflict per se starts suchting both economies in a way that the synchronized slowdown i talked about become something worse and we start seeing recession emerging. processions don't just happen of old age. ,hey have interest rates rising

that something in the cards intimately, or you you have financial instability that leads to a recession. both in the short term are unlikely but the bad news is that in the synchronized slowdown, the risks of an accident go up and if one happens, they can have severe implications. francine: thank you so much -- thank you so much. we want to get you back on to talk with the swiss franc. that's philipp hildebrand, the vice chairman of blackrock. ceo of ubs has some it is a after posting fourth-quarter results. that's next. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg surveillance." oppresses a giant was acquired by the china company for $40 billion. they are seen more consolidation in trade tensions have heightened between the u.s., europe, and china. under the umbrella of a chinese company, what does this mean for the business particularly in the u.s.? we are with the chief executive officer of syngenta. what is really must shout to think about integrating the two companies? >> we've been purchases a

financial deal. the last us to execute our strategy with a partner in china that has a long-term view. it has very strong kid abilities in china. that's always been a challenge for global companies. we got great support is -- to expand around the world. we did for acquisitions. two additional and one vegetable seed company. great support globally and terrific support in china. francine: is that money coming from chem china? can you spend more on r&d? on r&d.e spending more we spent $1.4 billion on area for protection products and seeds, we are increasing that and connecting to chinese institutes that are

doing research work. we are also leveraging that capability. we are increasing our r&d capabilities to drive higher yield. to help profitability of farmers. it also to address climate change. haslinda: you've had allegations of china stealing innovation, technology, with your take on that note you are part of a chinese company? -- >> they spent $43 billion to buy us and we have world class technology in the agriculture arena. i spend more time in china and i have spent a lot of time in china over the last two years, i see china really rising as an innovative country. whether it's digital with tencent and alibaba but also in andhealth care field agriculture. chinese are putting a lot of emphasis on research and technology development. with that comes the responsibility to be a global

player in intellectual property protection and i think you'll see that happening. francine: it is beneficial in some ways have a chinese coming as a parent company. how have you benefited? we have benefited particular in china because china is unique market. it's a huge market and it's critically important to us. there,g how to play making sure we get the best talent, making sure we do things the chinese way, and growing our business. this past year we grew our business in china very nicely. i think we will step change in the next three years in china. at the same time, they are supporting our growth strategies around the world. great thing is, they realize that to achieve our goals, it takes a long view. we can't worry about quarter to quarter. we need to perform every year but this discussion, the concerns are about where are we going to be in five years or 10 years as much as they are this

year. it's great support for a growth company. francine: what does the bayer/m onsanto deal mean for you? can you catch up? >> it's a big company and i like our position. well-positioned globally. we will keep growing by investing in our base business and i thinkough m&a we have a unique opportunity in the world in china area i like our chances. -- china. i like our chances. francine: give me an idea what you would like to buy right now in m&a. are leaders in crop protection and seeds we are number three. he made a large acquisition of a seed company in brazil and argentina which gave us edition of those key markets. we still need to strengthen in the u.s.. in china, in a big way.

and in europe. c to be the top early of the acquisition. we bought a few digital --ere's a number companies. and there's a number of companies developing brand-new technologies, biological technologies going after pest control in a more sustainable way. we are looking at those and developing our own but that's another area of potential interest. francine: are you looking at any acquisitions with the next six months, 12 months, 24? >> i will be back next year to talk about the acquisitions we made. yes, we will make acquisitions in the next year. it's going to be a huge entity. nta get lost in that merger? it's the core of the error

play for these companies. ing is the chairman of chem china and syngenta. he's got a great global view and a great idea of how to succeed in china. he's up in us through that. enta as the core of the aquaculture play across those companies. the effect of the companies have other agriculture plays gives us more options on how to strength and. you ever feel like you are caught in the crosshairs of this u.s./china trade war? do you get called up by european and u.s. leaders to talk about what you know about how the chinese are using things? >> sure. i get talk to a lot because of our unique situation. i tell people united states is the biggest market in the world, we are a swiss/european headquartered company and we are owned by chinese so we are very global. are they pleasant

conversations? because the biggest agricultural importer in the world is china and china has seven -- 21% of the world's population and 7% of the arable land. the need to grow more with her own agriculture but will always be a big importer. our customers in the united states in our largest market in raise we are trying to encourage fair and free open trade throughout the world, but that is good for our customers to be able to export more to china. francine: thank you so much for joining us. let's get straight to the bloomberg first word news. ana: the international monetary fund cut its forecast for the global economy for the second time in three months.

the letter predicts 2019 will see the weakest pace of world growth in recent years. warnsf managing director downside risks are rising. one ceo says there are still barriers to cross-border consolidation. >> there are political issues there, from bankruptcy loans to capital requirements. until we have a more level playing field, it is going to be very difficult to have cross-border contradiction. viviana: president xi jinping reportedly stressed the need to maintain political stability amid an uncertain economic

outlook and a trade war with the world's biggest economy. the u.k. labour party proposing a series of votes in parliament on how to avoid in no deal brexit. one of those choices would be a new referendum. the times is reporting up to 40 members of the u.k. government could resign next week. markets and ofwo part of their trading operations from london to amsterdam. cme will move its foreign exchange which traits about $12 billion a day, cboe will trade most of its economic outlook out of the u.k. it's almost impossible to

rationally invest in the u.k. at the moment unless you are really looking for stress because there is masses of downside, which is unquantifiable. the upside is very limited. the japanese prime minister is having to talks in moscow. the soviet union taking over islands in the final weeks of world war ii, expelling all 17,000 japanese residents and have held them ever since. the japanese prime minister is said to push for progress, russia's rhetoric has hardened. 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. this is bloomberg. francine: let's talk banking ubs. outflows of almost $14 billion

in the first quarter. increasedarned that volatility protectionism and geopolitical tensions could continue to weigh on climate activity. pleased that q4 has delivered a resilient result despite the very challenging market condition. ofs translating to a kind bitter cocktail. i think it is way too early to talk about first quarter. last year, it was a totally euphoric environment around the beginning of the year and the prospect for the full year 2018. it is way too early to make an adjustment about q1, but also for the entire year. december,ned in particularly in the fourth , that remainseral

at the very i level. francine: do you expect a difficult market to continue? sergio: i think it is way too early to call. in the last seven years and last was soughtcularly, southern changes of sentiment and outlook that to make statements about out of quarter is quick to look like, after three weeks in january is way too early. francine: talk to me about the outflows and asset management. how big was that it will that continue? ergio: if i look at the two segments, i would say they are quite different trajectory also during the year. ouricularly when i look at

overall results, they are not up to our ambition and expectations. when you look region by region in asia, we still have almost a 5% increase on a year on year the risk adverse sentiment by clients. they basically took out the leverage and that was one of the main factors. if i look at the u.s., we have net outflows. we have been performing better than all of our peers even in the third-quarter. it looks like this is something that happened in the entire market. competitiver position hasn't really changed. it is reflective of the sentiment we saw in q4, less leverage and more people going into cash. francine: that was the ubs chief

executive speaking to me early on, right after putting this earnings out. more bad news. his administration has been pressing the central bank to hand over a part of it -- to help ease restrictions on profit lending by state banks. -- flush out the nonperforming the centralng banking system and keep a lid on inflation. joining me now is the former rbi governor. he let the central bank until 2016. we heard how china has talked about serious challenges, serious threats. whichrd from the imf covets growth projection for the second time in three months.

