>> 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 or friday.

and the dynamics of panels and things they get set by bankers, they are on the upbeat today versus the government. jonathan: we can catch up with one of those bankers right now. sitting down with the ceo of citigroup for the year ahead. >> one of the things i pay most attention to. my job. my ability to get one. my wages. and second, my single biggest investment is my home. not just in the u.s. around the .orld, in pretty good shape if we look at u.s. holiday sales, maybe some of the big-box retailers. spending is up 5% or more. >> are you worried about the shutdown? about it from this point forward. i'm worried about the people in hass of the hardship it

created. your question is from an economic perspective. we are entering the second pay cycle. we are beyond one month in terms of important goods or services. the second piece is around business. season0 days and turning . 75% of companies have reported above expectations. it doesn't feel like a business environment that is falling into the abyss. if you look at companies that are generally relatively conservative, there are management costs and other things. the flashing amber light is on the government level. right? when you think about what is going on, 10 years of quantitative easing. lack of fiscal reforms. lack of fiscal follow-through. the question we will face, are these economies sustainable?

or ask us where the challenge comes from, it comes from a lack of credibility from the governmental level. manifesting itself in confidence that undermines economies. >> one manifestation of government would be the trade war. how much does that worry you? is that something we should see stretching throughout this year? or is it something that gets solved on the terrace space -- tariff space? or is trump committed? >> when you look at the world today, the book ends of the global economy, in many ways, are the u.s. and china. europe is important. anything that moves to undermine the confidence of theanything te

the confidence of the trajectory of those economies has ramifications around the globe. the numbers came out yesterday broke before, china fourth quarter, 6.4. four years, 6.6. we see the chinese government acting aggressively in terms of tax cuts and things to keep the economy going. but it seems the china economy has slowed. >> from the point of view of a bank, are you slightly troubled because he is opening the market to you? >> we have been in china under our own brand for a while. but in general? approach here, he is trying to create balance to trade. when you look at trade agreements, many are not only decades but beyond decades-old. if you think about the evolution that needs to happen in terms of when youand balance --

go back to world war ii when many trade accords were set in place, it was democracy versus communism and i will offer you this to pull you my way. those trade agreements have not evolved. like any contract, it needs a fresh look. i think in terms of the balance , it isngs that are going important because politically it is manifesting itself in terms of protectionism. manyust in the u.s., but places in the world expect politicians and government to go after. >> is the trump trade war, whatever you want to call it, from your perspective, are you beginning to see waves? >> what some people have iscribed as vulcanization --

talked about this challenge at the governmental level from a physical perspective. employment is important. country, if we are losing jobs cross-border, you are likely to get the societal backlash against that. i don't think it is a developed markets phenomenon. i think it is a global phenomenon. >> you have 9000 staff in the u k and have talked about putting them in a few places. from our perspective, it is likely that it will go down to the wire. we have three very different views or opinions of where this should go. the industry perspective, and many businesses, we have no choice but to prepare for our exit.

it is likely that we will come down to the wire. reason will prevail and strike a balanced outcome for each of the parties. in some ways, it is a difficult situation. >> do you think less of london now than you did pre-brexit? >> the outcome will be that we are doing less. about one third of our business is u.k. related. one third of the business is europe related. and one third is the rest of the world. without a doubt, it is likely we will be forced to move our european peace to the continent. u.k.ll continue to do the piece in the u.k. exit, havehe heart you run the numbers on that -- have you run the

numbers on how much it will cost the firm? >> yes. we don't share that. [laughter] create a new entity in europe and we have the risk of compliance, people, and all of the things to be able to do that. it is not going to be cost neutral. jumping into the eurozone, one theme is that you have talked to the bankers here. there is a lot of talk about consolidation. we talk about europe having national champions in the finance. you were in charge of the bad bank citi. citi has cleared up $800 million worth of loans. why do you think the europeans have not done as much of that? >> one is structural. one is environmental. coming out of the financial to givecapitalization

the banks the ability to act and solve the challenges in a fairly of time.iod as you referenced yourself, others were able to do that. heal inn time will these banks will be able to earn and grow their way out of the challenges. issue is thel consequence of low to negative rates. not describe that as an environment that is highly profitable for banking. with negative interest rates, it is difficult. the earnings trajectory has been shallower than people expected. and i think as a consequence of that, the european banks that have less flexibility over the same time period. >> would you expect to see consolidation? i think industrial logic is

there for consolidation. do governments and regulators want to allow it to happen? we don't know. we hear talk that the european regulators are right for that consolidation. in the end, there is a nationalist pride. having a national champion or a series of champions. you would be a potential acquirer. do you find that a difficult barrier? >> i also believe that in the u.s. today, this probably not much appetite for the big banks to get bigger. i think over time, it is. i understand coming out of the financial crisis, the sincerity. i can go to other industries. done, we have

environmentally, that is an example. are we have interceded in terms of the natural course of things and we have to go back to fix them. if we think of a healthy banking system today, it is not small bank versus big bank. it is a bank scale to serve clients. we need community banks, regional banks, national banks, global banks. limitings you start the outcomes of those, i think you are creating a suboptimal outcome in terms of trajectory going forward. >> many people here come from the tech field. finance is any area that we can disrupt. another group says that they never really lived through a crunch. which side of that debate are you in? michael: we have to recognize fin-tech, or the

digitization of banking is here to stay and accelerate. i go around the world meeting with fin-tech companies. the conversation has evolved. i remember meeting for five years ago when i was there, a young tech person was there and sat across the table and said, i'm coming to eat your lunch, old man. all.ot dismissive at but if you want to trade at an eight times or nine times multiple and be regulated, we would love to have you in the industry. thatat has happened to young person? michael: what came from that is a different approach. companyout the fin tech that can bring it on to our platform in touch 140 million clients.

