"activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. trade concerns dominate discussion. via pompeo speaks video link. speak with the trade secretary liam fox shortly. more drama for deutsche bank. ,uspicious transactions

intensifying one of the biggest money laundering scandals in recent history. good morning, good afternoon if you are watching from asia. welcome to "bloomberg surveillance," live from davos, switzerland. i am francine lacqua. want to people here know what 2019 will bring. a lot of topics revolve around a global slowdown and on brexit. carlo up we will speak to messina. we also have bill gates. and james quincey the chief executive officer of coca-cola. we will also hear from top policy leaders, including christine lagarde, and the prime minister from italy and south africa. let's get straight to the bloomberg first word news in london. the bank of japan has left monetary policy unchanged.

far from itss how price point it is. they will lower its inflation forecast. the u.s. shutdown continues into its 33rd day, and senate leaders have agreed to vote for rival proposals to reopen the government. it is unclear if any measure can pass. president trump's land includes $5.7 billion for a border wall, and a democratic proposal would reopen shuttered departments through february 8. the u.k. parliament is one step closer to stopping a no deal brexit. it is increasingly likely to extend the march 29 brexit deadline, according to john mcdonald. brexit haspporter of decided to relocate the company headquarters to singapore. the move was not due to the brexit.

impacted bythe u.k. drones, one was spotted flying nearby. growing drone disruptions stoke fears. one of the biggest money laundering scandals in history could heat up further. the federal reserve is examining how deutsche bank handled billions of dollars from denmark's leading bank. the probe is in a early-stage. says it hask received several requests for information, but denies there is a probe. global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries.

this is bloomberg. francine: thank you so much. earlier this week the international monetary fund downgraded economic growth warning that any new tensions may hurt the country's output and banking system. this comes after italy's populist government fought with the eu over the budget, and the banks are continued to be saddled with debt. we are happy to welcome carlo messina, ceo, managing director, intesa sanpaolo spa. thank you for coming on bloomberg. how concerned should investors be, and the possible impact on italian banks? carlo: it is less than 1% market share in the country. it is possible to be worried about something, i cannot understand you can talk about agreeable, no worry at all.

there could be a solution, so i do not think it is a problem for investors. thingse: sometimes small spiral out of control, why have we not found a solution? carlo: it is a matter related to shareholders. when you have shareholders with matter increase, it is a under control, no problem for the italian banking system. in any state, state king take control. francine: the ecb is urging them to merge. is anyone prussian you to buy it? 25% and exceeding italian banking system, no possibility at all to make any kind of acquisition. makeine: do these concerns the consolidation phase for the

banking system in italy delayed? belo: i think there could one solution that could be public, and another solution could be a merger with an entity in the country. again, it is something that can happen in the next six months. without any problem for the italian banking system. francine: can you confirm dividend payouts will be a target of 85%? yes.: francine: this is 100% confirmed. are you on track on your delivery compared with the main targets of your 2018? carlo: yes on track, and much ister than the plan, and it to accelerate reduction. also the location of the next quarter results we will make an announcement on accelerating.

your wealth management is focusing on switzerland, are you looking at m&a? carlo: not significant targets. it could be considered for possible acquisition, we have made -- we are looking for some minor entities. it is similar to make an acquisition. the best way to proceed for us can deal --e people francine: are you still looking for accommodations with blackrock? carlo: the point on asset management, we considered to combinationssible

in the future, but you have to spread isoday the impacting the valuation, so maybe it is not fair for shareholders to make any kind of possible combination. in any case, it is absolutely to create value for my shareholders. francine: do you worry about political concerns are on investors minds? carlo: it is not less attractive, if you compare our share price with the other big players, the performance is better than our competitors. it is clear you are attracted by that -- the valuation of ,nvestors is absolutely based and on the clear results of the stress test that confirm we are

the number one in europe. being in italy, we are top of your. francine: carlo messina, ceo, managing director, intesa sanpaolo, thank you very much. i look forward to hosting you in over london studio. now we will be hearing from top policy leaders of the world. that is coming up. this is bloomberg. ♪

francine: this is "bloomberg surveillance."

davos atcine lacqua in the world economic forum. let's bring you up-to-date from davos. have a listen. >> definitely it will be international, we are currently in discussion with regard to how issuance for the bonds. everything is going well in , disclosure, financial disclosure. any type of disclosure. the issuance market, will come to life. >> some of the reporting we have done has shown saudi aramco has books with zero debt, and you are one of the most profitable companies on the planet. when you disclose, is that what

you will reveal is that you have no debt, you are incredibly profitable? >> we will look at our balance sheets, there is debt in the market. disclose, we will disclose the whole of aramco. regard tota with saudi aramco will be issued. >> the kingdom came to the market recently, 175 basis points of the treasury. do you think when aramco comes to market, spreads will be tighter? >> that will be decided by the market when we go into the cycle of the bonds. -- our history in terms when we share,

all of that information in addition to the disclosure, the market will decide. we have to agree -- >> ahead of that, you may have to talk to a credit rating agency. have you done that? >> we did engage a credit rating agency. >> are you going to have a better credit rating agency than the kingdom? >> we are maintaining the credit ratings, and what we have from the other agencies we will share when we go with the disclosure. francine: that was the chief executive of saudi aramco. shut downe the u.s. brexit, dominates the headlines, bill gates is warning that countries risk losing sight of the need to keep up the fight against diseases that kill millions of people annually. bill gates is the cofounder of

microsoft, and the chairman of the bill and mitigates foundation. we are delighted to have him join us. when you look at some of your initiatives, when you look at funding, how do you need to fund your important initiatives different lead to get people on board? bill: it has been 20 years since two organizations were created, one to buy back for children around the world, and to make sure hiv and malaria medicines get out to the toughest parts of africa. those organizations have done phenomenally well. our foundation has put over $10 billion into those efforts. overall it is $100 billion. most of the money comes from the foreign aid budget. inot of what we are seeing davos, let's look at the track record, the learning that has taken place, and despite these distractions, let's maintain

that commitment because we can get further. the replenishment's for those funds are coming up over the next year, the global fund is in october in france, and any time somebody looks at this and sees the work, they are enthused. so, i think we will avoid the fact it is far away. the fact there are other things we will avoid is getting overlooked. is there a worry it gets overlooked, and how do you pitch to investors? innovation through medicine, what kind of advice do you give to investors? do goodhey without losing money? bill: in a lot of cases, these are grants. you will not get a direct return. the economic benefit, because you have kids surviving and participating in the economy,

they are healthy, the returns overall are fantastic. we had people look at it, and it was over a 20 to one return. if that is not coming back in the form of a dividend, it is your peeking countries that are not stable were lots of kids, up the age of before five. you are helping with them up, so over time like india, indonesia, beingm they graduate from recipients and participate in the world economy, and you get stability which means you will have to spend resources there, you will not have a pandemic. it before it spreads. with the right perspective, which is a long-term perspective, these are very impactful. of all the dollars the government's spend, you will not be saving lives for less than a thousand dollars per life except

in this area. francine: what new technologies should we be looking at? you have been focused on drums? placeshe drones in a few , you get the delivery out when roads are flooded, which we have a lot in these countries, rwanda, that is going well. the biggest thing would be new vaccines. tv vaccine or a aim -- we do not have a tb vaccine.r malaria our foundation spends an equal amount, and the government to find the tools. because delivery efforts have upe well, they are building the primary health care system. it means there he quickly once , those got something will get out there to the toughest areas. francine: how quickly can you get some of these vaccines? bill: unfortunately they are not

here overnight. the new bed nets, the problem with the current ones, those are coming out this year and next year, really soon. the miracle vaccine which would help us and these diseases are more in the six to 10 year time frame. it is proven to be hard to create an hiv vaccine, it is super important because we are getting a lot of people infected , and to put that to an end, a vaccine is necessary. is making achnology lot of people lose their jobs. who should be in charge to help displaced workers? bill: different governments have different parameters. technology means we do not have to be subsistent farmers. fort of emergent means middle income and rich countries

emerge. dynamic,t economies be some of those will come in there, and in the meantime if you are interrupting someone's career where they have been trained in a certain way, some governments do better than others. reaching out and getting that worker a chance to move where there is a job, giving them the new skills. over time, the idea is we tax labor, we do not do much in training programs. as you have accelerating innovation, you will tax capital more and labor less. earned income the tax credit, you will encourage labor in some cases, so the overall picture is good. to make sure there are not too many losers, you need new innovative programs. francine: when you talk about your philanthropic efforts, do you want companies who want to