it is not looking good. backs ofcoming on the a fairly strong recovery in 2017 and 2018. at this point we have a whole lot of uncertainty, which is slowing investment. why is germany not doing so well probably because x for growth has slowed down considerably because companies are not investing as much as they were. will some sort of deal between the u.s. and china solve matters? i think it will help but i don't think it is the end of the dispute between the two countries. this is far bigger than just a trade dispute. it is known about the shape of geopolitics for the next 20 years. in my sins, a number of change a number ofy sense, things have changed in the last few years.

it is also about u.s. companies no longer being happy to defend china because they were selling from china into the u.s., but now one thing china to open up astheir activities in china opposed to china as the production center. i think these are things that take time to play out. you will see probably some kind of a deal announced, but i think this is something we've got to watch for the next eight years. .osh fe -- few years to some extent, i think that has to go by what it sees as activity. it has to be far more contingent that was last year. the warning is that the fed was time to get away from --, to some extent the volatility last

year as well as genuine fears about whether activity would slow, given the kind of uncertainty that has been created has rightfully put the fed anymore tentative move. i do think longer, it would be good for markets if they could stand up on their own rather than continuously rely on the central banks to come to the rescue. how do you disentangle fed policy from market behavior, is something that certainly is one of the fed's biggest challenges going forward. chairmant this point, powell has been very clear that it is going to be far more contingent that the market feared last year. i think the process of this untangling is going to be messy because you do need at least many bursts of volatility for the market eventually get the sense the fed is not always good to come to the rescue. francine: how long are we lower for longer?

raghuram: at some point, fed has to normalize. every time we see this process of normalization, we see the world is different once again. now come when have all of this uncertainty in the possibility that the world is a lot slower than people expected last year. haslinda: 10 years after the crisis, what is the biggest risk to the global economy? raghuram: i would say the real they challenge we have to deal with is technology. all of these are manifestations of technological change. as it has manifested itself for reducing the cost of trade, now trade is attacking every part of to places that were

thought of as a mean. it is treating differential growth within countries. chicagondred miles from and it is the depression in some sense. what we're dealing with across the globe are the effects of technological change. for that, we really need to come to grips with it. this is not business as usual and it gets tougher as we go forward, rather than easier. haslinda: we have to caps on india. that isew at 7.2%, pretty solid but still lower than what the central bank was expecting. your thoughts on where india is headed and is the government taking the right steps? >> it is going reasonably strongly, is it growing enough? that really is the question that india's politicians have to answer because the reality is

like everywhere else. india needs money market shops and is producing today. jobs than it is producing today. haslinda: always good to have you with us. still to come from the world avos, we forum in d speak to the obc secretary-general. we will talk oil in the middle aramco's ceo,i the opec secretary-general. this is bloomberg. ♪

francine: this is "bloomberg surveillance." as trade tensions rise, populism continues to dominate politics around the world, uncertainty looms large over the global economic outlook. joining us now is essential -- secretary-general of -- where do you see a bright spot in the world? basically, they are saying that china is only going to grow at 6.6%. that is a wonderful rate of growth, to put it in perspective. ishink what is happening something we knew was point to happen. we put out these numbers since last november saying we are

decelerating very clearly, now the imf has confirmed all of those numbers, including the growth of china. perhaps what is more important is that we focus on the reasons. we set the world was quick to grow at 3.8%, approximately 4% this year and next year, and now we have shaved off .5%. we may shave off a little bit more next march. what happened in the meantime? i called my chief economist and said how is this possible, she said everything that could go wrong did. the trade tensions, whatever you want to call them, those tariffs, why do you invest? you invest to produce.

why do you produce? you produce to sell. if you do not know if you can sell, you don't invest. investment is the state of tomorrow's growth. it is not just that the rate of growth of traders come down, it was already a 5%. it is also that it is affecting investment. investment is what will make us grow next year. the uncertainty is the greatest enemy of growth. francine: what are the risks to the downside now? angel: we are seeing all the risks to the downside. .5% of worldg off growth. zeros, you can't even imagine. the question is, why is it happening and to understand that

those actions actually have consequences. not only on the other countries to which terrorists may have been applied, also because the world growth slows down. it also has consequences for the countries that apply the tariffs. your is and seems will be the biggest disappointment. is it brexit related or european structurally related? angel: i would not say the problem lies in europe. i think there is a generalized slowdown in the world economy. i would say brexit is one of the big elements of uncertainty. uncertainty in a number of elements. what is happening is that we don't know exactly what is happening. this is the problem. . there is not a very clear roadmap

there are several scenarios we are imagining every day. that makes for uncertainty. francine: is brexit systemic? you have other people saying because of this lack of confidence, coupled with trade concerns and emerging-market concerns, it could actually become something much bigger. systemic.course it is the u.k. is a g7 country. it is one of the most important economies in the world. the fact that it is leaving the eu is big news. it is just that we have had two years to get used to it. and thehese discussions bumbling and not discussions and non-votes and all that. it is very important and systemic. when europea moment is subject to a lot of pressures. there are some countries clearly departing the mainstream in terms of some of the values that have kept europe together.

it is a delicate moment and i suppose brexit is a little restrictive of those pressures. haslinda: if the worst-case scenario were to happen, what implications are there for the u.k. and the eu? angel: as far as i understand it, the u.k. is going to leave the eu, whether it leaves in march or maybe a little later because there is an extension. the question is and what terms? they are k is a member of the oecd. what we will do is work to make seamless and smooth as possible and to lower the costs. francine: what is the chance of a no deal brexit? angel: i think it is getting bigger every day. my wishful thinking parts is

saying we hope it won't happen. francine: as always, thank you so much. coming up, we will hear some of our exclusive conversations with the chief executive of credit suisse. this is bloomberg. ♪

matt: economics, finance, politics. this is "bloomberg surveillance." i'm matt miller here in berlin. annmarie: ubs down nearly 4% this morning. net outflows in the last quarter coming out 13 billion euros, 8 billion when you look at the key wealth management unit. ing pretext profit lower. sales accelerated for the first time, the fastest they have seen in four years.

he markets china doing very well. annmarie with the stocks to watch as we see indexes falling across the continent and the u.k. "bloomberg surveillance" continues in next hour. tom keene will join francine live from the world economic forum in davos. they will speak to the chairman and ceo of saudi aramco, as well as the ceo of bank of america. this is bloomberg. ♪

francine: gray clouds on the slopes.

kevin rose kicks off with worries on the economy -- davos kicks off with worries on the economy. the wealth management division failed to impress. referendum reruns. the labour party seems closer to supporting another brexit vote. good morning, everyone. this is "bloomberg surveillance." i have been up about eight hours. it has been -16 degrees. tom: you have been frozen out here this morning. francine: but we had some great conversation. we try to figure out what the main concerns are. tom: the economic slowdown is really coming front and center, not only the imf report, but

really the china gdp number. a look at the chart and it is just this rollover back to the growth of 1989. tom: our question of the day is whether it is government obstacles to global growth. we have a great line of interviews coming up this hour. the chief speaking to executive of --. later, we speak to john from pimco. tom: also joining us is the vice president of jobs growth in investment of --. now, let us go to our first word news. : british labour party leader jeremy corbyn is proposing a plan that would open the door to a second referendum on leaving the eu.

