>> 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,

deutsche bank and the european banking story, this is tangible that this question of what do you do with a dominant bank. jon: talking about the prospect of consolidation in the united states. in europe, we've been talking about that for years, tom, and it hasn't been happening at the scale people would like it to. tom: thank you for the great feedback. good morning to all of you. again, the conversation to move it forward, but like "the great teampost," the in washington amid the shutdown, that is creeping in here. let's bring in a voice on american politics, timothy adams, president and chief -- wonderfulicer

to be with you again. banking, we could talk about onde and debt, all eyes are mitch mcconnell. the senate is different. i want you to explain to our they haveience that power. mitch mcconnell has a lot of power in the shutdown. tim: he does indeed. you need 60 votes to get anything passed in the senate. there are no democratic votes for anything the president is proposing. tom: can mitch mcconnell and gop senate go it alone against their president? he wants the president and nancy pelosi to work the deal. tom: is that appropriate on a historical basis? tim: the dynamics now are

different. this is really up to the speaker of the house, the democrats in the house and the president to find a resolution. tom: do you know who henry clay is? he was a giant of the whig party. we don't have time for this. people think tim adams' gop party could become the next whig party to go away just like henry clay. jon: thank you very much. two,ne, we don't care, day day 33t care -- does matter for the u.s. economy? or are we not there yet? >> we will get there quickly. the point where there's an inverse relationship -- something will go wrong, when tsa workers stop showing up at the airports, that's when we

will have a problem. jon: that's when washington, d.c. wakes up and does something. >> a couple weeks, we will see what happens with airport traffic. tom: heaven forbid we would speak about banking as we do. a backstory here is european banking. that is not removed from you and your mandate. how urgent is it for the european banks to get their act together? >> they have raised a tremendous amount of capital and liquidity. we've seen npl's drop precipitously. europe,d curve across the interest margins are pretty thin. they have not made it up in revenue. have,very conversation we we always come back to real yield and jonathan faro's

property. negative yields -- jon: you mentioned how much capital they raised. some banks have more capital than they are ultimately worth today. there are some big european players in that box. what can they do now? is raising capital and option? >> there needs to be some consolidation. the real technology arms race is going on -- mobile for interfacing with the client -- that is a large drag, a large i.t. spin. tom: we will have the important brian moynihan interview later in the hour. the culture of finance, the culture of banking and the culture of giving financial information as well -- we were told europe is different, they don't have the depth of the capital markets. there degrees of freedom aren't like jamie dimon's and brian

moynihan's. >> they have a huge domestic market and a huge domestic capital market. it gives them a huge advantage versus european institutions. jon: i can't say that about germany. why not? why do we have a strong german economy over the last 10 years and weakness toward the back end of last year, but relative to ,urope, germany has been strong the banking system hasn't been? why not? >> the industrial organizational structure is very different from france and italy. always a wonderful annual conversation we do in davos. we welcome all of you on bloomberg television and bloomberg radio. i want to get out front of the brian moynihan interview. perspectiveams on a

that confronts brian moynihan right now. jon: seems to confront everyone on wall street. last year, we had low volatility, a lot of people would come on this program and say they need higher volatility -- i hear the phrase "bad volatility." risk, this is what it means. jon: what is bad volatility? >> it's important that we have a diversified institution, diversified across business lines and geographies. you hope, unless you are very leveraged toward fixed trading. tom: are the big banks in america constrained because they can't increase deposit growth? we have the canadian model of a number of larger banks like bank

of america and j.p. morgan, they did ok in the crisis, are we limiting the successes of jamie dimon and brian moynihan? >> we moved from the model to funding, its, rates is a more stable funding model but it does create constraints. jon: let's talk about where the leverage is now compared to the last 10 years. how much debt do we have now? >> a tremendous amount. -- we'vemarkets, 214% increased by $50 trillion. they haveg markets, to roll for trillion dollars -- $4 trillion over the next three months. jon: last week, italy had $40 billion worth -- last year, $50

billion for spain. some people out there think we are approaching the inflection point where demand won't be there. >> i worry a lot about sovereign debt being on an unsustainable trajectory. the markets seem to shrug it off. tom: i think this is so important, there's a remembrance of 2006, early 2007, interior confidence that was there. now,gest it is not there but there's a different confidence in banking. >> business is good, but our balance sheets are better than they have been in a decade. it's a very different business. it is a technology business. the real competition is the technology platform companies. to have adams, great you join us on the program.