do good egos countries are retrenching on some of these things in the west? tol: the aid levels continue go up modestly. the u.k. and germany went up quite a bit. the u.s. congress has maintain levels there. the private sectors to step in for aid money, i met with the big chemical companies because we need them to do new insecticides for both agriculture and to stop malaria. i am meeting with pharmaceutical companies talking about the innovations we need them to bring out. continue tosectors innovate and provide those things to the poorest, at a breakeven price. that is important in how we continue this progress. francine: if you were to start a

new tech company, how much would you focus on privacy issues? bill: an ai system that is helping people out to have enough information would have to be trusted. making sure the user understands where is this data being maintained and how it is being protected, it is important to get permission. privacy in itself, you cannot by say here is have to the service, i will help you organize things and realize which messages are important, but i will do it in a way, even though i modeled your activities, i am not sharing that with other companies. are good atu dealing with u.s. regulators in brussels regulators, is there advice you would give the new tech companies? government's are asking them to be broken up. bill: i do not know if it will come to that. the tech companies are so now at the in a way,

mainstream, shopping, nothingation, there is that this will not pass, as long as technology is so key, you will have to engage in issues about what type of speech should be allowed or not allowed. or, how to tax structures in a way that is fair. and privacy will be a big issue. the companies they engage, there is not a contradiction tween the services they offer and privacy. if you think about it, you can solve those. face red commission is one where microsoft is getting out in front, saying, here is what we think how regulations should look like. not banning it, allowing it or it can be useful, finding lost

kids, there are lots of positive applications. this is one we are trying not to wait until there are problems and then solve them, but anticipate them up front. atncine: if you look technology, philanthropy, and the world economy, what do chief executives get most wrong? bill: innovation is what change the rules, the thing i am most interested in. whether it is break to software, breakthrough health tools, not but all ofseases, our challenges including all dimers. .- alzheimer's in energy space we will not avoid climate change problems without massive innovation and a lot of the fiscal economy. what changes the rules of the game, and a lot of , they do notrised

drive enough in their company. that is my huge bias. francine: bill gates, thank you for joining us. i hope you have a fruitful 2019. cofounder of microsoft. we have some market movement. listen to bill gates talked for an hour. it would be great to see a channel of bill gates talking about those ideas, fascinating stuff. have as of markets, we turnaround, we were down across the board in european indexes, and we are now seeing gains. 0.6%.ex in madrid is up euro stoxx 50 is gaining 0.2%. in terms of currencies, there is not much movement at all. for the euro. very fascinating, the japanese yen is selling off. markets are not terribly risk off right now.

investors are selling the 10 year treasuries, yielding 2.75%. you can see we have the continental index, not down by much. 40 unchanged right now, .nd the dax down by 0.2% coming up from davos, our interview with brazilian , hisdent jair bolsonaro thoughts on restoring investor confidence in the nation. this is bloomberg. ♪

francine: good morning, everyone. : there is a lot going

on. we have the imf reporting on monday. they were learned about europe. i'm surprised how much focus is on brexit. the consensus is they don't know how to read the market, a lot of your chief executive because it is politics. and it is not their second nature. there is no official here, but a interesting -- haslinda: people are really uncomfortable. francine: there have also been a lot of fun parties. ourng up from davos, interview with the brazilian president. his thoughts on renewing investor confidence in the nation. haslinda: we will speak to other top political leaders across

europe and africa including the president of south africa and the president of the ukraine. francine: according to the blackstone chief executive, corruption investigations are hurting growth in china's economy. haslinda: he also believes a failure to ensure china's compliance in any trade deal could cause a breakdown in negotiations with the u.s. >> the chinese economy is slowing, that is pretty well-documented. there are a few reasons for that including the corruption investigations in china which are making approvals on things more difficult. there is more government intervention in the private sector. there are tariffs being discussed, although the financial impact of those isn't that great.

they have three things going on. literally, and endless cycle of economic growth. 6%, it they grow 5% or is still a lot, but it is off what their growth rates have been. it is normal to be sensitive. it is particularly important to because they were trying to pay down debt and be more conservative financially, but when you hit an air pocket, all of a sudden you have to borrow money. you have to restart the economy. have a window into the u.s. trade negotiations with china. how are they going? >> i would say they are going pretty well compared to all other times. i think you need some perspective that it has been 70 years since you have a trade agreement with china.

that is a lot of failure in a lot of places. we now have certainly what appears to be the head of state of china and the united states who would like to progress something. >> do you think we will see something by the end of february deadline the president set? >> you are going to see something, either success or failure. are the chinese compared to make the concessions the trump administration wants? >> i don't think in any negotiation one side prevails. i think there will be something much more in the middle and just what the u.s. wants or just what the chinese want. i think one of the important things that most people don't think about as they talk about those discussions, trade deficits, tariffs, intellectual property. one of the things that i think

eventually be a dealbreaker is compliance. the u.s. is very focused on making sure that anything that is agreed upon actually occurs. that enforcement mechanism becomes key. that was the blackstone ceo. india returned, to the market after being bailed out by the dutch government after the financial crisis. they now hold about 56% in the bank. amro ceo. now is abn good to have you with us.

the sentiment here is that there is a slowdown. what is your take? >> i think it is a bit gloomy here. u.s., i thinkhe around a trade deal i expect that to happen because mr. trump wants to be real active. also in asia, i think we have seen deleveraging there, and now they are working on it. the euro is a bit lower. germany. i'm not so pessimistic about it. francine: are we going to see banking consolidation? we were on the verge in the crisis happened. now, what we have seen in the last couple of years is more banks that are in trouble merge. i still think that -- ro play a will abm am

role? >> we work on a standalone basis. we are doing well. when of the few european banks which have a market 10%. francine: where do you see the biggest investment opportunity for investors? you are one of the most optimistic chief executives we have spoken to. >> i think it is a bit too gloomy. i think that investment opportunities are still there in asia because that region is still growing by 6%.

i think the u.s. as well. euro will be a bit less. investment opportunities are a lot because a lot of clients are making journeys to more sustainable business models. there is a lot of money involved there. the dutch state was meant to sell down its stake in abm. that didn't happen. will it happen this year? >> it depends very much on the stock exchange. thanks went down last year in europe with 25%. of the stocknt exchange was not so good. this year, we hope banks increase again. expect thei also ministry of finance decision, but i hope we will see further sell down this year. francine: do you feel like you

are held back? >> no. we are living in a market economy. it is not a level playing field to a lot of banks. -- i am not held back on anything. i can do strategy, i can do everything. anarchic whenever you -- from a market point of view, you should do it. much.ne: thank you so let's get straight to the bloomberg first word news in london. sebastian: one of the biggest money laundering scandal in history could be about to heat up even further. sources tell bloomberg that -- the fed's investigation is in its early stages.

deutsche bank says it has received several requests for information, but has denied. --h of about 200 $30 billion $230 billion that flows through its outpost may have been dirty. the bank has let its best the u.s. shutdown continues into its 33 day. it isn't clear if any measure can pass. tomorrow, lawmakers will vote on president trump's plan which includes $5.7 billion for the border wall. as washington's security of tech companies have intensified, big tech has spent more and more on lobbying. according to federal disclosures, google spent more than $21 million in lobbying

costs while facebook spent nearly $13 million. .he industry faces a tech lash impactingn't only flight in the tech -- flights in the u.k. regulators say to travel the changes brought about by the new robotic aircraft. the u.k. parliament is moving one step closer to stopping a no deal brexit. the opposition labor party is theincreasingly extending brexit deadline. a billionaire inventor is a andng supporter of brexit has decided to move his headquarters to singapore.