n calling for a series of votes in parliament. choices is a new national vote. the prime minister is seeking concessions from the eu to rescue her brexit deal. the fate of the huawei ceo being detained interim that may not be resolved from talks between canada and the u.s. was arrested over allegations of bank fraud and violating sanctions over iran. 10% of u.s. airport security screeners were out on sunday in the midst of the longest federal shutdown in u.s. history. that is three times the rate of a year ago. they are not getting paid. oil is near a two month high in new york today. drilling for rigs oil in the u.s. has fallen to the lowest level since may. there is an uncertain outlook for demand as trade talks

continue. 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. bloomberg. tom: thank you so much. a little more active in yesterday. the u.s. closed yesterday for martin luther king. action. woeful i noticed euro comes in a little bit. that is a fractional move. showing an 18 level. this is a quiet little story with that dow list. 24,000. rounded up to 25,000. deutschepointing out bank because there is a real conversation about the future of european banking. francine: that we have a look at how european stocks are doing

overall. i think a lot of the markets are looking at the cloudy outlook for trade and growth. i'm looking at treasuries climbing, ye strengtheningn. i think markets already latched onto a president the asian was saying, stressing the need to maintain political stability. this is a great joy to being in our coverage today. jacob is with jpmorgan international. his services to israel as the former governor of the bank of israel and prodigious in first rate resource in chicago a few years back on foreign exchange. lovely to visit you each and every year here at davos. ofant to go back to the idea then it was fixed exchange rates and now it is variable, floating

exchange rates, and we don't have to worry about slow down because currency will fix things for everybody. it just seems too good to be true. is too good to be true. the important thing is that there has been big developments since the recent theories were developed. the big development is the growth of international financial markets. this has been the source of fragility as well as the source of growth. great financial -- it is not the cure for wrong economic --. tom: what is different this year versus 2006? francine mentioned global slowdown. this time is different.

jacob: the important thing i want to emphasize is that i have the impression whenever there is even a tiny moderation of growth, i would not even call it a slowdown, there is already the ingredients of we are about to enter another recession. that is not the case. we have been here during the past 10 years, following the great financial crisis. the economy has recovered. the u.s. has been ahead of the game, and not by accident. there are a lot of pressure points in the system, in particular in the trade area, in the u.s.-china relationship, but they are coming against the background of the u.s. economy which is stronger. the european economy that is still time to find its way. japan that is not just recovered.

francine: the u.s. economy may be recovering, but not enough for the set to continue hiking rates. in alsohat is correct, we need to put it inside the time frame. i will not roll out that the fed will continue raising rates. one or two additional hikes this year are still in the cards as far as i'm concerned. the reason why they may take other parts is because there are a lot of noises that come from outside of financial markets. trade is going beyond politics. the link between the u.s. and china, the two largest economies in the world that do not get along. this is a key issue. francine: i don't want to be all doom and gloom, but if you look at the three rock stars, the people that have the most

attention here in davos. last year it was emmanuel may.n, theresa none of these leaders could come here because of domestic problems. what does that tell us? jacob: those are three separate problems. trump is trumpism. brexit is the same context, micron is the same context. it is not a local issue. it is becoming a global issue. larger and larger of the population has said they feel they have been left out of the so-called recovery. it is a license for even more responsible policies. let me just give you a brief analogy. come we areng, how the economy recovering and yet people are nervous? why are people nervous? you are sitting out in a first-class seat in an airplane

the speaker of the airplane says from the cockpit, the two copilots do not get along. even if you are sitting in a good seat, you would not feel very good. i think the first priority is to skirmish. trade how would you advise mr. diamond about the new trump-lateral trade system? i'm sure jamie hasn't read power versus plenty, but how do you advise him on the trump-later approachal to trade? acob: don't assume jamie didn't read everything. i think the world really has changed. bilateralomy between

and multilateral has been broken. issue.s a multilateral i think many trump's and strategies have been slow because they focus on bilateral relationships. by the same token, the world is composed of nexus. they need to communicate with each other. is a complex system which means it is a system for professionals. amateurs.for you would never go to a doctor because he is smiling well and tells you --. you go to somebody that you trust. the system is very complex. tom: that is all the time we have. tomorrow, jacob will be with us for a one-hour interview. coming up, we will drive forward this conversation. with-hour conversation

ubs. francine: let's have a six-hour show. tom: i think that would be a good idea. stay with us. this is bloomberg. ♪

viviana: this is "bloomberg surveillance."

the former nissan chairman wear --to wher -- apollo global management is an reportedly talks to buy rpc group. the price of the more than $3.8 billion. a deal could be announced today. , says things ceo are looking up after a difficult fourth-quarter. business iscine turning around since the first of the year. yellow downplayed the idea european banks may consolidate to solve their problem. >> their political issues there and regulation. loans to capital requirements. until we have a more level playing field, it is going to be very difficult to have

cross-border relations. iana: that is a bloomberg business flash. tom: thank you so much. we welcome all of you. great conversations today that really fold into a tone of urine market investments. -- year en market investmentsd. to look at china and the assumption of those so critical of china, is they play with a stacked deck. part of that is a cultural overlay. they have an x axis, of time function, even longer than jpmorgan. a few others have a time function there. chinesee contact to the long-term? jacob: it is correct that the chinese horizon is much longer

the policyrizon, framework that governs most of the western countries in the world. therefore, when you go to a negotiating table, each comes from a different perspective. how do we address it? by communication. by addressing the issues eu always do in dialogue and negotiations. for the u.s., the issue of property rights, intellectual property rise in the high-tech area is key. everyone agrees. this means that china will need to demonstrate understanding that this is key for the u.s., and then i am sure that the u.s. will see there are far less important for the u.s. and more important for china. communication is the key. i believe the way a here now is that the rumors are that they may be communicating. markets are eager to hear some good news whenever there is a glimpse of hope. suddenly, markets rally.

whenever there is disappointment, markets decline. trade is key because of symbol of economic management. francine: how much more can the chinese economies simulate the chinese economy? at what point does it become hurtful for the reforms they promise in the neighboring countries? i believe china has the capacity to stimulate the economy, definitely on the fiscal side. the issue of debt in china when it comes to the government side is still having some flexibility. cultural debt has increased significantly. i think having a stronghold on the economy and having the space, i believe they have the capacity. the slowdown in china has been interviewed. it was not just something that came out of control. bloomberg sitting here two years ago worrying about the explosion of the china bubble, and now

there is a slowdown. i believe it is under control. francine: what will happen if this is uglier than we think? this is not only trade but something symptomatic that was baby created. is china your biggest risk in 2019? can it bring the world economy at the brink of recession? jacob: when you have two largest economies in the world, of course it affects the terms of the entire system. we need really to watch for. cyber is a very important issue. there is no international system in place to address it. tom: with your work over the decades, the key question for all americans -- it is interesting to how you would advise mr. dimon and jpmorgan. one-off moment we are

in? as president trump a one-off? is the battle in austria or hungry a one-off that we go back to a normalcy? b: i think we are seeing a common phenomenon happening. brexit is about manifestation, the french yellow cult is a manifestation, trum is a manifestationp, etc. a part of the population feeling they have not been sharing the benefit. it is a lesson. it is important that it is being addressed. francine: we should talk brexit. unfold? this we were talking about the fact that we were at westminster last week without really any clear coice saying this will happen.