you only did that so you could prepare for brian moynihan . it made you smarter so you would be better prepared. it is timely here. i put deutsche bank in my data this monday or tuesday -- whole european banking thing is a quiet backdrop. jon: there's been a massive focus on china but more so on europe. do they have the policy levers to respond to a slowdown on the continent? you could look at china and say the answer is yes. tom: some real interesting news coming out of washington today. the senate may have some form of dialogue between republicans and democrats in the senate to begin a negotiation as they await the president and the house to come to some agreement. jon: 24 hours away, do we have to get something done?

tom: i didn't think we would get today 33 -- get to day 33. made clear he was looking at six months, which i find unimaginable. with theill catch up former u.s. commerce secretary. that conversation is just around the corner. in the markets this wednesday --ning, good morning to you futures positive 5.4% on the s&p 500, positive on dow futures as well. positive .4% on the s&p 500. from switzerland, to our audience worldwide, this is "bloomberg surveillance." ♪

lisa: this is "bloomberg surveillance." let's get a check on the bloomberg first word news. the first time since the partial u.s. government shutdown began last month, the senate has agreed to vote on proposals for opening it. tomorrow, senators will vote on president trump's plan, which includes money for a border wall. the british parliament is trying to avoid the risk of an economically damaging abort from oppositionhe main labour party is now increasingly likely to support a proposal to

extend the deadline. members of parliament overwhelmingly opposed theresa may's brexit deal with the eu. the venezuela -- he has been pushing the venezuelan military as thegnize him legitimate head of state instead of nicolas maduro. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. of theet's get some stocks moving ahead of the u.s. open. some earnings beats today setting a more positive tone. >> one of the earnings beats, comcast, they are gaining .5% for subscribers, 350,000, losing fewer tv subscribers, something

the company and investors are cheering about. this is the first quarter where they've owned sky. a sign they can boost free cash flow while paying down the debt. another purchase we got late last night, ibm -- shares rising after quarterly earnings came up yesterday. they had a positive forecast for 2019 -- the consulting business and more traditional businesses driving growth. i want to take a look at the cloud growth. so much of our conversation has been about the higher-margin business. they've made a big push to go into cloud and ai after the purchase of red hat -- looking at over $19 billion in revenue. that was the slowest rate of growth for the cloud business in three years.

we will have to see what they can do with that cloud business. lisa: definitely a different tone, more constructive today with a mixed picture on the earnings front. coming up from davos, penny pritzker, former u.s. commerce sec. weighing in on what we are finding out from washington, d.c., day 33 of the government shutdown. sighresolution in t? jon: this is "bloomberg surveillance," live from the world economic forum in davos, switzerland. day 2. date 33 -- day 33 of the government shutdown. tom: hello to all of you worldwide. this is a really interesting conversation. who started on third

base or second base, whatever -- the pritzker family of chicago, they were the same, but they weren't. penny pritzker grew up very advantaged and then there were .eaths in the family she's had an exceptional career in business and serving as the former u.s. commerce secretary. you met president obama and family at a ymca in chicago. what was it like the first time there was this guy who could play basketball surrounded by people who couldn't bounce a ball? sec. pritzker: he was surrounded by children, they were all playing kids basketball, he was just like every other uncle, loving all the kids, enjoying the fact he could --

tom: there is a yearning for every other uncle to show up. where's the next barack obama? we are looking for a leader for our country. we will have a lot of choices and we will see how this all plays out. tom: you are dressed in blue. sec. pritzker: not me. i'm anxious to see how this all plays out. jon: the only democrat not running. where would you like to see the party go, in which direction? sec. pritzker: the party needs to think about how we address the angst americans are feeling about their jobs and their job prospects given automation and artificial intelligence. this is something we've heard a lot through the aleman trust survey.