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: thank you so much. earlier this week china reported gdp figures that slowed the lowest -- showed the slowest annual growth rate since 1990. what does this mean for chinese companies and how are they weathering the trade storm? we are delighted with the chief executive of soho china. china.e us smarter about why is the china slowdown in 2019 different to the one in 2016, which was deeper and took real estate down? -- theink last year chinese economy is very policy driven. -- policy was that contain debt contain.

we always see that when there is less credit and money in the system. at the company level, we really sell this because we are developing relief office space in beijing and shanghai. we do with hundreds of companies. we can only see they are bottom-line driven. especially smaller companies are having the toughest time. that was last year. francine: how much of it is an internal slowdown? how much is it hitting consumer sentiment? >> trade, i don't have the number itself, but it is the confidence. obviously anticipating the trade, the tariffs that you saw third-quarter, export import numbers are really high. fourth quarter obviously suffered because you have so much already done in the third-quarter and that was pre-booked in the quarter

before. it is a big deal. eyes are on the trade talk. it is more about confidence in the numbers. if you look at the numbers, china's exports to the u.s. accounts for 4% of total gd p. itn if you go down a number, is still not a big number for china's gdp. i think economy is so much about confidence. factors decision-making into that. haslinda: lots of questions about whether -- is working in china. how is that translated in the property market? property market is especially capital driven. again, this is to do with

credit. when we had the tight credit last year, right away we saw it. this year, he will see the tax cut is already coming. credit ease is already happened and is coming more. i think that without the property market, no doubt. property prices in hong kong have taken a dip of 10%. >> hong kong is slightly different. it is different from china. renminbi, andown is not a freely convertible currency. it is not related to the u.s. dollar and interest as it goes up. that is probably more for the hong kong real estate market. for china, it is really about what the government allow the government to go into the real estate sector? francine: you have done some of the most innovative and gorgeous buildings in the east.

what is expected for 2019? >> i think the demand was week last year. we hope that this year, with credit easing and we will be seeing the economy back on the heels, i think again, it is about the confidence. trade talks -- it matters a lot that the trade has come back with good news. everything goes back. -- all eyes on the trade talk. francine: thank you so much. davos, we have a really packed agenda. we will speak to some of the top political leaders across europe and africa. this is bloomberg. ♪

haslinda: good morning, everyone. thank you for being with us. this is "bloomberg surveillance."

the u.k. parliament is moving closer to delaying brexit. this, we understand is an effort to prevent the country from leaving the eu without a deal. the labour party is now increasingly likely to extend the deadline if theresa may anls to come up with agreement. joining us now is the u.k. secretary of state for international trade. thank you for joining us. i feel like no one really knows what happens. every day, we hear from labour, certain factions of the conservative party. how do you see this going? >> under the law that exists that parliament passed last , unless there is a change in the law or a deal, that is what happens.

the best way is for us all to reach agreement with the european union. francine: to delay? liam: to come up with an agreement. it is pretty much already there. how do we get that so that we can get into the negotiations with the eu on the future trading relationship, which is sequential. francine: you have been wanting to get out of the eu for 40 years. would you be in support of a delay for a couple of months if it puts the k&a better position? liam: if there is a delay because we got a deal implemented and want to implement it, that would be one and we can get it implemented by the 29th of march. my suspicion would be that those who want to delay it is because they want brexit to happen at all. that would not be true everybody, but there are a

number who see delay as a means of hoping that something will happen and we won't leave. i see that as being a very big issue. we are discussing the disconnection between a lot of voters and the political class. i think the biggest risk there is when politicians promise something and then don't deliver. in the u.k., you have the clearest possible example. first of all, we sent to the voters, parliament can't make up its mind on this, you make up your mind and then we abide by that. then, we had an election where the mps and house of commons said we will abide by that result. to turn around now and say we don't like that would put the tape in the potential of u.k.uring his politics -- in the potential of fracturing hiits politics. haslinda: how successful do you

think you will be? liam: we have about 37 agreements. some in operation and some are not. that constitutes about 11.1% of our total trade. of all of those agreements, the top five make it 8% of the 11%. they are the key ones for us to focus on of the bottom 19. a lot of our exports are preferential agreements for developing countries, giving them access to our markets. it is in everyone's interest that we continue to do this. your next question is very logically, why do they not want to do this? some of them are saying we don't believe that no deal is a possibility. and even ifibility, it is unlikely, it is prudent to

prepare for it because you do not want any trading disruption. francine: what is the percentage chance of a no deal brexit? liam: it is a very good question. i think it is unlikely, but i think it is possible. businesses will never criticize you for being over prepared for an eventuality. francine: are we really prepared? let's say there is no deal brexit. the day after, what exactly happens? we talking about trucks being borders. do we actually have a procedure in place to make sure goods can come to an from the u.k. and europe? liam: the government has been looking to increase the traffic we have. there are other policy elements. what do we do with a one tariffs? what will the shape of that be? mitigate that?

there are lots of ways of mitigating potential disruption. the majority of the u.k.'s trade isn't with the european union. it is outside the european union at the present time. about 46%. 56% of our exports is not eu nowadays. the question is, if we have that and it is in both directions, how do we mitigate any potential increases? what are the frequency of inspections we would apply? you had one mayor saying there is no way to put these restrictions in place that puts us out of business compared to other ports. francine: what you come back to london studios? we have about two hours of questions.

liam and it is not -10 degrees:. the u.k. secretary of state for international trade, thank you for joining us. tune into our panel where i will be joined by michelle bachelet, al gore and nina jensen. that is streaming on bloomberg.com/tictoc. annmarie: let's kick it off with deutsche bank. a bit higher this morning. the federal reserve is looking into billions of dollars of suspicious funds from danske bank into deutsche bank. last hour, we heard from deutsche bank who said they have probes.

metrolink is saying -- metro bank saying profits slowed. definitely well below what they were thinking. carrefour, a bright spot. they were able to weather the yellow vests protest. matt: thanks very much. thanks of course to francine and haslinda for their coverage in davos. surveillance" continues from davos. francine lacqua and tom keene are live. our interview with the brazilian president. this is bloomberg. ♪

francine: davos day to.

dominancerisk discussions. the u.k.he wire, parliament is closer to forcing a brexit delay to avoid the no deal scenario. we will be speaking to the trade secretary. plus, more problems for deutsche bank. good morning, everyone. good afternoon if you are watching from asia. us.three 4s. we had -- for we have been on the mountain a couple of days. we have had some amazing conversations all revolved around politics. tom: i love your opening. yesterday was very much focused on the imf report and the reality of a global slowdown. there is a set of themes today

wrapped around the perfect weather here. francine: we will be talking to some big names in business this hour. we will be speaking to the coca-cola chief executive as well as the cochair and cofounder of carlisle. it is going to be really powerful. francine: and we speak to the imf managing director. tom: a bunch of fascinating discussions. so many opportunities to talk about the linkage of politics. francine: also some of the disruption because of how they have to retrain some of these workers. let's get straight to the bloomberg first word news in london.

sebastian:sebastian: the british parliament is trying to avoid the risk of an economically damaging divorce in the u k without an agreement. the main opposition labor party is now increasingly likely to extend the mark 29th exit deadline. members of parliament overwhelmingly oppose theresa may's brexit deal with the eu. the central bank left monetary policy unchanged. the boj forecasted prices will rise just .9% beginning in april. lower oil prices are the big reason. for the first time since the partial u.s. shutdown began last month, the senate has agreed to vote on rival proposals for reopening it. it is not clear either can pass. both sides debate border security.

both sides debate border security. mike pompeo may run for senate from kansas next year. both sides debate border security. mike pompeo may run for senate from kansas next year. bloomberg has learned that pompeo has spoken recently about the possibility with senate majority leader mitch mcconnell. a spokesman said he is focused on being secretary of state. 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. i'm sebastian salek and this is bloomberg. tom: thank you so much. data check, interesting market. equities, bonds, currencies, commodities. i have one screen today with futures up fractionally. the euro a little bit weaker over the last couple of days. i don't know what to do with oil. some great interviews today. francine: i'm looking forward for christine lagarde, the imf managing director and her thoughts on oil. i love doing data checks because it is the only time where no one can tell me, stop being on your

phone francine. some of the latest corporate earnings and moves to end the yen government shutdown and sliding at the bank of japan cut its inflation outlook. tom: what is tomorrow in frankfurt? a small ecb. here is what we like to do. with a lot of conversations here. some of the highlights, let's go to the right now. look.needs a fresh i'm not going to comment on approach. in terms of the balance and things they are going after, it also i believe is important because politically, it is manifesting itself in this form of protectionism, which not just the u.s. but most places in the world expect that politicians

and government to go after. of the important things most people don't think about as they talk about those discussions, trade deficits, tariffs, intellectual property. one of the things that i think could potentially be a dealbreaker is compliance. the u.s. is very focused on making sure that anything that is agreed upon actually occurs. american sending some beans to china with this 90 day cooling off period. they are being supplemented with south american dance. -- beans. >> i hope something positive will come out of the latest route. i'm not too optimistic about the lasting deal. francine: to bring you a

bloomberg exclusive. one of the biggest money laundering scandals in recent history intensifying. it was quite amazing looking in davos and trying to figure out exactly the chief executive of deutsche bank. he is trying to lay some of these legacy issues behind him. every couple of months, it seems something is happening behind him. tom: the voices we just saw on thrilled we spoke with the leadership of cargill. minnesota is the state where there is lots of links and it never gets above 32 degrees fahrenheit until july. u.s.have a fabric of the and it was great to get a visceral feel what they u.s. and china trade deal means for the midwest of america.