now, the chances of a note of brexit increasing almost every hour. jacob: that is correct. like always, the light seems to come up in the last hour before the negotiations. those who told us there is going to be a smooth sailing need to recognize the skeptics were right. the important point is, i'm an outsider and it is a decision for the british people to decide how to handle the matter, but there is no joke about it. i think the growing concern that it is bad for britain. it will have general effects, but the world probably will be less affected than britain itself. maybe it is itself, politically incorrect to say, but there is a saying that what

characterizes a political suicide is that you may live to regret it. francine: there you go. tom: that was very philosophical. thank you so much for being with us, as always, jpmorgan international chairman. we will turn our attention to the dynamics of oil in the monetary systems of the middle east. this is bloomberg. ♪

tom: good morning, everyone. the first active day of the economic forum meetings. many other backstory zaslow. one of them is the persian gulf and the instabilities within the gulf. wonderful to have you here, particularly with your experience in petroleum. that makes this particularly timely. give us the price of oil that is best for the gulf states. give us a brent crude price where you can return home calm. >> the idea is just to have a balanced market where there is a

good supply in the market, economies can perform without any major obstacles. i think that is the common policy. tom: do you have a number there as we move from 100 down to 29? too low prices is not good. the idea is that you have a level of price where a producer can invest and supply the markets and avoid this big gyrations and pricing. francine: talk to me a little bit about your day-to-day job. what have you done to improve foreign-exchange reserves? d: we're back to the dollars and we continue to with thee markets requirements of foreign currency. tourism exchange control and

bahrain. we have been maintaining a level thereviding markets with is requirements in terms of trade and repatriation of capital. we have not had any kind of visual regarding continuing the free flow of currencies. francine: what is your borrowing program looking like this year? think it is fairly think it is fairly early at this stage because we are now discussing the budgets of parliament. depending on the budget outcome, we decide how much we need to borrow. francine: is there a range? rasheed: i think because of the fiscal balance a program, our targets will be much lower than before. tom: i want to ask you about all of the turbo in the persian gulf we have seen.

an ancient tension between saudi arabia. saudi arabia has been hugely in the news in the last year. saudi arabia need to do to have a better 2019? rasheed: as far as i am -- we have a very strong and historical relationship with saudi arabia. saudi arabia, for as is the largest trading partners, and i think one of the largest investors also in bahrain. we see the government is going through a major economic and social reforms. this will have far-reaching impacts on the region in terms of stability and diversification of economic activities. this will be quite good to the

region and to bahrain, in particular. tom: is the search for a new gulf,ity in the persian what is the catalyst you need to see to get to a new and better stability? reforms our economic that we have been marked in bahrain has provided us with a clear vision of the future in terms of improving the quality of the standard of living, creating jobs, diversification of the economy. i think all of these elements are the stability of the future. that has been always our mind jobs,ms of providing social services. get will help the people to on with their lives. tom: will look at the persian

gulf and price of oil and a dynamics. as a central banker, what do you need to see opec succeed at this year? what needs to be the new theme for the cartel to move forward? opec has come a long way in terms of providing platform cooperation. they have reached out to opec producers which created a good working platform where the supply was in the markets. francine: have you started receiving the support? how much and how much will that continue? governor rasheed: this has been within the program we have agreed. the first payment was last year and this will continue. francine: last year when? governor rasheed: at the end of

the year because we signed the agreement at the fourth quarter. francine: are you expecting anything in the next three to four months? governor rasheed: i am not sure how much is the timing frame. there is a schedule we have to go through for each year. tom: thank you so much. greatly appreciate it. he is rasheed al-maraj, the governor for the bank of bahrai n. here is nejra cehic. downgrades its outlook for global growth and we talkingident xi jinping about risks. the stoxx 600 down .2%, a second day of decline for equities. you can see the banks are underperforming, led lower by ubs, the market focusing on outflows in the fourth quarter. we saw those that almost $30 billion.

the plan to buy back one billion shares this year not enough to the news and the decline in invested assets, not doing a lot to boot we sentiment. we saw ubs shares drop. u.s. markets were closed yesterday. u.s. futures in the red, we could see declines there. u.s. equities keeping the highest since december. the 10 year treasury yield is down today, we are seeing money move into safe haven assets. but islar has been bid the yen the ultimate safe haven, the today performance could show it is. cable on the front foot after wage data from the u.k. brexit confusion rumbles on towards perhaps a second referendum given the vote tabled by labor.

oil getting caught up in the risk off sentiment and the outlook for global growth. let's get the first word news. senate republicans revealed their plan to end the partial government shutdown. it matches president trump's request for a wall on the mexican border. it would give young immigrants temporary protection from deportation. a plans to vote this week. will democrats say they not consider border spending until government agencies are reopened. president xi jinping is signaling communist party leaders are concerned about the social implications of the slowing economy. he was stressing the need to maintain political stability in a meeting of top leaders. he said there are dangers to the long-standing rule. the european union targeting russia with sanctions over the attempted murder of a former russian spy in the u.k.

the e.u. opposed travel bans and asset freezing on four implicated in the murder of he and his daughter. it is the first time chemical weapons have been used. ubs said investors withdrew almost $13 billion during the fourth quarter. the worstbank warns may not be over, saying increased volatility and geopolitical tensions may weigh on revenues in the first quarter. bloomberg speaking with ermotti. >> we have net outflows. if i look at invested assets, we are performing better than our peers. it looks like it is something that happened in the market. we are the only firm reporting money in the u.s. market. i see our competitive position has not changed. thes reflective of

sentiment we saw in quarter for, less leverage and more people going into cash. viviana: 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 viviana hurtado. this is "bloomberg." francine: thank you. we are just hearing there from ubs is still recovering after investors pulled assets. that the worst may not be over, ubs said increased volatility and geopolitical tensions are still weighing on mines -- investors minds. joining us now is axel weber. what is worrying clients, are they looking at trade or is it unease? the first week of this year in china and what a difference to the start of last year. was, thingshe mood

can hardly get better. i was skeptical. the mood in the market is nothing can go wrong. go wrong,en things when repricing is larger. than irection was deeper had anticipated and for the first time, you see the mood in asia has been impacted. for asia, when you meet clients, the sky is the limit. they are optimistic. the asian economy did not get touched. they had a good run. moodre starting to see the is getting impacted by the china normalization and the cooling of the chinese economy. formern a panel with the governor of the people's bank of china and what they are saying is that the chinese have domestic debt so all the policy tools to stabilize their economy so investors are skeptical.