, thethat is michael corbat citigroup chief executive. , we welcomehwait you. a perfect day in davos. at reallytte -- corb high on political turmoil. >> the stock price battered in december and a massive rally following -- >> there was record profitability. tom: the one data check we did three days ago, i noticed both our bear market on to correction. when 4700 on the dow. theance to speak with secretary-general in a conversation with his entourage as he came on to our stage. we talked about the history of 1986. the history of opec.it was a

cartel . you take offense to the idea that it is not a cartel. if it is not a cartel, what is it? >> thank you for having me. happy to be here. jonathan: happy new year. >> you are quite correct. we are no longer a cartel. free,k that we are a open, transparent organization. for some of you might call a fishbowl in the u.s. we have come a long way. data today, all of our which is raw material, is online. from 1960 until today. publications key

are the monthly market report, our annual statistical bulletin, and they are online and accessible to all. the meetings are covered by the global media and stream most of the time live. anye as open as organization you can think of. we are proud of what we have been able to achieve. jonathan: you are very transparent with the data now. the process is less transparent to me. when we sit on any given morning and the president tweets about opec, is the president the elephant in the room? the president is the biggest producer in the world today. it is logical for him to take more than a passing interest

because of what we do or fail to affects the industry. and by extension, his economy. , the u.s. andurn the shale producers were on the same board. tom: the history tangential to opec, and you have a meeting in vienna in april. come to viennaia in april? it is an odd chemistry right now. i think so far, so good. we have come a long way with our russian friends. the energy dialogue we have gone as far back as 2006. an adjoining this last downturn, we have worked together with the the historic reach

declaration corporation. from january 2017 to last december. performancelevel of , and what you call compliance. the russians have played a leading role in the entire process so far. it on good authority from the russians that they tend to continue to work with us to sustain the balance that we have been able to achieve on a sustainable basis. jonathan: are they a reliable partner? mohammad: very much so. jonathan: to the early part of january, what have you seen in the data? mohammad: we have seen vienna to 2018 a close

figures. we took stock of the implementation of the supply from 2017 to date. tell you the level of performance was well over 100%. we're just beginning to implement our decision. so far, so good. we are on track to achieve common objectives. tom: one of the rumors is that above the arctic circle and cause a record cold? mohammad: above the arctic circle and cause a record what o make sure that inventories that to unsustainable levels do not recur in 2019. visibility onve that right now now? we count votes off of singapore. we start to see very

sharp reductions in supply in conformity to the supply obligation that we agreed upon on the sixth and seventh of december. have seen the market respond positively. and this is just the beginning. tom: thank you for joining us today. jonathan: let's get up to speed on the market action. a rough start to the week for the u.s. trading session as we get back to work. theyork city ahead of opening bell, futures a little bit softer there. down across the board. in can see this plank out the bond market and the fx market. treasuries shaping up as follows. in the fx market as you might expect, some yen strength.

and the euro-dollar is pretty stable. what we also have to look forward to this week, ecb president mario draghi. tom: it is off the radar and it should not be. some people saying even the imf cool down yesterday wasn't enough. draghin: and president has stayed out of the spotlight over the last couple of months. even though it is europe that is looking really soft relative to the space. i would say that it is a set of central bank -- if we try to stagger as well, it is a complete mystery of what the governor will do. this is fascinating. this is about technology, the

overlay of technology. that it with a gentleman has experience in scandinavia and at verizon as the chief executive officer. he had a three-hour interview on technology worldwide. let me start with the obvious question. why did you take the job? what a challenge to take on verizon. >> i am excited to bring in new technologies. i think verizon is one of the best technology companies in the world. but you are senior vice president of triage at the same time. for this, $4 billion for that, and you have taken them right down. you are the new kid in the corporate world of verizon. how are you treating the acquisitions of yahoo! and the rest? goodwill. to ride

assets that we can use for our strategies. component -- the comparement point of view, things are very good. jonathan: let's talk about the strategy at the moment. you don't make the former ceo of ericsson the ceo of verizon if you want to create a media conglomerate. why is verizon not doing that? hans: we are the best network in the u.s. and probably one of the best in the world. we have a great solution where customers all the way from consumers, to small and medium -- i see the network as a service. we can handle all our assets are self. .- ourselves

jonathan: are you seeing the space play out at the moment? hans: [indiscernible] we take our route, others take there's. we move on our strength and our assets. jonathan: let's talk about 5g. what are the goals? cozy panels taking place like globalization 4.0. why is 5g so important for that? because it has been based on throughput and speeds. 5g has eight different capabilities. everything from low latency, battery life, millions of i.t. devices. of course, the consumer use case as well.

you can do it for five different enterprises. tom: everybody is distributing to the cell phone. everyone listening on the radio tv,washing -- watching on they are glued to their phone. i only have my phone 20 minutes a day. how will you battle with t-mobile? you have to do it on price. how do you get momentum against t-mobile? hans: we are serving they types of customers. in the consumer segment, we continue with the best network. that is so important to have the high quality and high performance. we have the 1.2 million in the u.s.. i think we have good momentum in the business. jonathan: always great to catch up with you. berg.on ceo, hans vest

coming up, we will be catching up with a ceo right here at the davos economic forum. this is bloomberg. ♪ lisa: i'm lisa in new york. let's get some of the stocks ahead of the u.s. open. taylor: we are right in the middle of earnings season. we will bring you to market open action. johnson & johnson coming with 45 minutes, and the topline revenue growth really deviating. it is about that for your guidance, sales coming in at about $80.4 billion. and earnings per share missing the median estimate of about $8.61. still, the stock is pushing higher. take a look at what is driving earnings growth.

analysts are looking at a 6% bottom-line growth between 2018 and 2020. betweene 11,700 cases andand 20 -- $10 billion $20 billion. lisa: really important to keep an eye on the earnings coming out in the heat of the earnings season. we have more for you on that. coming up, more from the world economic forum in davos. trade skirmishes and broader economic slowdown. this is bloomberg. ♪