when you look at the corridors in davos, they talk about the straight people. -- these three people. tom: we will do that with lagarde later. the company appears not to be faced by the new government's budget tensions with the eu. we are delighted to be welcoming the chief executive of enel. how much do you worry about politics impacting your business and some of your initiatives? i'm thinking brexit but also italy. >> we are not concerned directly by brexit. we have no presence in the k -- u.k. we are affected indirectly by what happens in the global

economy. concerned, wey is have a plan and the plan was there last year. different really feel because of the reforms are lacking reforms, depending on the point of view. there quite secure about horizon of this investment. francine: what is the mood like? i can't figure it out this year. this year, i don't really know how to work out politics and what it means for me. francesco: from our standpoint, we are more bullish than bearish. that is because we see changes in brazil, changes in columbia, changes in latin america. .mprovements in argentina

the typical times we had in months in the past with italy and eu on the budget seem to be over. why should we be bearish at the end of the day? this is for 2019 and probably 2020. going further on, it depends very much what the global economy says. tom: let's talk the quantum mechanics of infrastructure building. you come to davos and there are all of these signs. the constraint in america is one example is nothing gets done. masturbation coming back from venice's northern italy has a lot of quality infrastructure. with all of your experience of project building, how do we do infrastructure better? francesco: the big theme across rejectld is that people

infrastructure projects point. people don't want to see infrastructure building ongoing. it is not only italy, it is everywhere. it is not a place you can throw things that people and say, that is it. you really need to convince people about what is the need of infrastructure, wide you want to do it and who is going to pay and why? that work is never really done properly. the real thing, if you want to have success in infrastructure is start very early getting people involved. don't come at the last minute. don't think you can force it down the throat of people because it doesn't work anymore. tom: what is the constraint of labor? what is your experience of

managing the labor component of your the project? francesco: i think there is today overall key constraint on most of the infrastructure .rojects that require manpower the reason need to get people and keep them working. projects cometure and disappear. from a government standpoint, there must be a program that another.o a year from it has to have a 10 year time frame in order that you can explain to people your skills will be needed not only today but tomorrow and the day after tomorrow. we have talked a lot about m&a and the utility sector, is there still more scope for more m&a?

i think m&a in europe will be a little bit of a waiting game for the new eu commission and what outlook they will have in the single market with your up in the future. for this year, i would think maybe not. what you have appetite to be part of a second wave of consolidation? francesco: we are a very large player. we don't have an issue of size. atis something we will look when and if the time will be there. francine: thank you so much for joining us. we alsop later today, speak with the italian prime minister. that conversation right here in davos at the world economic forum. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine as always. one of the biggest money laundering scandals in recent intensifying. the federal reserve is said to be probing deutsche bank over how it handled suspicious transactions with down to b -- daca bank. bank. danske steven arons. is we look at deutsche bank almost on the daily basis. we have a new chief executive in charge who is trying to move

away from legacy issues. when will he be able to do that? steven: that is the question he is asking himself today. he is here today to meet world leaders and investors and clients. tom: bohemia with angela merkel? steven: i don't know. tom: how convenient to meet here? francine: maybe, or maybe the new leader of the party. what is his number one priority right now? steven: putting the bank into calmer waters. it's time it is reported that something goes on at deutsche bank, it is not something they like. tom: behaviorally, what i find fascinating in this rolling wreck, is it is obvious there was some kind of money flows off of the estonia project. i get all of the romance of it.

don't you just stand up and say effective immediately, we are done with this and moving forward? why can't this bank do that? to be fair, this happened in the past in 2015. it did pull out of estonia because it did see suspicious activity. pulled outher banks of estonia two years earlier, and there are questions to ask. tom: what i find interesting hear from a financial standpoint , when is the next liquidity call, cash call at deutsche bank? if they are going to move x amount of money's on danske bank, there is a point where they have to go back to the market? steven: yeah. that new thing now is the regulators are looking at this.

if the u.s. regulators take a harsh view on deutsche bank and decide to impose something, this could be a problem. francine: what do we need to look at? consolidation, is it on the cards? tom: is commerzbank here in happy valley? steven: their chairman is here. francine: i have had them on a panel together. seriously, have they get out of this? steven: that is a good question for 2019. it can't go on like this for very much longer. they will need to come up with a big plan to solve this problem. investors are getting tired of this. francine: if we were in the studio, tom had some really good charts. does it impact deposit rate and clients? steven: what impact the clients

was the footage in late november. officials descended on hecklers. police officers writing the bank was in good. is there a euro per share price point where it starts falling? we are just trying to get you in trouble. thinkingeople were 10 euros, and now it is at 7.7. the price point keeps going down. tom: i think they are all meeting at the hard rock hotel. arons, one ofen our finance reporters based in germany. coming in next, the coca-cola

chief executive. we will talk to him about the trade war and china. this is bloomberg. ♪

>> important factors for growth.

tom: always in these moments at the world economic forum. world leaders coming in. there has been a very busy shinzo abe. he is looking at a significant disinflation in japan. once again, his country challenges all by the dynamics of trade. the number one topic of these meetings. we welcome all of you to davos. really interesting and different davos, devoid of trump. many corporate leaders looking at the changes. they are buffeted by the politics of the moment. one of the most interesting to the executive offices here is out of atlanta, georgia. to make this a mckinsey pain moment. is fascinating

with your twentysomething year the coca-cola. you have got to parachute and with a new -- what is the biggest pushback you get? james: i think the risk averse in the end, there is a whole spectrum of people. from those who knew that was the answer even before you set it -- said it. the challenge is getting a critical amount of people to want to move towards the future, which in the end will be a balance of doing justice to the incredible heritage of coca-cola and its growth potential. that is the cultural shift that one has to engage in. billy, it is about two things, being honest about where we are today and where the future can be and should be. coca-cola used to move america, move the world with advertised 30 seconds long.

your new branding marketing world is youtube, snapchat.how are you meeting the challenge of shifting a dinosaur over to modern social media? james: you actually have to blend the two. tom: will you be at the super bowl? james: we have taken one of the slot just before the thing comes on. it will be in our hometown. this shift to digital has occurred in part and is occurring. especially for some of the smaller brands, it is much more efficient to be digital. this is where the consumers of the future are. we have had to adapt and keep one foot in each camp. francine: what are your plans for coffee in 2019? james: they are going to drink more commercial beverages, but they want more choice. our strategy around beverages is really about making sure we had

the organization focused on the consumers, the center of what we should be doing. we need to provide them with choice. they're going to have my diet coke. if we start with the consumer, will be able to follow them and stay with them, rather than trying to just sell what we make. francine: is growth in diet coke sustainable in the u.s.? james: i think so. when i said a few years ago that we could turn around diet coke when it was declining, i don't think there were that many believers. the u.s. team did a great job of finding a place where they can reengage with lifestyle drinkers and bring new millennials in. tom: do you know why you are here? she has a really killer panel on the oceans in plastic. it is your fault. what are you guys doing about

plastics in the ocean? center on theand ecology of this hugely serious issue. what are you doing to move forward on this question of the oceans? goal, we set ourselves a we want to recover 100% of all the packaging we sell. part of it is removing some of the single use plastic that we don't need in the packaging. use.n get out of single what we want to focus on is making the plastic bottle part of the circular economy. we need to put in place collection systems. there are plenty of places around the world where we have over 90% collecting the bottles. this is a problem that can be solved with today's technology. with think we need to get together. it is a collection. once we get it, we can recycle it and make new models.

tom: you and pepsi need to get and figure outm once and for all what to do with all of these stupid plastic bottles. i remember the uproar over five cents a bottle. the world got cleaner instantly. james: we need to work with government. when you do government to help set up the collection system. it can be salt. -- solved. problem in avable very reasonable timeframe. francine: does it have to be some of those cans? would coke taste the same in a biodegradable vessel? tom: i don't think we want to go there. the europeans will be fine with it. james: even biodegradable depends what it degrades into.

in the end, it is the same objectives. if we can create a circular economy where the bottle you buy has value, then we have no pollution getting into the oceans. the idea is, give value to the bottle and it will not end up in the ocean. francine: are they going to see more consolidation in your are you feeling about global growth? will we see companies merging? james: i think you will see the bigger companies invest in smaller companies. is where a lot of dynamic, innovation, and a lot of new people coming in. coke is a quintessential , trust and share buyback, trust and dividend growth. flow that willsh maintain your blue-chip status?