that is what we try to do in our outlook statement. i think thesks but outlook for this year is not as bad. we are coming towards normal growth. francine: what does that mean for the markets? we are also dealing with brexit, we had the imf revised downwards their outlook for europe. where is the encouraging picture? axel: you can only take from the fact that when you face such a huge number of uncertain events, you should not put your money in any one of these. diversification is key. investing more in the global economy, for u.s. investors, investing abroad is the way to deal with these. exposures, try and be diversified. to clientsn talking who have been sitting on the sideline, moving into cash, not investing.

as long as the mood is like that, we will not see a rebound in the market. if i were to look back to before christmas, some of the risk looks more mitigated now. take monetary policy, i think the central banks have shown that they are receptive to the slowdown, that they are more data dependent. i think the central banks have sequence any sort of about rate hikes. i still have the fed down for one or two more this year. it is not on autopilot. they might move in summer. fed is going to pause and whether they resume will depend on better data coming through in the second half of the year. that should be a reassurance for investors of that the usual reason why a recovery gets aborted is too much tightening

of monetary policy, that is not likely. not embarq from policy normalization because that has been pushed. i want to ask you a set of delicate questions. i defer to you as a lead academic. the call of a decade is a european banking system has failed to clear their markets. how is it going to be done? through mergers? through cross-border mergers? is it the swiss to the rescue? how do you frame we are going to clear e.u. banking once and for all? i got through that without mentioning a german bank. francine: well done. axel: i have been saying that they one thing that matters in

banking now that we see regulation and cost, is size. if you look at the u.s. banks, they have been having a good run. they are larger and they came back from the crisis faster. there has been a mindset -- tom: is a cultural? is that what we are talking about is a continental germanic culture that says we cannot clear markets? axel: in the u.s., the regulators are looking at banks as enabling growth and investment and you have a d -- deep capital market. the capital market expertise of european banks has been focused on expertise in foreign markets and how the european corporate invest in the rest of the world. reset moment, you need a of the business model. we tried to blueprint that. take the balance sheet out, moving less on the trading side,

more on the advisory side. europe will always have high capital requirements. some of our peers have not done that change the way we have. i do not think our business model is not for everyone. wealth a unique management engine to fall back on. in the current environment, when you see trading and investment banking perform less, you see wealth management having issues with money. is a stable fee earning business and i think european banks need to invest and reinvest themselves. there are too many of them and the market needs to consolidate. ,f they want to be global banks they need to put their house in this together. i do not think ubs will play a role because we are having a good run and corporate mergers tie you down. for us, we can grow because we are a strong bank in the u.s. and in asia.

that is what we're focusing on, growth in our strong areas. way too nice to ask about deutsche bank. what do think is the solution? on a i'm not commenting competitor but i think the one strong thing that banks in germany have is a strong domestic corporate base. you need to leverage that. as a swiss bank, we have leveraged swiss international corporate's. tom: i said earlier, swiss to the rescue. can you envision the ubs team of the future coming to the rescue? we saw european mergers before. say, is ubsng to going to work with some form of merger with a german bank. those best swiss practices can be transported through consolidation. is that feasible? axel: we are not in the business.

we are a large player. tom: when the world is blown up, -james-dimon.00 are you going to have to come to the rescue? axel: we did not get that phone call. tom: that will be next year. axel: i always take phone calls. the point for us is, we have grown our business model over years and shaped it so we can benefit from the dynamics of the u.s. markets and capital markets. building in an organic way our u.s. business was what we announced and what we are doing. the other is asia-pacific. many european banks are focused on europe. they are not global and they have two small exposure to china and the asia-pacific market. that is where the growth will be. we are growing in areas where we are a leading bank and where we

see the dynamics of growth. europe is not going to contribute to global growth. how is the fusion of the wealth management business is going? it is a fundamental business discussion you need to have, what is your regional presence and footprint and what you have within the bank are different models of how you deal with wealth management clients. space with more entrepreneurial client advisors and the other is client advisors across the globe. we us, the point is how can onboard clients and assets onto our trading platforms in a way that is not differentiated between the space and the rest of the bank. it is about leveraging the synergies and creating processes that are the same across the bank and if you look at how you can do that, take ips, you have

to have the same product suitability judgments for any client globally. tom: he talks like a chief technology officer. on this day.much he is the chairman of ubs group. at one ofng to look the most interesting transactions, we will talk to the chief executive officer of saudi aramco. we will do that here at the world economic forum meetings. this is "bloomberg." ♪

viviana: this is bloomberg surveillance. i'm viviana hurtado. aitish prosecutors opened

trial against the former barclays ceo. it is the first case heard against a top banker in connection with a financial crisis. it has to do with a capital injection he secured to prevent -- prevent a government bailout. will has not decided yet to appeal a $57 million fine him pros by france. it is the first time a company has been penalized under new european data protection rules. these allow larger find spirit google is accused of forcing users to agree to new privacy policies. this is bloomberg.

tom: the weather is beautiful here in the meetings at the world economic forum. the theme is globalization 4.0, ,ushed aside by the news flow brexit, they shut down, wrapping around conversations around china. -- the shutdown, wrapping around conversations around china.

she is laura shaw of the university of wisconsin at madison. what was it like your first day? i was coming from hong kong in the late 1960's. it was the days of the protests. tom: interesting. exciting,eresting, and introduction to the united states. tom: it was mr. nixon. if you could have a cocktail hong kong was elected members of the trump administration who feel china is a behavioral and social threat, what would you say to them? laura: first and foremost, we are talking about a different culture, we are talking about

inclusion, we have to be accepting of other values and culture. there are common values even though we may have different integrityhe values of thatesty, these are values hong kong holds dear and that is what has made hong kong successful. china has repeatedly promised to open financial systems to investors and foreign companies. how is it going and what more do they need to do? that theere is a lot central government can do in opening up the financial market. ,hen china joined the wto financial services was one of the least open up all sectors. over the years, they have gradually opened up, they have allowed foreign ownership.

because the currency is not completely convertible, foreign investors now can access chinese markets through hong kong. what else can the central government do? they have said a few months ago that they are eliminating the restriction on ownership. what is more important is not the ownership but allowing foreign investors to participate in that market and vice versa. that has to be a two way street. francine: we have seen crazy moves on the stock market. companies lost $75 billion, stocks were down. what can the exchange due to prevent that? laura: you are talking about the exchanges in china? francine: yes. china the exchanges in have a different problem than the rest of us because a large percentage of the participants

in the domestic market are retail investors. there is sentiment and people trade on rumors. that is what brought about the and institutional investors in china are not yet well developed. i used to say that institutional investors behave like big retail. instead of providing some anchor to win the market was volatile, -- two when the market was volatile, they joined in. i think that would bring more stability to the market. tom: thank you so much. greatly appreciate it. discussion nots only in china but on the global slowdown and there is much on global wall street. a good person to do that with is

jonathan studzinski. much more to talk about. the theme of the moment, maybe there will be a new theme wednesday and thursday. global slowdown front and center. we do pay attention to the affairs of london and new york. a large body of data moving today, full trading after the u.s. was shut yesterday. please stay with us from the world economic forum meetings. this is "bloomberg." ♪

this morning, political

chaos of the united kingdom and the united is states -- united states pushed aside. slowdown led by week china growth, not seen in over 20 years. back to the chaos. nothing to see here after failed plan a and plan b. prime minister may considers plan c. shutdown update, tsa has in the problem and with a wind chill two degrees above zero, the president spends two minutes at the martin luther king memorial. the park rangers are not in attendance. this is bloomberg surveillance. i am tom keene with francine lacqua. it is a joy to be here. francine: that feels warm compared to double spain. -- davos. tom: that is cold.