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jonathan: live from devils, switzerland is "bloomberg surveillance. " to you from switzerland. good morning if you are watching from new york. tom: through the week on television and radio, we are simulcast to talk about the issues of america. radio in boston, washington, sirius xm as well. ,ut the international moment the theme is global slowdown. jonathan: we have a window. we have to do brexit. i am hoping this is brexit free until we sit down with george osborne later. tom: that will be a timely conversation. let's continue the conversation with the chief executive officer

in the middle east, the single most important executive, aaron is in marriott ceo. we can talk the summation of travel rewards. the government is in shutdown. i read an industry article about the percentage of immigrants that make marriott go each and every day. give us a percentage number of your employees that can relate directly to the national debate. uncommon for us to have 60 or 70 nationalities represented. president has illegal

immigrants in his hotels. >> we use all the tools available, including e-verify. we are vigilant about documentation and making sure that these people have the right to work in the united states. but the government shutdown. why? because both political parties better to leave immigration unresolved than come up with a new consensus. jonathan: what is your message? arne: keep talking. get the government open and get engaged. people across ask the u.s., people would say that i have no idea. it varies from market to market. we have 150 hotels in the greater washington area. digitss is down double

since the government shutdown. domestic that's tension. let's talk about the international tension between the u.s. and china. how big is the slowdown? even apple is struggling with near-term visibility. do you have good near-term visibility? arne: we know what happened last night and last week but we don't know it's going to happen three months from now. there is a trade war. the chinese economy is under pressure because of it. chinese travelers within china and abroad, we think it will continue to grow 20%. tom: i don't know if you have been at the marriott in tulsa, oklahoma.

there are workers there for you who are directly affected by the shutdown, directly affected by the debate over immigration and they have a real job at marriott. how does america have confidence that we -- that they will advance and prosper. >> it is all about jobs. tom: benefited with medical. arne: all the folks have health care. i should not a 100% because some have their spouses insurance. but even the retirement participation rate is 80% because we think it is important to compensate people fairly and build careers for people where onlycan say i can work not last month or this month, but i can build my career and put my kids through school. i can have a house.

that is the way i want to grow. in some ways, the company has been about managing crisis. do you have any idea who was behind the hacking? arne: i don't know that we will never know who was behind it. was in theebody reservation system for a few years. we did not find out. inwas something discovered the fall of 2018. we moved as quickly as we could to be transparent. we knew we had to share with everybody else. and to find out as much as we could find out. had 10 nights at the ritz-carlton in atlanta show up in my marriott rewards. everybody was affected, right? arne: i don't know that that is connected. do we have firm

protocols for when a passport gets scanned at a marriott hotel? that is now encrypted. is, we arenswer getting there as quickly as we can. of january, weg thatmine as best we can none of the payment card information was unencrypted. we determined that about 5 aboutn global passports, 5 million weren't encrypted. that is where the concern comes from. there was a debate. others that say that is my passport. i feel violated somehow by that.

for a's, long-term, we have sure everything is encrypted. we also have to make sure we comply with local law. we are required to take your passport, maybe make a physical copy of that passport. your rock's copy is not the leading edge of technology. dimon or here i would ask if he is too big as a bank. the question is, is marriott too big? the scale, the rewards meshing. arne: i think it is a crazy idea. of -- or 8% of rooms in the world. it is hardly a massive share. and half of those rooms are run

by franchisees. a highly competitive business and what customers are telling us, they want to be able to stay with us wherever they are going. and they are going lots of different places. and we want to be there for you. jonathan: always great to catch up with you. coming up on this program, more from the world economic forum in davos. if we can get down to the cash open in new york city, futures a lot softer. treasuries with a bit of a dip as well. the s&p 500 down. if you switch to the bond market, it is a picture of treasuries for you. reflecting that appetite, a

stronger japanese yen. from switzerland and our audience worldwide, this is "bloomberg surveillance." ♪

this is bloomberg surveillance in new york. a let's get a check of bloomberg's first word news. we are joined for the top stories. republicans reveal their plan to and the partial government shutdown that matches trumps request and gives some young immigrants temporary protection from deportation. senate plans to vote on the measure and house democrats say they won't consider any border spending until government agencies are reopened.

communist party leaders are concerned about the implications of a slowing economy. there are serious dangers to the party's long-standing rule. british labour party leader jeremy corbyn is opening the door to a second referendum on leaving the eu, calling for a series of votes on how the u.k. can avoid an economically damaging no deal brexit. global news 24 hours a day on air and at tictoc on twitter. 2700ed by more than journalists in more than 120 countries. lisa: taylor is looking at the stocks on the move. ernie'swe are expecting

-- earnings later today. they are developing a las vegas convention and we want to hear about that. they are waiting for their encore in boston harbor to open amid 2019. been on thes recovery over in vegas but so much of the revenue comes from the cow. we talk about the slowdown in the vip customer and slowing chinese growth. the company gets 75 percent of their revenue from the cow -- ma cau. we do know that we are seeing some of these table wagering's trying to offset what we have so far from vip. some of that is putting pressure on their earnings.

another to look at his halliburton. reporting earnings this morning as well. we see topline revenue barely beat. and free cash flow for operations caught my attention. this is about 2.5 billion year over year. a big drop in crude prices. of course, earnings with .alliburton and we have been seeing with a lot of ceos, they are coming out and slashing capex spending because they don't believe in

the crude rally. a got hurt in the crude slowdown in 2018. lisa, when we talk about oil, we have to talk about the airline as well. we are in the middle of the shutdown. for thet travel at all holiday weekend due to the tsa shutdown. lisa: and 10% of tsa employees stayed home, saying that they were financially not in a position to come to work. it was pretty rough. taylor: we are busy at work, indeed. lisa: we have more coming up from davos. anti-of people got on airplanes to go to switzerland. up,ave an interview coming don't miss it. ♪

♪ good morning, everyone. this is "bloomberg surveillance." a perfect day in davos. sun, beautiful switzerland. on radio, just imagine. -- i'm not going to sing for you. know lot of people don't that we are just above italy. going from southeastern switzerland over to austria, is that ok? now joining us is erik schatzker. in conversation with mr. schwartzman. i am here with chairman and ceo of the black stone group.