what do we do to help the average american, make sure they feel confident in their future? jon: the president has done a great job of speaking to working-class america. does that argument resonate with you? sec. pritzker: no. eight out of 10 americans are saying the system is not working for them. there is enormous angst out there. 75% of americans are fearing for their jobs and the prospects for their family. there's this serious issue. chairmen are standing up and saying how can we help the american worker be more productive and competitive. tom: what is the definition of the new democratic party? you need to redefine with confidence a new liberal you for a morehos

conservative america. how do you expected to play out as we go into the election in 2020? sec. pritzker: we have to find someone who understands that we can't afford to have 7 million americans who don't have health care over the last two years. 7 million fewer americans have health care coverage since the last election. that is crazy. prospects, we job can't keep manufacturing crises like the shutdown we are living with. jon: we have found someone to blame -- it is china. the president tapped into that. what do you make of the approach under this commerce department on things like trade? compared to the approach you took? sec. pritzker: this commerce

department is extremely focused on trade. commerce is a broad mandate. the first thing you need to be as an advocate for american business, an advocate within policy creation domestically and globally. walking away from trade agreements, walking away from multilateralism is not the way for america to lead, it is not good for the american worker. tom: for global audiences, this it is thend center -- gun violence in your chicago. there are beautiful parts of chicago, but it resonates every day and every weekend through this america, the account of violence in chicago. what do we do about this within the political leadership we have? sec. pritzker: there's two

levels to dealing with gun violence. thee come together, philanthropic community with the police force with the mayor's office and we are bringing that violence down. would saydent trump that democrats cannot support our police. sec. pritzker: that is not true. we have a democratic mayor who is working with the police department who is helping to bring down violence in our city. the other thing we have to do is create opportunity. this goes back to the same issue. our philanthropic efforts have worked directly with young men who are targets of this violence to help them. they tell you if you can help me get a job at $15 an hour, i'm off the street. i want to support my family. i want a safer life.

we have to help these folks find an alternative path. we had to guns off our streets. candidate youa like for the democratic party? sec. pritzker: i don't have a candidate. i'm excited that there will be a robust dialogue in our party. we will have to figure out where we want to be as a party. tom: go to basketball games and the ymca -- at the ymca in chicago. she could maybe jump in and change the calculus. sec. pritzker: thank you for having me. chicago, you know where that is -- sec. pritzker: a fabulous of the. -- as a fabulous city fabulous city. tom: two baseball teams. sec. pritzker: number one in job growth, number one indirect investment.

-- in direct investment. jon: what about the white sox? >> i'm a cubs fan. jon: penny pritzker from the world economic forum in davos. this is bloomberg. lisa: coming up, and interview with greg jensen. right now, we will take a look at what's happening in the markets. what'sriggs checking out moving higher on the back of those earnings reports. the focus is, procter & gamble. they are beating on the top and bottom line, boosting the high 1%.of that 2019 view by there was a big focus on organic revenue growth. 2.7%.g estimates of with the september

promotion, which was helping drive sales. investors breathing a sigh of relief. they are beating their peer group. looking forward, analysts want to see how they can gain market share in key categories. presencethe e-commerce is so important. it looks like the company's turnaround plan, which was originally criticized by nelson peltz, is being felt. lisa: this is bloomberg. ♪

jon: good afternoon from davos, switzerland. this is "bloomberg surveillance ," live from the world economic forum. another busy day coming up and a stack to show as well -- stacked show as well. coming up, brian moynihan. tom: really timely because of the expense rationalizations we are seeing bank to bank. we welcome all of you on bloomberg television. coast-to-coast, this is something every banker is doing, trying to figure out the business going forward. where are we right now on the recover from q4 into this year? credit suisse told francine lacqua it is getting a bit better. jon: you can see it in the stock price. look at the aggressive rally on bank stocks.