james: i think so. wheree come off a period dollar strength, and dollar strengthening hurts us o because we are an 80% international business. dollar strengthening, last five wers or so, going forward will have no problem maintaining the dividend, seeing it grow. tom: let's go my grow. the same jazz bar at the hotel in shanghai. .hey have a case of coke will they have it there in 90 days? james: it is amazingly local. i tell this to every global political leader that i made. that iscoakes dra drunk in your country was made in your country. francine: the chief executive officer of coca-cola.

tune into the panel, and taking action for the ocean. exclusively on twitter.com/tictoc. tom: this is where we ask for super bowl tickets from the guy from coca-cola? francine: no. tom: american football game, francine. francine: he might give us a glimpse of what he is most looking forward to. we will do that off their. -- off air. tom: we need to go to london to save the show. sebastian: the opposition would see financing and it relief it government.as the againste protests

maduro said today. the european commission pushing ahead to lay out plans for a border with northern ireland in case of a no deal brexit. bloc says a no deal brexit would mean a return to a hard border. the federal reserve stepped into the investigation over money laundering and danske bank. the danish bank has admitted that much of the 200 $30 billion that flowed through the estonian branch may have been dirty. authorities are investigating reports of a drone that briefly shut down flights at newark airport in new jersey. heathrow and gatwick airports have been disrupted by drones recently. federa global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. salek, and this is bloomberg. a wonderful day here in

davos. this is a wonderful conversation, not only because his serviced to with president carter, the shutdown, and global finance. it is also wonderful moment because he had the interview of the year for bloomberg. his interview with mr. bezos was with hisnary "peer-to-peer" effort for bloomberg. congratulations on your interview with mr. bezos and the sequence of effort you did this year. i'm seeing ceos are anxious this year. if jeff bezos was here, would he be anxious? everyone is anxious because of the economy seems to be slowing down in the united states, asia, and europe.

the boy hit mood we had last year's not here right now. the government shutdown is a problem. i'm hoping that the shutdown will be resolved soon. both parties recognize it is not good for either party. tom: one of the joys being in davos is people of different economic skills. david, there are one point five gdp for this quarter, marking from gdp of a percent every week of a shutdown. it is a tangible impact? david: i think it is more significant than we know because we haven't had anything quite like this, so the econometric models aren't going to be perfect because they're plugging past.bers from the may be the estimates are right, but i think they might be more on the upside, rather than the downside where they should be. when you get a government permit

to build a facility or borrow money, you can't get that right now. if you are going to use for thating, you can't do right now. it is having a big impact on the economy. both parties know this. they are looking for a way out. i think something will be done soon because both parties know something has to be done soon. francine: this could not last for six months, can it? david: it cannot. one idea would be having the usual model we have done in the past, to have a presidential commission study this for two months or three months coming get a democrat or republican former head of homeland security and have them come together for 75 days and report on what needs to be done, and for the 75 days fund the government will stop it might be possible for the president to agree to this without having to sign legislation. you can have a bill passed by congress that the president

doesn't have to sign they can still go into effect. francine: is that hurting or helping the landscape in the u.s.? david: is not helping. there are bottom fishers that benefit when things fall apart, but for most they benefit when the economy is growing. business people are beginning to say to the administration and congress, get something done here. i don't have an easy solution. it is not something that will minute.n a members of congress and the administration know this has to be done soon. i don't think it can go on for another week. tom: if i can switch gears to the arrogance of technology. we are seeing this now with the project collapsing, this project collapsing, even tragic suicides among young kids. windows tech in silicon valley, when do they grow up and start acting like financiers like you? david: i'm not going to agree with everything you said.

it is the case that technology has its downsides. who would have believed years ago so many -- so much of our gdp would be dependent on 2 companies. companies control so much of our economy. tom: are they the standard oil of rockefeller? david: they are not. facebook, microsoft, apple, they are good companies with a disproportionate amount of wealth. not that that is bad, but we have not adjusted our economy to deal with it. francine: is it up to them to read trade workers that are losing their job because of technology? david: all of the ceos recognize they have some sort of social responsibility. i think in the 1980's it was generally viewed because of ronald reagan, margaret thatcher, others, shareholders

are the only ones you have to worry about if you are running a company. now people recognize there are social responsibilities and a lot of companies i've mentioned are good on social responsibility, but they can't solve all the problems by themselves. francine: does that go to taxing? david: no one is fighting for higher taxes generally, but the tax situation in the united states is complicated. the tax cut bill probably could have been improved in some ways, and i suspect the democrats when they control the ways and means committee will try to make modifications to the bill. our shot in washington has your library of congress in the background. inequality on income, particularly inequality on wealth in america, you advocate for some form of left, democrat, or social redistribution? is there another path to a more

equal america? david: you're not going to solve the inequality problem in the united states by changing the tax code. the real problem is not just income inequality, it is social mobility. people on the bottom have given up trying to get to the top. i started at the bottom thought i could get to the top living the american dream. now many people on the bottom don't think they can get there. we have a large number of people still dropping out of high school. our population is functionally illiterate and can't read past the fourth grade level. when you are functionally illiterate you have a better chance of being in the juvenile delinquent or federal prison system. 80% of people in juvenile functionallyre illiterate. you have to educate people. continue this conversation. david rubenstein with us, the

star of bloomberg, "peer-to-peer conversations."coming up on the top of the we are looking forward to speaking, then we'll move on through the day with other conversations. in the economic forum in davos, this is bloomberg. ♪

francine: this is "bloomberg surveillance." a special edition from the world .conomic forum in davos we are continuing our conversation with david rubenstein. we're talking a little bit about

concerns regarding the shutdown, what that means for the u.s. economy. a lot of the talk here is whether we get a trade agreement china. the u.s. and the market seems to believe it doesn't matter if it is smoke and mirrors as long as if we get something by march 1. are we going to get something that holds? david: with nafta, we changed nafta to usmca. most trade experts would say it is hard to see the difference, but people are happy we have it and hope congress will it.mately improve with the trade deal with china, it is hard to know if it will be done by march 1. most deadlines in washington honored. i think before this spring there will be an agreement because the annese and americans want

agreement. the americans are trying to figure out what they want, and the chinese are trying to figure out what they can live with. something will be done. francine: if you are optimistic, what is the resolution on trade? where do you think the opportunity is in 2019? david: in 2019, u.s. economy will grow at a lower rate the last year, and china will grow at a lower rate. you have to look at sectors. health care will be an important sector as people age. financial services will be important as well. food and things related to the food chain will be important as people look for healthier foods as they get wealthier. in the last week, there was an important speech about the mission inarty's china. explain the carlyle experience of business in china buttress up against a communist regime. david: i served as the chairman

of the board. she really understands china and the issues that she has dealt with in her writing. jinping, my to xi view is he recognizes that he needs to get a deal with the americans, and i think he wants that. carlyle's experience has been the chinese government has been relatively welcoming of private investments from the west. comesview is when money in from private equity investments we will teach the chinese to do it privacy investments and eventually the companies will be owned by the chinese. they are not as threatened by us as they are by logistics. tom: contrast your approach and carlisle's approach to the distrust from the president's administration. jinping,rly on, xi they were confused about what

the president really wanted because he was friendly to them, but then he wanted things that were tougher than they expected. now they recognize the president serious. they recognize that if the president were to leave tomorrow someone who would replace him what have similar positions. 40% of the american people probably have views similar to donald trump. tom: 60% don't. are you suggesting donald trump is not a one-off? david:david: i am not. at least 40% of people agree on his views on china. whoever replaces him will have interests.they want to get a deal done, they just want to know what the deal is the american people really want. francine: do think president trump is a two-term president? to last 10ou go back presidential elections two years in advance and protect to the president was going to be two years down the road, you would be wrong almost every time.

trying to predict two years in advance is beyond what i could do. francine: did you see what he did there? dodged the question. tom: we're waiting for you to jump into the democratic party and run for president. david: i am embarrassed to feel like i've accomplished things in life but have not run for president. i'm the only person i know not running for president. that is true. maybe it is news we can break here. it is important, the democrats looking for a new liberal voice, what does the new liberalism look like after what we have seen for 20 years. is it bertin free, speaker pelosi, or a different liberalism? david: as was famously said about pornography, i will know it when i see it. when it comes along we will say, -ha, that's what it is. carlyle group, and

cochairman and cofounder. we are the world economic forum. we will spend a generous amount of time with the managing director of the international monetary fund, christine lagarde. us from thewith meetings at the world economic forum in davos. this is bloomberg. ♪

sebastian: this is "bloomberg surveillance." let's get to the bloomberg business flash. elliott management used ebay as an acquisition target, but only if it gets smaller. elliott believes ebay could be worth $15 million if it sells stubhub. they believe that can make it attractive to companies competing against walmart. bloomberg has learned j&j is looking to buy the california company at a premium evaluation from funding rounds at $2 billion. the ceo expects to see a strong economy this year in china. digital is changing.