this is number what for you at davos? steve: i think 20. something to celebrate. what is the most important item on your agenda? from: i like seeing people different areas from business to the not-for-profit and political area. what i have picked up so far is a palpable sense of anxiety that the global economy is slowing and possibly heading toward recession. a recession that central banks will not be able to fight off. you share that concern? steve: no. we are slowing, which is not a surprise. 4.2%.s. economy was completely unsustainable.

and it went down to 3.5%. it in the sense of the companies that we own, that was just part of blackstone. in the 2.5% to 2.75% range, something like that for the u.s. economy. earnings growth will probably be a little disappointing, which is why some people were concerned in the 5% or 6% range. not in double digits the way it was last year. it doesn't represent a recession. more people got so twisted up about that the last two months of the year. it was a surprise to me. there was a price-earnings multiple adjustment. price going down to reflect it.

that did not mean the world was over. that the stock test rebounded, all theare of not losses that cannot but for the year, it tells you something in that direction. erik: president trump said a few weeks ago that he would be proud to shut down the government. and so far, the american public hold him more responsible than the democrats. ,iven what you just articulated is it wise for the president to put the economy at risk, keeping the government shutdown? is wise orher it not, i don't think it's a good thing. regular people are getting hurt. it's almost like a family where the parents are squabbling and the children are being affected.

that is unfair. it probably should be brought to some type of the close. have done a few deals in your time. how would you resolve this impasse? steve: you have irreconcilable differences. erik: you believe they are irreconcilable? steve: literally around the wall, one wants to go forward and the other says it is immoral. definitive iftty you know the people involved. it is a tough thing to bridge. on the one hand, the president doesn't want to give up on the wall and truly believes it is important. believe justrats as sincerely, apparently, the opposite. in some other way, probably in the court system.

erik: which camp are you in? steve: i'm in the camp of having the u.s. government function. it's no good for anyone in the long-term for the government not to be functioning. erik: let me ask you about china. they appear based on some that they are growing more concerned about the slowing pace of the chinese economy. what is your read on the chinese economy i go -- economy? steve: it is slowing. there are a few reasons for that, including the corruption investigations in china that are making approvals on things a bit more difficult. there is more government intervention in the private sector. tariffs being

discussed over the financial impact. so we have three things going on. and an endless cycle of economic growth. 6%, it is go 5% or still a lot. ratesoff what the growth have been. and it is normal to be sensitive. it is particularly important because they were trying to be more conservative financially and pay down debt. to of a sudden, you have borrow money and you have to restart your economy. window into the u.s.-china trade negotiations. how is it going? it is going pretty well compared to all other times.

it has been 70 years since we have had a trade agreement with china. it is a lot of failure in a lot of places. be we have what appears to the head of state of china and the u.s. that would like to progress something. will we see something at the end of february deadline? steve: you will see something. chinese prepared to make the concessions the trump administration wants? don't think in any negotiation, one side prevails. i think it will be something much more in the middle than what the u.s. wants or just what the chinese want. one of the important things that most people don't think about and they about those discussions and trade deficits, they talk

about tariffs and intellectual property. i think couldngs potentially be a dealbreaker is compliant. the u.s. is very focused on making sure that anything that's agreed upon is enforced. that enforcement mechanism becomes key. that becomes key. that is not something the chinese are used to. it is something in the west that we are regularly used to. don't comply, something bad happens. the mechanism for this could be setting up in the office of the vice mayor so that if something for a companyout or whatever, they can bring that to that bureau. frameg as there is a time for resolution, it will get

resolved one way or another. erik: while the trade thetiations are going on, u.s. government appears to be getting more aggressive on ip theft by chinese actors. -- howious do you think serious a threat do you think a poses to thehuawei u.s.? steve: i don't know the details of that. i just know what i have read. the chinese side says it is not true, the u.s. says it is something different. there are countries that are supposed to be prohibited. and there is also potential piracy issues. not to dive from this but that

is more for professionals. there is a healthy debate about converting from a partnership to ac corp.. -corp.a c where are you? steve: it is an interesting issue and if you convert your tax rate, it is higher. you are taking money away from shareholders. on the other hand, there is a broader market for that kind of corporate fund. and that should compensate. the answer is perhaps. and we are a time of relatively low tax rates. forward andlook say, will taxes be going up?

that makes the breakeven a little more difficult. >> will this happen at the 2020 election. steve: in that sense, it's just another factor. you are the chairman and ceo of blackstone but you handed the day-to-day operating rains -- reigns over. will you be spending more of your time on philanthropy? you just gave money to m.i.t.. steve: i love blackstone. john gray is terrific. before john was also terrific. tony is still at the firm and john is providing the leadership . i have a wonderful position at the firm where i get to be

involved in everything. and we still have our management committee meetings every wednesday. we talk about everything. i'm not going anywhere the city blackstone. s blackstone. your opportunity gets less and less every day. at some point, you won't be there. i enjoy the major things. i enjoy the m.i.t. gift. the schwarzman center at yale, all kinds of stuff. erik: erik: i encourage you to give more of it away, steve. john, that is steve schwarzman, chairman and ceo of blackstone. jonathan: erik schatzker, thank

you very much. i'm jonathan ferro. tom: a great first day of meetings. we welcome all of you worldwide on bloomberg television, bloomberg radio, and on sirius xm channel 119. it really started with francine lacqua. the one i would go back to, kind of a brexit free day. really focused on the political turmoil. jonathan: coming up on this program in the next hour, we will be catching up with the former u.k. chancellor and now editor of the evening standard. he will be coming up. , plans for the takeover. >> we are in discussion -- [indiscernible]

we are in discussion with regard to the price. jonathan: do we have a ballpark figure where the price will be? >> not yet. i am thinking $65 billion. >> i will not comment. [indiscernible] jonathan: the energy minister has not been silent. he is looking at a potential bond issuance. can you comment on that financing of the potential acquisition? >> we are exploring. and considering the acquisition,

we are looking at all options for funding. and that is something we're looking at. jonathan: how much could come to market? >> at this stage, we are either evaluating. we are going to decide soon how much we would like to take from the bond market. it is not decided yet. jonathan: do you know what your intentions are with the other 30%? >> it is a publicly listed company. regulator, can you just buy the 70%? >> we are in discussion. the issue with that, it is in

discussion with that. our mission is not to acquire anything from the public at this stage. and that would not be a dealbreaker for you guys. >> from the strategy to acquire , you have no intention of acquiring. jonathan: issuing some debt in the second quarter, we have also heard that there will be an international bond. >> definitely, it will be international. currently in discussion.