what is so critical hear about all of that news flow, this is the first day i have not focused on brexit. it is a great feeling. francine: not yet. i have been here and i have focused on brexit. a lot is on china, the slowdown in trade, the shutdown in the u.s.. we have a great interview coming up with amin nasser. tom: let us get to first word news in new york city. here is the baby on a bank. viviana: -- here is viviana hurtado. viviana: jeremy corbyn is proposing a plan that would open the door to a second referendum on leaving the e.u., calling for a series of votes in parliament on how the u.k. could avoid an economically damaging no deal brexit. one of those is a new vote. theresa may is seeking concessions to rescue her deal. the fate of the huawei cfo

being detained in canada may not be decided in trade talks between the u.s. and china. canada's ambassador to the u.s. says washington still wants to extradite meng wanzhou. she was arrested over allegations of bank fraud and violating sanctions over iran. 10% of u.s. airport security screeners were out sunday in the midst of the longest federal government shutdown in history. that is three times the rate of a year ago. the transportation security administration workers must come to work but they are not getting paid. one of the world's highest paid players will pay almost 22 million dollars to settle spanish tax fraud charges. suspendeda two-year sentence, accused of using shell companies to hide income. 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 viviana hurtado. this is "bloomberg." tom: thank you so much.

let's do a data check. equities, bonds, currencies, commodities, full trading today after the u.s. was closed yesterday. futures was negative. oil, we have got that saudi aramco interview in a bit. with the vix. look at the equity markets, they have gone from the bear market and we bounce up to a correction. sterling speaks of volumes. volumes. stronger sterling. there is a lot going on with labor putting a position on a second referendum and theresa may's conservatives asking for an extension. this is what i'm looking at,

european stocks drifting. a lot of talk is on trade and the outlook for growth. those movements mean that the yen is strengthening and treasuries climbing. tom: very good. we are going to move for the conversation. sequence with , talking ondzinski any number of things in global wall street and the fabric of europe which is a perfect which is the vice president of jobs, growth, competitiveness and was a wonderful host earlier this year. helsinki was extraordinary. capital economics, roger bootle talks about a 1% economic growth for europe. the theme is global slowdown. is it a europe that is slowing down and will it be a tougher

time i head for the habs and have-nots? this year,nen: europe will grow and next year less. the reason for this is the global economic slowdown coming from the u.s. china trade issues. once europe was the most open market in the world. tom: you were one of the definitive philanthropist. it, you talked the talk across europe. what do the elites need to do in reattachal europe, to to so many people struggling? jonathan studzinski: well, this is the 20th anniversary of europe, the euro.

when you have been in the house for 20 years, you reassess the plumbing and electricity. what the elites need to do is what has been accomplished and in the context of those people who feel they have been left behind and had they started doing that sooner, some of these issues in the last couple of years, it is a symptom of this 20 year stop, look, listen about europe. we see it with france, with the emergence of the far right in central europe. this is a broad-based reflection of 20 years. opinion,tanen: to my we need a stronger national ownership, stronger political leaders. from europe i want and i am ready to fight for it instead of using the language

that all the bad things are coming from europe or just blame the e.u. francine: we have some european elections coming up for parliament, and strong european national ownership is fine but what do pro-europeans need to do to stem populace? we cannot blame the people who are voting for populace. ists. they are offering easy answers. they are lying to us. we have to be part of the discussion. europe leading the way on asserting a national voice to brussels? we see poland almost dictating what to do about brexit. you are the expert, are we seeing a more assertive e.u.

teaching traditional europe, this is the way it is going to be? jonathan studzinski: i do not think we're seeing a more assertive europe. reactingeing a europe to a new set of emerging leaders. there is an emerging set of new leaders and the problem is those do not fit into the central casting mode. they have got different objectives. francine: do they create jobs? people want jobs and they want growth. they canstudzinski: create jobs because they can do it through nationalization. whether that is the right thing for economic growth is a different debate. francine: how would you create jobs for europe? jyrki kaitanen: trade. europe is the biggest and most open single market. we have to believe in trade.

trade agreements, japan and canada are good examples. in artificialest intelligence. those are the projects we have on the commission agenda. we need to modernize. tom: you have been a great philanthropist. franklin setback a few years youngd looked at that upstart, madison and said, who is the young lad from virginia? about new leaders invigorating europe, where is your new leadership in london and in the united kingdom? jonathan studzinski: there are a lot of people auditioning. u.s.we have that in the too. jonathan studzinski: we still hear a lot about ruth davidson. leaders whof the has been thoughtful about this discussion.

she has yet to be taken on board she is not in a position to lead formally. she is someone who has been seen as a leader. francine: what are they chances of a no deal brexit on what does it mean for europe? -- what are the chances of a no deal brexit and what does it mean for europe? jyrki kaitanen: it is bad for britain and for europe. we do not want to speculate. we listen to theresa may and the parliament is saying and we have newheard any news, indications which country -- which direction the country wants to go. this has been a problem. member states want to keep the status quo, we want europe as it state toand one member leave the club. little the you can keep

britain. we let them go. -- the you can keep britain. we let them go. -- the e.u. can keep britain. we let them go. jonathan studzinski: there are three options. i am not sure everyone wants the status quo in europe. views ingot strong many countries about what is right and wrong with europe. got a lot of challenging coming out of germany, out of italy. there is a restlessness in about 20 years, you have got to look at what works and fix what is not. it is not the status quo. ?rancine: how long will it take if the european union cannot give benefits to their citizens, how long do you give it to survive? you havestudzinski:

had a ten-year year economic expansion and people have not benefited. macron has made more concessions than the french government has in six years. with a certain amount of unrest, the europeans react quickly. earlier rather than later. the e.u. hasn: never been as popular as it is today. people are expecting more security, more growth, more solidarity and more action on climate change. i am not worried at all. francine: thank you both. up, we have market movers, a lot of newsmakers. the focus turns to crude. we will hear from the saudi aramco chief executive, shortly. this is "bloomberg." ♪

viviana: this is bloomberg surveillance. i'm viviana hurtado. itsbucks is expanding delivery venture with uber. uber eats will deliver uber eats in san francisco. it will be rolled out in the coming weeks. the service will be tested in london. rejected again. a court in tokyo passed on carlos ghosn's latest bail application. he offered to wear an electronic tracker and have guards monitor him. hosn has been in jail since november, arrested on allegations of financial misconduct. credit suisse tidjane thiam says

things are looking up after a difficult fourth quarter, telling bloomberg business is turning around since the first of the year. he downplayed the idea european banks might consolidate to solve problems. >> there are political issues and there is regulation which needs to consolidate at a european level so that from bankruptcy loans to capital requirements until we have a more level playing field. it is going to be difficult to have cross-border consolidation. viviana: that is the business flash. francine: thank you. a lot of the top is going to be on risks for 2019, the mood different from last year. president macron showing up, we had theresa may. tom: a guy from america showed up. francine: there was a standing ovation at some point. today, you look at the concerns regarding global growth, you have president trump with the