the industry. he expects to turn around by the end of the year. we will be speaking to some of the top political leaders across europe and africa. we are looking to catch up with the italian prime minister, the president of brazil. tom: i thought one of the most interesting conversations was francine lacqua with liam fox. who is he and why ac critical to the brexit debate? liam fox is the secretary of state for trade and has wanted to leave the eu for 20 years. because he has been waiting for 40 years for the u.k. to break away, he was a brexit is up order. whether he was happy to have her brexit delay have a better chance? what is cool is he is from

scotland. he is a practicing physician. he is cut from a different cloth given so many of the london elite. francine: he was dead against delay. he said delay is only a tactic for people who always wanted to remain within the eu. he said there is a mistrust that citizens have with their politicians, and if we do not respect the referendum result it will make that gap even wider. fox: if there is a delay, that would be one thing, but i think we can implement it by the 29th of march. my suspicion is those who want to delay is because they do not want brexit to happen at all. that would not be true of everyone, it would be unfair to there are a, but number who see delay as a means of hoping we won't leave. i see that as being a big issue.

withbrexit may be removed prime minister may not attending, but the date is next tuesday. there is a vote on plan b. is it as big as the last v ote? francine: it is, but we don't have a plan b they are voting on. 29th of march the u.k. believes without a deal. what happens to the trust and kelly? tom: what would tony blair do? tony blair used to walk through davos with an entourage of 40 people. entourage. lagarde's what would tony blair do in davos about brexit? francine: tony blair does not want brexit. he has come on the air, written opinion pieces, advocating that a second referendum is the only way to go.

the question is what does jeremy corbyn actually want? he is not that friendly with the eu. he wants and no deal brexit off the table. update on brexit. part of that discussion in switzerland. coming up, a wonderful annual visit for us from two top but different economists. stay with us. from the world economic forum in davos, a perfect day. this is bloomberg. ♪

tom: this morning, do the math. a davos woman" man who consider slow down. all eyes on washington. what is the daily cross to america and the land of trump. will any and all consider the new populism in this regard? the multilateral elite and the many shades of 2019 fascination. fascination. this is bloomberg surveillance, live from davos. i am tom keene. francine lagarde. francine lacqua. lagarde, lacqua. francine: no piano bar. tonight.

tom: let us continue. what is so important is you are talking to ken rogoff. this is a different davos. francine: it is a little different. i feel every year you have consensus on if it is the end of the world when it comes to the world economy, or we are doing great. this year, people are on the fence. down.ay we are slowing they look at politics and say this is my number one risk and i'm not sure what is going to happen. tom: joining us is pristine macquarrie best christine luck laqua. does it work? i think will have a different view. what is great is professor rogoff. francine: we focus on the middle

east, we focus on the slowdown in the last decade in real estate. macspeak to the founder of de properties, and we talk trade, central banks, brexit, that is christine lagarde. later, the governor of the bank of canada is also here. tom: an important interview with italy and south africa's leadership. lot of good conversations. jon ferro to join us as well. from first word news in london come here is sebastian salek. sebastian: the british parliament is trying to avoid a divorce from the eu without an agreement. it will be moving forward to a plan to delay brexit if there is not a deal. members of parliament overwhelmingly opposed prime minister theresa may's brexit eu. with the

the bank of japan has underscored how far away its inflation target is and how few options it has for getting closer. the central bank left monetary policy unchanged and cut inflation four straight times. low oil prices are the big reason. thethe first time since partial u.s. shutdown last month the senate agreed to vote on rival proposals for reopening it.it is not clear either can pass . the senate will vote on president trump's plan adding foods money for border wall, but also a democratic plan that would open close agencies through february 8. mike pompeo may run first senate from kansas. he talked about the possibility with mitch mcconnell. he is focused on being secretary of state. global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg.

tom: thank you, so much. equities, bonds, currencies, commodities. a quieter day today. futures lift as well, curve going nowhere, euro-dollar weaker, oil with a turn as well. francine: a lot of the conversation is on the u.s. politics and japan. sliding as the bank of japan cut its inflation outlook. shinzo abe giving the keynote speech an hour ago. the european indices are moving sideways. they were down a touch, now they are up to attach. traders are juggling corporate earnings with moves to end the u.s. shutdown and doubts on progress over trade talks. they are juggling the information and moving sideways. tom: there has been many davoses we have looked at. one was a corporatist davos.

kenneth rogoff and his perspective from harvard university and nouriel roubini. professor roubini, let me with you.art how much of the trade effect leads to economic slowdown? is it overplayed or will it be a tangible slowdown? kenneth: it depends if there will be a full-scale trade war between the u.s. and china or not. paris could have 25% tariffs between the u.s. and china. i think the direct trade impacts

are low, but the impact on business and consumer confidence on capex, the financial market, the gentle contagion. the direct trade links are small, but it could lead to a greater impact on the global economy. tom: one of the giants of chicago talking about mercantilism a while back. are we falling into a new mercantile age? >> the u.s. has a legitimate cause to worry about proprietary transfer to china. isancing the trade, that not the right model. tom: falling back to the 17th century? >> i don't know if we are falling back to the 17th century, but we are falling back. the fact is the united states has been very attractive. about want to talk to you

the classic. very simply, when you overlay the new populism in america, is this time different? nouriel: i think there is a broad populist backlash against trade, migration, globalization, and change the because well these things benefit the global economy there are winners and losers.there are those that are succeeding , and those left behind. it is not just trump in the u.s. or the brexit vote or the populist, but you are seeing italians being empowered from putin in russia, erdogan in venezuela, andin so on and so on. andcal geopolitical

political depression where the populist pressure is going to worse. in addition to trade and globalization, technological affections are going to countries more than trade and migration. that is why these problems are going to stay with us for a long time. yes? francine: what does this mean for the economy? you correctly predicted the crisis when many did not. are we now on the brink of a bigger slowdown than people think? are we on the brink of a recession? i do not--nouriel: think there will be a recession this year even if 2017 was an expansion. this year will synchronize global slowdown in the u.s., japan, china, and global markets. there is a global recession and to 2020, but the broader

point is there may be a process of thelobalization global economy because it is not just trade and economics, but geopolitical. you have a rising power facing an existing power, and there is a conflict who will be controlling the industries of future. that will be as much about the investment, technology, and someone as it is about trade. the conflict is going to get worse. therefore, you will have a global world where the global supply chain will change. china is going to decide to produce semiconductors at home, period.that will be at radical change in global supply chain. divide the internet, divided technologies, divided global trading regimes. it might be the end of the second era of globalization. a de-globalized world.

francine: is that right? kenneth: that has been the trend. harold james at princeton predicted this 10 years ago, globalization goes in waves. we are due for populist wave after what happened. we may see the fallout. ingree that productivity some places is on a slow burn downwards. i feel that more about china than the united states or europe. i am more optimistic over the longer term in those places. francine: a lot of the emerging markets what globalization. does china what globalization? kenneth: you're asking me to read their minds? they are trying to decide what they can live with. they need to obey the rules. . think that is important tom: i had a beverage of my choice at the belvedere bar

where we sat 12-13 years ago and talked about the quiet to come. we both got the amplitude of the crisis wrong. you absolutely nailed the reaction functions that would get past the financial crisis. are the reaction functions the same, or are we more protected from financial shock? we are having a buildup imbalances. last time around was mortgages, housing, subprime, and the banks being leveraged. this time we are seeing a significant buildup in the united states and emerging markets. a significant increase of that in china. the problems are going to be less in regulated banks, but more in shadow banks and unregulated. we are seeing the buildup of private and public debt.

on the other side, the wider financial market. public equities are expensive, but private equities are expensive. residential is expensive. government bonds are expensive. there is no asset price around the world that is cheap. thecombination of this and buildup of that in a world which gradually banks normalize rate, may be financial stresses like we are seeing in the fourth quarter of last year will buildup in the next 12 months to a potentially another financial downturn. tom: we will have to leave it there. we greatly appreciate rouriel roubini. with ancontinue important discussion on washington. kenneth rogoff of harvard university. more good conversation to come.