and we have that issuance for the bond. .nd everything is going well any type of disclosure required. and i will comply. jonathan: let's talk about potential disclosures. we show that saudi aramco's books has practically zero debt. you going to reveal that you have no debt on the books and that you are incredibly profitable? amin: they have debt in the

market and they have financing. in regard to the ratio, it would be -- [indiscernible] jonathan: the kingdom came to the market recently. spreads will be tighter for saudi aramco? >> that will be decided by the market. when we share all of that information, the market will decide. and we have to agree.

jonathan: are you talking to a credit rating agency? >> we have talked to a credit rating agency. do you have a credit rating agency in the kingdom? >> [indiscernible] jonathan: it is a tense moment for the kingdom. there is so much of a political overlay. jonathan: for me, what i'm confused about most is the strategy. a year ago, i spoke to the ceo that were preparing to go public. it is a major acquisition just

before -- tom: i'm going back to the political overlay of saudi arabia. jonathan: they need the money. one of the best ways to leverage money is to -- to raise money is leverage the balance sheet. by the petrochemical giant and the money goes back into the kingdom. that is the perception and he is telling me it is part of the strategy of the overall company. was thential this month saudi arabia and kingdom coming to market and issuing debt at 175 basis points over treasuries . i'm trying to understand if it is business as usual. bloomberg senior executive editor, great to catch up with you, stephanie. do you get the sense it is business as usual? we have heard people say that they are toxic in the global community.

that has eased off a bit. but the questions that you are raising about the aramco deal are the same ones we would've raised six months ago. we did the long interview with the crown prince and he went thatjustification for it the moment anyone buys aramco, they will see that they needed to have the downstream potential. tom: are we on to these discussions now? the washington post says this has to be changed discussion. interview with royalty and leadership, can they move on from the khashoggi event? how itie: we will see plays out, but there has been a bit of distancing from in bs. -- from mbs.

you are seeing different faces and a bit of diversification. not so much talking about him. fine printing at the of this deal, do we think the valuation will be anything close to what they talked about with this asset? jonathan: and if it ever happens. ,he global economic slowdown i'm trying to get my hands around to what degree china has accelerated. some say it is ok and it's not as bad as you think it is. what do you think 24 hours and? -- 24 hours in? seniorie: we had a chinese regulator on that panel that dominated discussions of china. there was interesting conversation about corporate debt, but the focus on the causes of the slowdown and how worried we should be is on the chinese side, the flexibility and ability to respond. he suggested there was a risk of responding to much.

i think what they have done is cushioned the effect of the rather than push the economy right back up again. i think they are trying to provide a floor. they are not trying to settle the cycle again. through this moment without talking about brexit. some say that is a success. stephanie: i will be fine with that. that is changing very quickly. tom: it is. you wonder where we will be monday. jonathan: or the next five minutes, never mind monday. world economic forum in davos, switzerland. we will be back with uae systems chairman. the open just around the corner with futures.6% -- -.6%.

this is bloomberg. ♪

lisa: i'm in new york where it is colder than davos. we're looking at the mornings top stories. republicans reveal their plan to end the partial government shutdown. it grants the request for the wall on the mexican border and protects some dreamers from deportation. democrats won't consider border spending until government agencies are reopened. wei ceo inf the hua the canada may not be decided in trade talks. there are allegations of bank

fraud violating sanctions on iran. and in china, president xi jinping is signaling party leaders about their concerns for the social implications of the slowing economy. she is stressing the need for political stability. there are serious dangers to the party's long-standing rule. day -- aws 24 hours on journalistsby 2700 in more than 120 countries. -- let's go tong taylor riggs. get us caught up. taylor: 80 big headlines coming out. this one has been under review. activist management saying that they have taken about a 4% stake in ebay. they are urgent need a to review

their portfolio and focus on the marketplace. shares are climbing up almost 12% after urging this portfolio review. they say that company is evaluated at $53 to $63 a share. to $35.ading at $34 nearly they see some upside. we will keep you posted. we know that as the aerospace products company, they are off more than 25% near a record low. this as they say they are no longer pursuing a full sale of the company. there were hoping to reach a deal over the weekend with apollo. they are not getting proposals they like. they are looking to move forward with the building and construction systems as well. stocks clearly on the move. the financial index you have at

the rise of the s&p 500 recently, it is tightly correlated. meet prettys to soon. better stocks do, the more people expect things to are thinkingeople maybe we are not going to get that stock rally. the worldad back to economic forum in davos to hear more from all the luminaries over there. this is bloomberg. to our audience worldwide, this is "bloomberg surveillance." alongside tom keene, i'm jonathan ferro. i believe we have to do a little bit of wrecks it. -- of brexit. tom: we will do it right with smart conversation. what we really want to do is drive the conversation forward and what webate

have seen for the historic moment in the united kingdom. systems.r of bae a few years ago, he single-handedly changed the direction there. in support of a committee assisting the prime minister, and what i noticed in my recent trip to london, i really felt like an outsider. many people in business are saying that maybe there is an advantage to leave. is big business model live now with the prime minister? -- is big business monolithic with the prime minister? business hask big

really managed the cards it has been dealt over two years. we are for parliament to decide on the way forward and one busy -- and what business once above all is clarity. jonathan: maybe we have a touch more urgency. are you speaking to the government today? roger: we are speaking with them on a regular basis. you talk to them today, what are you going to say to them? roger: what can the prime minister due to improve the deal she had? it allowed a frictionless trade and kept us out of the more difficult areas. wonderful if someone could untangle the audience to allow this to receive more general support. it is worthy of general support and considerably better than