shutdown, you have theresa may not here as well. let's get back to john studzinski. i was going to ask about china and trade. commenting, why are people surprise? what should we be worried about? jonathan studzinski: what you heard me say was the u.s. government, the u.s. economy has had 30 seven quarters of domestic economic growth. china has had 40 years. invested 40% of the gdp annually in the economy and it is one of the best run economies in the world. they have the talent management flying geese formation. everybody has experienced by the time they get to a leadership role. we have full faith the government knows what it is doing. the context of globalization are affecting how people look at china. china still has a big property

issue, 400 million people, that israel. there is a credit -- that is real. there is a credit issue. a cost ofgot manufacturing issue where you can manufacture more cheaply in mexico. francine: it is such a huge economy. to turn it from a saving economy to a consuming economy. oil tanker.ng an what are the pitfalls? jonathan studzinski: it is still growing, we are talking about whether it is growing at 6.5% or 6%. it is growing at a large number and it is well-managed. when you talk to a ceo about his company, you talk about how the ceo thinks. when you talk about china, you should talk about how the government thinks about managing

its economy. while everyone is focused on the slowdown, what they are nervous in there the elephants room which is this relationship between china and america on , trade-trump, taiwan, but it is also technology. what are you doing for pimco -- to go into their morning meeting and tell them what to do? is john studzinski doing for newport beach? jonathan studzinski: he is spending a lot of time with his favorite activity which is the ,eople that invest with pimco institutions, governments, investment funds. john citizens is also spending time on geopolitics. tom: which is folded into

investment. we are in adzinski: geopolitical recession. i agree with that. ofis the worst period geopolitics in 20 years. tom: thank you so much, with the gloom. up, our editor-in-chief john micklethwait in conversation. there is a bit to talk about. please stay with us. this is "bloomberg." ♪

from the worldng economic forum meetings, i'm tom keene. let's go to our chief washington correspondent, kevin cirilli. president trump, vice president pence at the martin luther king alone, noy themselves park rangers with a shutdown. the aloneness of it all. how alone is the president ?uestion mar kevin: isolated. the pressure is mounting. ofre do not seem to be signs a breakthrough. he tried to get a deal that landed on deaf ears. tom: where are the republican senators? there is a mystery to it. what is the dynamic of senators?

kevin: there is a mystery here as well. behind the scenes, staffers are telling me they do not know how this is going to end. publicly, they are not refuting hard against the president or administration. that is going to be a key test when look for when those, the private comments become public and the republican start to break with the white house. in europe, headlines 10% calling in sick, the tsa of our airports. do you have a number on where that tipping point is, where the tsa becomes a national issue? kevin: for me, it is the impact going to be felt by the folks that you cannot calculate, the small businesses. sliced off of gdp because of this partial government shutdown. these are not going to be able

to be calculated. tom: kevin cirilli, thank you so much. washington shut down. putting in a good eight hour day. coming up, we drive forward the conversation. we say good morning to you this beautiful morning in switzerland. stay with us. many good guests coming up. this is bloomberg. ♪

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. amazon prime video so when you say words like... show me best of prime video into this... you'll see awesome stuff like this. discover prime originals like the emmy-winning the marvelous mrs. maisel... tom clancy's jack ryan... and the man in the high castle. all in the same place as your live tv. its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome. francine: this is bloomberg surveillance. i'm francine lacqua here. let's get to first word news. here is viviana bank.

. senate republicans revealed their plan to end the partial government shutdown. it matches president trump's request for a wall on the mexican border. it would give young immigrants temporary protection from deportation. it plans to vote this week. house democrats say they will not consider border spending until government agencies are reopened. president xi jinping is signaling communist party leaders are concerned about the social implications of the slowing economy. xi stressing the need to maintain political stability in a meeting of top leaders. he said there are dangers to the long-standing rule. the european union has targeted russia with sanctions over the attempted murder of a former russian spy in the u.k. the e.u. imposing travel bans and asset freezing on four russians implicated in the near fatal poisoning of he and his daughter. it is the first time chemical weapons have been used.

ubs said investors withdrew almost $13 billion during the market turmoil of the fourth quarter. the swiss bank warns the worst may not be over, saying increased volatility and geopolitical tensions may weigh on revenues in the first quarter. bloomberg speaking with ermotti. >> we have net outflows. if i look at invested assets, we have been performing better than our peers. it looks like it is something that happened in the market. we are the only firm reporting money in the u.s. market. i see our competitive position has not changed. it is reflective of the sentiment we saw, less leverage and more people going into cash. viviana: 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 viviana hurtado. this is "bloomberg."

francine: thank you. saudi arabia's to diversify away from oil performs part of its blockbuster vision 2030 strategy. key to this will be the actions of the big corporate's. al-maimanned by talal , the chief executive officer of kingdom holding. thank you for joining us. the prince was detained in saudi arabia. how have you overcome that? are people shy of doing business with you? it is anmaiman: institution and it operates through corporate governance. when the prince was absent temporarily, the company performed well. just like it always does. francine: is business back to

normal? who are you targeting in terms of investors? what attraction is there for a foreign investor to get into saudi arabia now? talal al-maiman: there is no week that passes without receiving a call on investment regionalign banks and and international firms. francine: this is from asia? talal al-maiman: from europe, the united states. francine: what is the number one question? talal al-maiman: is everything ok and we we are sure them it is. francine: what is the second question and how can you reassure them given the political situation? talal al-maiman: it is about the opportunity and how we feel about it, how much we are committed to put into it. plan to spinyou off the real estate business and when would that be? tool al-maiman: we have

many real estate business categories. we have commercial ones, hospitality, and the last, which is like housing and the like. we are not yet into the spinning mode. we are developmental. francine: when will you be ready? year,al-maiman: in one part of it, not all and we have the biggest project of hours which is the tallest tower of the world, three years down the line. francine: what is the catalyst, does it need a more stable political system in saudi arabia , less volatile markets worldwide? talal al-maiman: correct. volatile markets are the main issue. francine: are you planning to complete that loan to banks? talal al-maiman: we have signed already with two local banks and four foreign banks. francine: what is the one thing

to worry about when it comes to investments, is it the pace of technology, is it that you may be too slow in keeping up with that? talal al-maiman: economic growth, we would like to see a better growth. saudi arabia has the largest budget ever. about $300 billion. we hope that will help the economy locally to ignite it and supported and i think we will do well. francine: what is the price of oil that saudi arabia needs? talal al-maiman: i would prefer to leave that to the experts. anything north of $70 would be fine. francine: when you talk about technology, are you supportive of talks? talal al-maiman: we are. we do not interfere nor are we a part of discussions. if it happens, we are supportive, yes. re newne: are the

companies? talal al-maiman: we have invested in a french company, music streaming. we think it is going to be the next spotify. francine: what is wrong with this spotify? talal al-maiman: nothing. it is expensive. francine: anything else? talal al-maiman: we have increased our ownership in lyft to have a billion dollars. -- two $.5 billion. $.5 billion dollars. francine: what do people misunderstand about saudi arabia? talal al-maiman: people are driving now, we plan to have businesses. i think the country is moving in the right direction and we hope to be a part of this 2030 plan.