we are interested in speaking with guggenheim about the state of wall street. everyone seems to be rationalizing, looking at the expense ledger. we will do that here today on bloomberg. stay with us for the meetings from the world economic forum with ken rogoff. this is bloomberg. ♪

tom: welcome to the world .conomic forum in davos thank you for the feedback we have had on our good conversations these first days. christine lagarde is to join us in a bit. we are with kenneth rogoff on this beautiful swiss morning. one of the great things about rogoffliticalness of ken

is he has always been a steward of america's debt and deficit. now, the senate may be beginning to get together. we are shocked by day 32-33 -- whatever it is. permanence. three damage the debt structure of the nation? usually, a shutdown is natural disaster. if you have a natural disaster for three weeks it builds up and you get nonlinear factors. we are edging up to that. is absolutely critical. with a nonlinear effect you have the fancy talk of gamma, convexity, or accelerating damage. does the president, speaker

pelosi, do they understand your nonlinear world? kenneth: who knows. i think they both think this is something they have to battle to the death and we are all standing and watching. it is a medieval shutdown. [laughter] do we have the tools in place for bankers to come together like they did in 2009? kenneth: the tools are better, central bankers are good and competent. if you go around the world and look at what is going on, we -team inve the a place to deal with the problem. i am a political, but we have -- litical, but we have not had any big crisis in the trump presidency except for the trump presidency. the other big factors the u.k.. they are jumping off a bridge,

and they don't even have a crisis. i do worry. despite the fact that the system is safer in terms of the mechanics, ultimately, financial crises are unexpected. francine: if there is a no deal is it aa crashing out, systemic risk to the financial system? kenneth: i don't know. i suspect not. i suspect people have been thinking about that. it will be a big growth check, not just for the u.k.. europe, they talk about the financial sector moving to paris. there aren't financial sectors in paris. they might move to frankfurt or singapore. they will be a big financial shock and it is not just the u.k. that has to deal with that. tom: can i digress here? we are with ken rogoff, who knows how to move chess pieces

around the board. anddid this six years ago, i say this in the spirit of andy murray struggling in tennis, derer keeping it going. you tied the chess champion of the world in a blitz game. gameou feel old within the in the high-level thinking you do and chess? do you get old? might be theson greatest player that ever lived and is infinitely better than me. but if you are an old club pro you might get the same. tom: what was it like to take on that superiority? kenneth: i admire him infinitely. tom: how did you tie? kenneth: it is a long story. francine: can i get a china question? if you look at the chess pieces

-- do you see what i did there? china, witheces of trade, how much of it is a domestic slowdown? kenneth: it is first and foremost domestic. it is not an aggregate demand story. they just do stimulus and it is over. it is a productivity story. if you centralize, centralize, and centralize power and try to decentralized the economy, the private sector is afraid they will be thrown in jail and public officials are afraid to do infrastructure projects. they have managed instability, but historically having a super centralized government and a dynamic economy doesn't work. i think they are having a productivity slowdown. that is why simply stimulating the economy is not addressing the core problem. francine: ken rogoff, harvard

university professor. we have many heads of state as bloomberg continues at the world economic forum. we speak with the president of ukraine live from davos this is bloomberg. ♪ .

check of theget a markets. we were seeing european equities down. we are in the green.

yesterday the second worst day for the s&p 500 this year. u.s. futures in the firmer green territory up .2%. dropped yesterday on a 270 six handle. we saw equities pushed a little by trade headlines in yesterday's session. dollar-yen being pushed around by the boj, cutting their outlook for inflation. we are seeing a break in the dollar strength we have seen in the past few days. from thebounding weakness yesterday. it was dragged down by concerns froment rebounding weakness yesterday. it is dragged down by concerns of mobile growth. francine: special coverage throughout the week, day 3. we have another 2 days. let's spokfocus -- let's focus n the middle east.

dubai-based property development company sold 54% in 2018. byare delighted to be joined the property chairman and founder. thank you for joining us. we saw demand for what you do in 2018. what is 2019 looking like? >> the property market is cyclical. we made a lot of money and sold a lot of property. 2018, we had a slowdown in the market. will be the same. i hope by the end of 2020. prices have come down, but the good part is there is a good philosophy of sale. about $5 billion to $6 billion.

francine: why do you need from the weld economy to be on better footing for 2019? u.s. trade tensions? a better price on oil? hussain: i think oil prices are important for the region. or $17, we are there. i think that the trade issue is a big issue. it is a large issue globally. , it very much pro-trade should be encouraged. you get the sense some companies want to protect their economies and bring the trade deficit to less than what it is at that stage. francine: what are your funding requirements this year? hussain: we have one of the strongest companies in the middle eastern property market. east,operty in the middle you can have government private. francine: you don't need extra funding?

hussain: no. we have 250 million dollars in assets. we are not borrowing money in 2019. our debt comes down by 500 million dollars by the end of 2019 compared to 2018. francine: you said you are happy to share more of your company's sales. hussain: i said last year we will be looking at this. down,the share prices are no way are we thinking of selling shares. francine: is there price target that you think appetite with come back? hussain: i don't see any intention of selling shares in 2019 or 2020. the marketf recovers, understandably, in the next two years where will you focus your energy? hussain: we focus our energy to reducing our overhead, which is important selling less.

north of $1ill sell billion come but we still need to streamline our overhead. we are looking at overseas markets. we're looking at the u.k. very seriously. we are at other parts of europe seriously. francine: with any type of brexit, or a soft brexit. if the pound falls, do you believe that is a good investment? hussain:francine: with any typef brexit, or a soft brexit. if it is a hard brexit there will be more opportunities and we will take advantage of that. if it is a harder brexit the pound will be affected in the property market will go down. we will be more than happy to go buy. you buy when the market is down, not when the market is up. francine: this is interesting. a lot of business leaders tell us that in hard deal brexit would be dangerous. you see it going because you

come in and the pound is cheaper? than you expect trade agreements between the u.k. to get better so the economy gets stable? london andndon is you buy when there's blood on the street. when there's a weaker pound and problems in the economy you can buy assets at a cheap price that is when you walk in and five. you don't buy when assets are the highest price. francine: how much would you put in london? hussain: we are at deals of 500 million pounds to one billion pounds, big-ticket items. francine: where in london? hussain: central london, zone one. that will be our focus. francine: any other regions, especially in europe, that look attractive? hussain: at the moment i know the london market very well. we look at germany, but we do not see attractive asset prices.

london will probably go down more. francine: thank you, so much for joining us. he is the founder and chairman of damac properties. coming up, christine lagarde, the managing director of the ibf. policyup, the foreign magazine editor. this is bloomberg. ♪

francine: good morning, everyone. good afternoon if you are watching from asia. it is day three of the world economic forum. tom: i like the francine and tom

show. francine: but it is bloomberg surveillance, but we may rebrand it now. let's get straight to the bloomberg first word news in london. assembly: the general leader in venezuela said they would seek financing and debt relief if they were seen as the rightful government. he has been pushing foreign governments and the venezuelan military to recognize him as the legitimate head of state rather than president maduro. the european commission is pushing ireland to lay out plans for the border with northern island in the case of a no deal brexit.bloomberg has learned that the irish government has been elusive when eu officials tried to pin it down. a no deal brexit would mean a border.o a hard authorities are investigating

reports of a tro and that shut down flights at newark airport in new jersey. heathrow and gatwick airports have been disrupted by drones recently. the washington scrutiny of big tech has been a bonanza for lobbyists. they have spent more than $21 million. facebook's lobbying set a record. the social network spent almost $30 billion. federal new --global news, 24 hours a day on-air and on tic toc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. i'm sebastian salek. this is bloomberg. francine: the international monetary fund has cut its global growth forecast, warning that the expansion in recent years is momentum. contributing to the slowdown is the organization increasing tensions and political flashpoints, including a no deal brexit. we have been talking about this interview all day. tom and i have been fighting over what to ask you.