some of the alternatives. jonathan: we have a deadline for the end of march. would your message it be to try to fix things? with that be the message for them today? if we can resolve without extending deadlines, that would be in everyone's interest. jonathan: how realistic is that? challenge but i think we need to hear from the prime minister on if it is doable. tom: the distance from london that all the rest of the u.k. seeks. debate, theat this freeze for me is no deal. it is a lot more evident than it could be. a former opinion on the same idea of no deal. >> it means a very unsatisfactory outcome. telegraph would say

that is correct, but it will heal itself and fix itself with great speed. do you buy that idea? resolution that creates considerable challenge for all business for many years to come. and we should work very hard to avoid that. jonathan: should the prime minister and say -- turn around and say no deal is not an option. it is something that has to be thought about. think thed that, i principle of no deal is something that should be the last thing we want to see come out of all of these conversations. and we should look at a very positive way of finding solutions. it doesn't really harm your company in a material way compared to some of the players in the united kingdom.

there is tension outside of brexit i want to talk about with you. you have joint projects with germany at the moment. the germans export military weapons to saudi arabia. i am wondering if that complicates joint projects with germans at the moment. >> it does complicate arrangements. when you have a partnership and you expect everyone to behave as committed. inre is no question that developing an aircraft with partners, you believe them to be there till the end. i agree the german position is different from my own and weeks -- we respect what has happened in terms of the positive. the negatives have been admonished. we are seeking to work as a friend.

it is very important from the point of view of our security and the intelligence network. how difficult will it be to maintain that relationship when it looks so dreadful? tom: i think what we have to do we had doi think what is recognize that if you stay in the relationship, work to improve conditions and return it to the trajectory it was on. there was considerable improvement. the more liberal saudi arabia, all of these things going in the right direction. you can't just sell them weapons and also instructed them what they can and can't do in yemen. do you have any influence over that whatsoever? leaders takecally, the point that this is something that ought to be brought to conclusion at the earliest possibility.

but we should remember that although it is an appalling situation, it is a country that is defending itself. the heart of this war. it is a defensive for and not an aggressive war. roger carr, thank you so much. will be: coming up, we speaking with george osborne, the editor of the evening standard. chancelloru.k. coming up shortly. good morning to you waking up in new york city. counting it down for the open in new york with futures negative, down by .6%. market, looking at treasuries at the moment. the yield's with a couple of basis points on the 10 year. and a stronger japanese yen. tom: stronger sterling as well.

jonathan: at the epicenterjonathan: -- jonathan: at the epicenter of all of this, global slowdown. this is "bloomberg surveillance." ♪ lisa: in new york, it is half of the temperature currently in davos, switzerland. take a look at stocks on the move. taylor: johnson & johnson came out with earnings and the numbers looked look -- look to good. a beat on the bottom and top line but there are concerns as for yourny forecast growth. shares are off about 1%. management saying that sales and earnings are expected to slow. the big concern is they are not saying why. there is a little bit of uncertainty here.

heading into this earnings , they forecast 6% bottom-line growth for the company. johnson & johnson facing a host of concern over the litigation of his best us claims in their health products. there are 11,700 cases outstanding and claims could be anywhere from $10 billion to $20 billion. cost efficiency going down. really trying to get the earnings per share boost. a loss of earnings on the move. lisa: coming up, more from the world economic forum in davos. from new york, this is bloomberg. ♪

tom: good morning. this is "bloomberg surveillance." we are in davos. at queen victoria street it is a perfect day. jonathan ferro and tom keene. we welcome all of you. coming up, an important conversation of george osborne. it fits the moment. jonathan: the former chancellor of the exchequer in the united kingdom as that brexit debate becomes increasingly tense. have we made a progress? tom: the most silent central banker has to be mark carney. he is distracted by the politics in the united kingdom but central banks front and center. ray dalio riding high.

many of his competitors tanking in the hedge fund business. the seventh president of the bund's bank, here is axel weber. >> i still have to sit down for one or two moves but i do not think it is happening on autopilot. at best they might move in summer. we are likely to see a work -- a week first quarter. i think the fed will pause and whether they resume is depending on better second half. an inappropriate desire to tighten monetary policy at a level that was faster than the capital markets could handle. at some point fed policy has to normalize. every time we start the policy of normalization, while there was danger the u.s. economy was in danger of overheating, now we have all of this uncertainty and

that the world lost more than people expected last year. jonathan: the former governor of the reserve bank of india there alongside ray dalio and axel weber. now is the bloomberg news economic executive director. are we on the same page about the fed? simon: i think the calls for the fed to be patient are spread by jerome powell in the last week you saw a lot swing behind him, including former fox. not rule out hikes later in the year if they shut down and trade war prove short-lived. we're not 24 hours in but i'm struggling to see how the world economic forum advances the debate. we know china has slowed down.

what madame lagarde said yesterday is not a surprise to anybody in the market. how do we advance the debate this week? simon: what you're seeing here and in the imf forecast is a more robust view then some in the market. i should nor talk -- i should not talk because a spike you saw last year in the stock market. track market is not specifically good. in 2008 there was no sign of a financial crisis. the davos was upbeat and more complacent than it should have been. the world economy is slowing. perhaps it needs to. perhaps you get leverage out of china and the u.s. comes off and you get longer expansion. it corrected the worldview which is a recession is imminent. it might do, but the people in davos do not think it will. tom: this goes to simon

kennedy's work in economics at bloomberg. you go to mario draghi, michael mckee and others in washington asking the questions. what we have observed in the last six weeks is data dependency reign supreme. forward guided debt. simon: not necessarily. they are saying they will look at the data and there will be less autopilot. it will change this week. jonathan: this thursday. simon: the ecb is still a data dependent european central bank. they have been removing qe. i think there'll be more autopilot. tom: i want to rip up the script. my headline last year came off your desk. it was something like draghi delays all monetary policy until