holding and all the companies we have invested in. west is skeptical because of what happened with mr. khashoggi at the consulate. what will 2019 bring? talal al-maiman: i hope it brings the truth and i have no said, that our leadership is smart enough and whenevergh to talk necessary on this issue in particular. francine: thank you for joining us. he is the kingdom holding chief executive officer. later, we speak with the chief executive officer of verizon. that conversation live right here from the world economic forum. this is "bloomberg." ♪

francine: this is bloomberg surveillance. me francine lacqua. -- i'm francine lacqua. ubs saw the worst outflows in the fourth quarter, a warned and increased volatility geopolitical tensions could continue to weigh on bank activity. i spoke with sergio ermotti. has am pleased that q$ delivered a resilient result despite the challenging market condition which translated into a bitter cocktail. it is too early to talk about first quarter. point, it wasthis a euphoric environment around the beginning of the year.

year,ospect for the full it is too early to make a judgment about q1 but also for the entire year. of course, what happened in ,ecember in the fourth quarter that remains at a high level. do you expect a difficult market to continue? i think, as i mentioned, it is too early to call the outlook for the quarter, for the year. years, and seven last year, we saw so many movements and changes of totiment and outlook that make a statement about how the quarter is going to look like after three weeks in january is early. francine: talk to me about net

outflows of client money and asset management. how big was that and will that continue? >> well, if i look at the segments, i would say they are different church directories. .- trajectories in wealth management, when i look at our results, they are not up to our ambitions and expectations. when you look region by region, in asia, we still had almost a 5% increase on a year-by-year basis. risk adverse sentiment by clients, they took out their leverage and that was one main factor. if i look at the u.s., we had net outflows that if i look at invested assets, we have been performing better than our peers.

it looks like this is something that is happening in the market. we are the only firm reporting money in the u.s. market. i see our competitive position has not changed. it is reflective of the sentiment we saw less leverage , and more people going into cash. for more on those ubs figures, we also spoke to a number of other bankers here in switzerland. let's get to the finance reporter. what should we worry about at ubs? what more every sense of is happening at ubs because of wealth management or is it something we are going to be hear banks talking about outflows? >> i was surprised by the tti made earlier

saying the results have been resilient. if you forget about the financials for a second, the fourth quarter was the worst possible environment for wealth managers. you had volatility on the one side, the bad volatility that paralyzes clients so they trade less and you had declining stock fewer assets means are managed and that is fewer revenues. this is continuous. it is an effect you will see over months. the results of ubs have been week on many fronts, first of all the wealth management unit, the investment bank did not perform well. cautious andok was that is the key takeaway and a topic to be discussed. everyone wants to do asset management. nt andock fro

center, packs to -- passive and active management. does ubs fitting? -- fit in? jan-henrik: ubs is small in asset management, it is the unit they have. they are trying to replicate the blackrock model. well forbeen going them, they are having inflows but margins are low and they cannot compete with blackrock. the worst case would be blackrock going into wealth management. they could not compete on margins. ubs model has been resilient over recent years compared to other banks because the volatility factor is not as high, the trading unit is small. we are in an environment that is not favorable for wealth management. these prove that the market reaction -- these results and

the market reaction is proving that today. it will be interesting to see development going forward. francine: thank you so much. talking to us from zurich. tom: he said everybody wants to be like blackrock. that is a theme i am hearing. francine: we also asked credit suisse if they can compete with blackrock when it comes to institutional investors. later, we speak with steve schwarzman. this is bloomberg. ♪

viviana: this is bloomberg surveillance. i'm viviana hurtado. the european union finding mastercard for ramping up credit card fees. the company unfairly prevented

retailers from seeking cheaper banks from outside the country where they are based. discount on the fines because they cooperated. british prosecutors opened a trial against the former barclays ceo. it is the first case heard by a british jury against a top banker in connection with a financial crisis. the charges have to do with a capital in junction he secured to prevent a government bailout. ken griffin bought a mention in london for $122 million. the home is about half a mile from buckingham palace. the 20,000 square feet includes gym, a pool, and an extension. tom: thank you so much. here, mondayl day like a day a lot of staff

showing up. print sets bloomberg up their operation. they are seven floors below us, down three basement floors on the bedrock of the swiss helps as they look at the foundations of the world economic forum. foundations,he last year it was too good to be true and now, it is slow to him how did we get here so quickly? >> that is the theme of this morning. talking about central banks last year getting ahead of themselves, and had of the market, tightening to quickly. has -- he is a skeptic now. the fed needs to be more patient as chairman powell has said. tom: mr. dalio taking a victory lap here after h or a terrific

year of investment performance. a lot of other people underperformed and ray dalio did well. china seems to be the big thing. it is our single best chart which we did for simon kennedy, it is logged gdp for china. the answer is simple, 6.6% annual. right now, it is back to 1990 levels. it is not the same as it was 20 years ago, is it? wanted toand they pull leverage out of the economy and they have done that. the problem is, they were not banking on the trade war. that makes it harder for the chinese to do that juggling act between pulling leverage out and protecting the downside. we have seen this direct feed of stimulus.

it suggests the big worry is that that slow down does get out of hand. , he jacob frenkel with us circled back to trade. what is the distinction bloomberg news sees about trade right now? there is this cover of this magazine, what is the distinction now? to go back tod the story we wrote yesterday, this idea that for all the talk havetruce and the leaders until the india of march to patch something together, what is china -- the end of march two has something together, what is -- the end of do march to patch something together, what is china going to do? at the same time, you have got this question that has not been answered. tom: simon kennedy used to cover the g7 meeting.

you have seen all of the elite. the americans are not here. what does it mean? simon: this is not new. president bush did not come, president trump change the tables last year, coming himself. that was the promise of this year, the shutdown prevented that. it does mean there is no one to engage with. , no wilbur ustr ross, it takes away from it to some extent. the interesting thing emerging is you talk about the crisis 10 years ago, politicians have come here and they have bashed the bankers, the likes of jamie dimon, christine lagarde. , this year, the , they are is that

talking about trade wars, brexit, government shutdowns. tom: political instability. simon: it is the uncertainty out there that is the greater political uncertainty. tom: did we do ok that we did not mention brexit? they spoke well on it this morning. a big issue and one that theresa may would have talked about. that we getmend this out in helicopter to give is brexit with them. simon kennedy writing our coverage here. we have got more to talk about, onto wednesday, thursday, friday. you never know what that theme

will be. usually driven by the markets, maybe by brexit or the shutdown. more guests coming up, any number of names including blackstone. the chief executive officer of saudi aramco and joe kaser. what his industrial multinational is doing. these stay with us here at meetings of the world economic forum, a perfect day. this is "bloomberg." ♪

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>> live from the world economic forum in davos, switzerland, and this is bloomberg surveillance. i'm jonathan ferro alongside tom keene. tom: it is the business world. good morning on bloomberg television and bloomberg radio worldwide. a great rangean: of stories coming up on bloomberg tv and on bloomberg radio. every day we will do this to a substantial audience. i don't know what the scene will be on thursday