an hour andh it to a half. when you look at the risks of the recession, are there risks to a recession? is it china, the u.s., brexit, europe? mrs. lagarde: if you ask me if i , i say no.sion if there is materialization of the risks on the horizon, and the point is this horizon is closer to what we had in october. that is why we slightly revised our growth forecast. if the risks materialize, it is a different story. if you ask which risk i rank higher, i would say that the trade tension is unresolved. if associated with the big question mark would be my number one risk, i think the exit uncertain -- brexit uncertainty and the question mark on how it

will be resolved. what is the timeframe? what is the after divorce situation? i would put that is number 2. probably, a major impact on the u.k., impact on the european union, systemic risks in the financial sector is not addressed. then i would have as a subset of the first risk, trade tensions continuing to increase, i would have been exhilarated moderation of growth in china. you look aten china, how can we be so sure it is not trade? more trade and not a significant slowdown that would be much harder to deal with? mrs. lagarde: i would call your attention to one fact. we have downgraded our forecast. two countries we have not downgraded are the u.s. and china. that is anticipated.

it was partly remedied, number 2. remedies in the u.s. because of the tax -- or brit tax major reform that has taken place and jobs.dditional growth and in china, similar measures taken in the last two months to compensate both the trade threat impact as well as the credit shrinking, which was welcome, necessary, and will hopefully continue a little bit. tom: i want to go back to steve bannon of the early trump years and his homage to french facism to hitler's and miscellany and troubled times. is nor fiscal book, there discussion of the new populism and the rise of the far right.

what can your institution due to populism,st this new and some would suggest a new, ugly populism? mrs. lagarde: what we need to do and be more vocal about it is excessive inequalities, the impact of any qualities on growth. about it forlking years ago. i had watch out -- i said watch out, inequality is growing. .e need to be vocal about that we need to articulate the measures that can be taken in order to resist this acceleration of any qualities -- inequalities in terms of wealth and income. it can be taken in order to address the issues. added to that, i think it is not just a fiscal, financial, it has

lots of other ramifications. among which i would put cultural disenfranchisement. i would put the threat of technologies, and how it will take my job displacement. and the malaise that people feel as a result. and the critical question, a delicate question for you, is the trump experience and other populist movements, can they be a one off puerto rico do we go back easily to some kind of normalcy -- or can they go back to some sense of normalcy. mrs. lagarde: we believe policies have to be taken to address the root causes of what has precipitated those movements. what i mean by that is address excessive inequalities.

address issues of i feel out of my job, machines are taking over, artificial intelligence is brain andmasculate my capacity to deal with my destiny. these are not all of it economic nature, but they have to be addressed. otherwise it is easy to instill fear, raise angst, and then anything can go. francine: is it tax redistribution? how do you make it more equal? is there one country that does it better than others? mrs. lagarde: each country will have to deal with it specifically. some countries are prone to creating opportunities, raising the level of education for people to aspire to a better future, better jobs and training. other countries deal with it with a different tax system.

what we are seeing more is less income going to labor, and more income going to capital. at the same time, we see less taxation of capital income then labor income. you have a confluence of those factors which needs to be looked at. if we want to address big frustrations around there, that is part of the remedy. francine: i want to talk about brexit. do we understand the possible ramifications of and no deal brexit? mrs. lagarde: what we know is whatever the outcome, whether it is a no deal, whether it is customs union with appropriate

adjustments for the irish border, it will not be as good as what it is now. there will be additional frictions, additional bureaucracies, there will be more slow lane for the traffic coming from europe to the u.k. and vice versa. none of it will be better. some of the solutions will be a lot worse. i think the whole business community should talk to them. from analytical work we all is having a no deal very negative affect. we are trying to model. for what it is worth, we are looking at 8% less gdp in the medium to long-term for the u.k. economy. it will shrink. that is what we see. that is the macro level. if you look at the microbubble,

level,omobile -- micro the automobile industry, the foodacy industry, the industry, they tell you it is terrible. we don't know how to deal with it. it is clearly of importance to the u.k., and also have been consequences for the eu. systemic or not, that will depend on the financial sector and it activity. how much reconciliation there will be between the two systems. who will be allowed to do what. tom: i want to bring it back to the idea that we all have to get back together. it is wonderful to talk about, much harder to do. you're the voice of the transatlantic world that seems to be an easier process. the president flew to paris for world war i remembrances and

could not get into the car to see where many marines died in world war i. how do we get back to the transatlantic conversation that is so shattered? mrs. lagarde: i hope we can get to the transatlantic conversation, dialogue, and joint approach. tom: will it take a war, or can we do it in a peaceful manner? can lagarde: i hope we learn from history and what happened in the past will teach us that collectively and corporativly can address those issues. we are even more so today they sing the same issues, ranging to terrorism, to cybersecurity, to financial market stability. we have to address that together. tom: one more question.

others talk, some do. you did. what is going to be the spirit for the imf going forward? gita willde: i think bring her energy, intellect, toth, and determination look at all issues. the process of putting things together. some of the traditional institutional views we have had for a long time. i do not hang she will look at it with an ideology. she is a researcher. she is a very honest person. she will look at data impact. i very much welcome that. francine: that was the imf managing director christine lagarde. coming up later, we speak to the italian prime minister.

that conversation from the world economic forum in davos asking about early elections and the budget loss. this is bloomberg. ♪

sebastian: this is "bloomberg surveillance." let's get to the bloomberg business flash. for 4.3p will be bought billion dollars. it represents a 16% premium. the private equity firm is getting fall out of favor because of backlash against plastic waste. its fourth-quarter sales and estimates.t the ibm ceo has been touting the company's newer businesses in the cloud and artificial intelligence. -- expects to see a strong economy in china. they'll so told bloomberg in davos that digital is changing the sneaker industry and adidas

plans to turn around the reebok brand by next year. tom: thank you, so much. ways toany number of get your dose of international relations on foreign policy. one of the most abrupt and concise is foreign policy magazine. it is energetic about putting on message the different debates out there. jonathan tepperman joins us now. congratulations. davos rag, but it has a beautiful energy. about the end of economics. the end of foreign policy with the chaos out there? jonathan: i don't think so. it is a bizarre time for analyst.olicy

the traditional playbook does not work anymore. in the old days there is a template for writing a foreign-policy article. what should be done, then what the administration is likely to do, and there is a close alignment. now you have an administration that rejects experts, advice, and is unpredictable. the template on how to write a foreign-policy article has changed. you talk about what should happen, then what on earth -- francine: is actually happening. jonathan: exactly. it is hard to reconcile the best practice with what is actually happening. what is the state right now philosophy, the hard knuckled kissingerarian policy? jonathan: the realists are having a hard time because they don't want to embrace trump. a lot of the things they are doing are a consistent, or

superficially consistent, with realism in withdrawing the u.s. from foreign ventures like syria, questioning u.s. alliance and troop engagements around the world. at the same time, what smart is the u.s.l argue needs to do everything a can't to marshal its forces and not get involved in foreign fights that aren't its business. it should be using force multipliers like alliances, treaties, and international institutions that trump has spurned as well. trump is giving us a dumb realism, where we withdraw but we don't put in anything. francine: we focus so much on the u.s.-china relationship we forget china's foreign policy with the koreas. a tough: china is in spot because it is being pushed back on fronts. the infrastructure plan that was

going to tie the world to china is looking less good than today because of the way china has struck deals with partners that have turned out to be beneficial for the chinese, but not for local partners. the chinese economy is slowing. the trump administration is hitting them hard on trade. the chinese are proving less resilient to u.s. tariffs. francine: is there a new alliance with russia? jonathan: the alliance with russia is not new, but it will always be a limited alliance because chinese and russian interests are not aligned except for in few areas. one of them is pushing back against the united states. have mucht they don't in common. with the chinese will do is return to policy, a more restrained policy. foreign-policy, that may bring up the single best chart.

it shows there is no other chart at davos with the migration of sub 7% on chinese gdp. , -- here is what to watch for from president trump. what is jonathan tepperman going to watch for? jonathan: the question now is is trump a free trader or an anarchist or nihilist? the answer will be a fully strike a trade deal with china or not. the reason this is so hard to figure out is if you talk to people in the white house you get 2 sets of answers. some say we want a trade deal, others say we don't want a deal because we want to decouple the

u.s. economy from the chinese one. tom: thank you, so much. aboutsay enough foreign-policy in this particular issue which really sums up high energy opinion from on international relations. we have more coming up. we switch the finance and banking. is in davosan giving a sense of what ceos and global leaders are doing. is also on their view to asia. this is bloomberg. stay with us. ♪

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>> wife from the world economic forum in davos, this is "bloomberg surveillance." i'm jonathan faro. tom: great conversations. we started with minimal garden david rubenstein joins us as well. and davidlagarde rubenstein joins us as well. jon: an interview with bank of america ceo brian moynihan coming up this hour on bloomberg tv and bloomberg radio. so much to discuss with the man at the top of bank of america. tom: the backstory here,