summer of 2019. what was your response when you saw that absolutely original headline from a central bank? simon: at the time it was within reason. until theld out summer, we will stop the asset purchases because the asset purchases were not achieving much anyway. mario draghi and's that. he has -- ends that. he is obviously a bit more bullish than the market. it might not also be his problem and i think that is a big story. draghi is gone. i do not know who replaces him. i do not know what monetary policy will look like in the next 12 months. difficult to imagine what happens after draghi is gone. simon: we do not know who will be the next president. we thought we knew last time. there are elections in a couple

of months. the word from brussels is they will want to get through those before they start to think about who they could be. various others from germany, from finland, from the netherlands. france might one another president in their current it is about politics -- from -- france might want another president in there. jonathan: bloomberg simon kennedy in davos, switzerland. tour ofcould do a everyone who is to be the next president of the ecb. jonathan: is simon kennedy going to sign this checks? earlier on we caught up with the citigroup ceo on the future of

the financial sector. take a listen. >> the models need to be tested. we have not been through a cycle. people have decided they're going to do new and different and interesting ways of underwriting credit. we do not know how it will perform. like any of these, we simply need to test them over time. there willcle turns, be tested and will be lots of learning and they will continue to be a positive evolution. when we were talking outt diversity and you came and said what your pay gap was around the world, which i think is 29%, and you could gasp as people thought about that. when you it matters compare individual jobs against individual jobs. how are you aiming to change that and is there something difficult about finance?

>> i think peter and stephanie did a great job in terms of laying it out. as we have looked at the issue, there are a couple things we've been focused on. one is there is just the big number. we have 210,000 employees around the world. over 50% of our population is female. you can say job done, let's go home. , and and was describing the journey, you have to get below that. we started her out looking at pay equity and that is, we have does show people, a man and woman in the same job, similar backgrounds, how are we paying them? you identifyibes those and where there are a imbalances. as soon as they are identified they get solved quickly.

we went into the u.s. and the u.k. in germany and cited our imbalances and today they are fixed. andame out a few days ago said we have now completed it for the rest of the world in terms of the other 97 countries we operate in. we have reported the number and we are committed and will close that gap in short order. with a numberut womenscribed in terms of in the city getting paid 71% of the males. getting paiditi 71% of the males. that is a wrong number because they may be doing -- that is a raw because they may be doing different things. what that number shows is we may not have a imbalance at the firm level, but we do at the senior job in leadership level. we then followed up by setting hard goals in terms of the evolution of the leadership of

our firm and where we are going to get to overtime, both women and u.s. based minorities, and we set hard targets in terms of where we want to get the firm to 2021 and we will keep evolving that. michael kobach -- michael corbat there. tom: you nailed the bank call this year. ahead of the underperformance of the banks. michael corbat and the other bankers have to produce this year. jonathan: the last month has been different. they produced last year. some of them had record profits. stock prices do not happen. it was a struggle to reconcile. tom: we welcome all of you on bloomberg radio and bloomberg television. this is without question our interview of davos on this issue

of brexit. for those of us foreign, it is baffling. a journalist at the evening standard wondered by mr. cameron's government, but far more important to us, he is in osborne of osborne and little. what was it like in your childhood bedroom, did we change the wallpaper every 90 days? little,d set up osborne a design company. we had to showcase the products so the house was always being redecorated. bedroom.r i got my changen: it is a massive being the chancellor of the exchequer. did you ever think you would be where you are now? i thought we would hit a

point where the promise you could leave the eu and have all the benefits of the e.u. membership would run out of road. i hoped there would be a more conciliatory approach, a middle way through, like a norm way -- like a norway model for britain. outside of the eu but closely aligned with the eu. that seems like it is gone and we are confronting two choices. leave the eu without a deal or delay or stop brexit. that is emerging as the two choices. prime ministere david cameron made the process sound straightforward. if the outcome of the vote was the united kingdom voted to leave, he would go across to brussels and trigger article 50. both of you ended up leaving the government. do you think both of you have a the outcome ofto what has happened in the u k because it was your government

that brought the vote to the british people. and myselfid cameron and others did spill out for the country that there would be .onsequences for leaving the eu i would argue that the process has been straightforward. it has all been done in an orderly way. the problem is not the process, it is the policy. what do people want our relationship with the european union to be. we want no relationship or a close relationship? that is the hard politics. ort is not about the process whether we have the right civil servants or negotiating team. it is about fundamental contradictions in what brexit promised. jonathan: i do not think many of us thought it would take as long as it did to trigger article 50. it took a number of months. here we are, the clock is ticking and it looks like we are running out of time. would your device be to the government, and i'm not sure

they would listen to it, would your advice be to delay? george: i think it is not acceptable for my country to leave the european union without a deal. that is a shock to the british economy and the european economy. it does enormous reputational damage to the u.k., and it is not the way in advanced nation should behave. if we cannot get a deal, if there is no norway on the table, then we have to delay brexit. is it realistic to take it off the table and negotiations? george: negotiation with the european union is over. the british government signed a deal in december. you can have any number of european leaders come on the show and say there is no possibility of reopening that talk. the only person who believes there is is theresa may. her cabinet does not think it, parliament does not think it. the choice is to leave without a

deal or everyone change their mind on theresa may or delay by referendum. that is an underappreciated outcome. jonathan: there could be an election? what would trigger that? george: there'll be a confidence vote in the british parliament, and a small number of security mps will switch sides because they would rather have an election than see our country leave the eu without a deal. we do civics 101 and explain that cameron osborne is the prime minister -- is the same party as prime minister theresa may. may pastorinister sell by date? i was thunderstruck there was not a window for her to gracefully resign and move onto a new conservative majority. did she missed that opportunity?

her challenge when she called a general election last year and lost the majority david cameron and myself and others have built up. she does not have any political authority. tom: are you looking for a grace from the prime minister to move away from the stubbornness and step aside for a new vision, a new set of goggles, a new optics? george: i do not think that is realistic. what is more realistic and what she should do is take this threat of a no deal off the table. she can do that unilaterally. she does not need anyone else's consent. otherwise she will allow the parliament into the space. here's an underappreciated point. it said hear on shows that it takes a majority of the british parliament to stop a no deal brexit.

in order to stop it, it is not enough to say the majority against leaving, that majority has to coalesce around one of the options, and alternative deal or delaying brexit or a referendum. the parliament is divided. looking at financial markets, you have to price in the tail risk that britain does leave without a deal and you have to say that britain is going to remain in the eu at the end of march. increasingly likely. jonathan: i do not knowingly field told you this, you sound a little like jeremy corbyn. being: corban is partly what the opposition -- the problem with delay. i'm telling you what i think is going to happen. delaying does not confront the choice britain needs to make. it puts it off. that is why it is a convenient bucket for people to go into.

unless somehow we can construct some kind of deal, which takes britain out of the eu but gives is in things like the european fairerc era, which is a reflection of a vote that split the country in half, then we will be confronted with the only way to stop, which is stopping brexit. tom: how do we look to the arch have ars who say we nostalgia and for doing our own trade deals and being unilateral in our view of the world, harkening back to the empire. george: it is nonsense. tom: it is nonsense but they have a certain mass appeal. george: there is enormous big board on the side of a hotel in davos which is paid for by the british taxpayer which says britain is the risk -- britain

is the sponsor of free trade. if we leave without a deal, we are engaging in the biggest action of protectionism and united thing -- the united kingdom. jonathan: someone say that the european union is a protectionist regime. in the eyes of evil who voted to leave, that is what the european union stands for -- in the eyes of the people who voted to leave , that is what the european union stands for. are we finding out that is what the european union stands for? george: i would argue that countries like france, germany, italy are our biggest export markets. doing trade the eu deals with america, japan, china. jonathan: should united kingdom do a trade deal with united states of america? george: i think the first priority is to have a trade deal with our nearest neighbors. the european union is the best

platform through which you can get a good trade deal with the u.s.. rings like permanent membership of the customs union could have could havee to a been a route to a deal that more mps would have supported. jonathan: the first -- tom: the first time i saw your government you were a minority. david cameron was going against gordon brown and it was not like america. are you advantage or disadvantage that jeremy corbyn is labour party head? with this debate be radically different if there was a different leader of the minority party? george: the answer is yes. it is sad for those who care about our country's reputation. labor is not led by a more moderate social democrat. if they had that kind of leader, there would probably be a labor government.

we are not, because the country is nervous of jeremy corbyn. the country does not want to have a choice of simply jeremy type. or the brexiter there is a center which is waiting for its voice. jonathan: what would be the worst outcome for the u.k. economy? a hard brexit or jeremy corbyn as the prime minister? george: i think one leads to the other. the brexit argument is globalization is failed you, the elite has failed you, we need to change the way we have run the country for 45 years. that is jeremy corbyn's argument as well. brexit opens the door to jeremy corbyn. we are already doing an enormous amount of damage by choosing to leave the eu and erect protectionist barriers and care up a key feature of the western alliance. tom: if you're just joining us,

george osborne with us. we talk about his united kingdom. i was thunderstruck by the vibrancy of london newspapers. the evening standard -- the culture is radically different than what we have in america. journalismof british and print journalism at risk of going away as it has in united states? it is great fun to work in a newspaper. . found a great second career i'm always trying to speak for classic london a newspaper for 190 years. i want us to have a broader national readership. you have to make it entertaining during when i was educated in wason, the evening standard the way you found out what was going on in the world. these days you do it on bloomberg. tom: thank you. george: you can get a constant

commentary on what is going on in the world, so by the time you pick up my newspaper you will know what is happened in the financial markets. what we can do is provide a context, we can make it entertaining, we can inform you. tom: so you cover english football. george: we do, particular my team, chelsea. tom: how did they do the other day? george: not so well. tarts -- what is the bubble one called? george: you are thinking of west ham. tom: the cab drivers lecturing on chelsea. we chelsea game on thursday night which i'm going to. tom: george osborne leaving happy valley to go to the game. is the road back into politics for george osborne?

george: there might be. i do not want to go back to this current situation. thingsto work on building up my country's reputation rather than diminish it. jonathan: you are waiting for this to get cleaned up? george: i had a lucky career in politics. i worked with david cameron. we were happy band of brothers and sisters. that is not british politics at the moments. i would take some persuading to give up what i am doing now. , greatn: george osborne to catch up with you. the former u.k. chancellor of the exchequer and a chelsea fan. tom: they are in london? jonathan: west london, chelsea. north london? tom: arsenal. jonathan: south london is crystal palace. tom: i knew they were sort of their. -- i knew they were sort of

there. i will say this. this happened this weekend while i was in london. you guys do it right. i kid you about how guys fall down. the fiasco in the national football league over the last week and those very flawed football games make you guys look like geniuses. jonathan: tom likes the fact that the clock still runs and they do not stop the game. seriously entertaining. tom: can we make some news? rams or patriots? george: i think you have to back the patriots. jonathan: tom keene alongside me. i am jonathan ferro in davos, switzerland. a special thanks to george osborne. to get you up to speed on the

price action as we count you down to the open in new york city, equity shaping up as follows. futures negative on the s&p 500. a little lighter on the dow as we get back to work on wall street. down .6%. risk aversion driving the bond markets. treasury shaping up. yields coming in by four basis points. as you see it, yen stress reflecting that diminishment. tom: risk aversion as well. from the world economic forum in davos, this is bloomberg. ♪

david: from bloomberg world headquarters in new york, i'm david westin with alix steel. this is a special edition of bloomberg daybreak count down to the open.

alix: the imap sets the tone for davos. heavyweights from the world economic forum way in. corbin's plan b could trigger a second referendum after theresa may's plan goes nowhere. take the money and run. ubs clients take money from the bank amid trade tensions and volatility as we open on this tuesday. heavyweights in davos worried about what is happening in the global economy after the imf downgraded its forecast. dow jones now off in the premarket. the dax getting hit hardest in europe on the downgrade from the imf yesterday.