tom: let's get an update on that from investment. know you've been looking forward to what this man has to say. from greg jensen bridgewater associates. nice to see you again in davos. many people already know what an unbelievable year bridgewater had in 2018. there's a reason for that. what worked and why? greg: the first thing to look at, it was a poor year for all assets. >> everything but cash. greg: you have to come at it from an unbiased perspective. we don't have a bias to do well when markets go up or down. it comes from the understanding we built up over 40 years that we synthesize into trading rules

we use in markets. wecan be wrong in short, don't have any correlation to the bond market or the stock market. it's a function of how well we predict what is likely to happen relative to that. that the, we expected fiscal push in the u.s. would accelerate the cycle, which would force the fed to tighten faster than they should. those were pressures we saw in these processes we built up. we had a diversified portfolio, we got a little bit more right than we got wrong. erik: that is pretty good. did you see the meltdown coming in the fourth quarter? greg: we repaired for it. we thought the fed was tightening too quickly. at the same time, we thought the fiscal push that had pushed money into markets into the first three quarters was

starting to add. it's a lot more than any theme. we are treating in a systematic way all liquid markets across the world. erik: the recent volatility has revived this argument that there is a problem with market structure. when you saw all those other hedge funds performed so poorly in the fourth quarter, you kept hearing that refrain. greg: i would not agree with that. wellarkets are acting relative to the conditions. this is what happens. people talk about the machines or humans or whatever, markets go up and down, it is a difficult game. it's about how they come in relative to what -- the markets price in very smart consensus. money in the markets,

you have to understand something which is hard, you need to have a unique insight, which is a rare and difficult thing to do, and that unique insight has to be accurate. erik: what do you think you and your colleagues at bridgewater understand that is an priced into the market today -- is not priced into the market today? erik: we've spent 40 years thinking about the major cycle. activity cycle, how does that work? the business cycle lasts eight years. erik: the trajectory of fed policy, for example, in what you said before about the degree to which fiscal policy is or isn't stimulate the economy. greg: the third major cycle is debtig cyclical long-term cycle.

from a debt perspective and demographic perspective, that makes most of our experiences irrelevant. understanding what it's going to take to stimulate an economy in this position, knowing what that , is whatut fed policy it is going to be like. regular mandatory policy, quantitative easing, moving into the era of what is monetary policy really like -- secular nditions and cycli cyclical conditions -- to ease conditions to deal with that will be the big question. erik: how does that play out in

financial markets over the next several quarters or couple of years? you've seen what's happened to treasuries. they went down almost 2% in 2017. up, thenn equities bounce around. to depend oning how policymakers react to the slow down. these things can change a lot depending on how the people with the levers play with those levers. while people have diminished their growth expectations year to year, we don't think they've done it enough. earnings expectations in the u.s. are too high. the fed and policymakers are expecting stronger growth than we are seeing. we expect weaker growth and a ratesnt to lower interest and a movement towards places

pricing in high-growth. the places that have struggled the most will benefit from the easing. some emerging markets have already suffered major cycle, really suffered from the lack of dollar liquidity. they will benefit. erik: does the fed cut rates once or twice in 2019? greg: we will see. that will be the discussion. they will stop quantitative tightening and then move toward lower interest rates. that will be the big story, that struggle. when you look at that in europe, they are starting from a worse level, lower inflation, close to deflation in many places, already at negative interest rates. what are they going to do?

we will only have a moderate effect -- their movement will be a leading indicator because they will struggle more with easing thanthe u.s. or china -- the u.s. or china. erik: great insights as to what we should be paying attention to . that is greg jensen from bridgewater associates. jon: great work after a phenomenal year over there at bridgewater. the conversation will continue in switzerland. program,n the guggenheim's cio on "bloomberg surveillance." wednesdayaction this shaping up as follows. better looking a little than where they were yesterday, positive .6% on the s&p 500.

yields higher by three basis points, two point 76 is your yield on a u.s. 10 year -- 6 is your yield on a u.s. 10 year. ♪

jon: live from davos, switzerland on bloomberg tv and bloomberg radio, this is "bloomberg surveillance." joining us now in the studio, brian moynihan. good day to you. i feel like over the last week, i've watched you tell everyone that things aren't as bad as they think they are. brian: you get a fair amount of

the growth rate will come down year-over-year, but still relatively strong on a worldwide basis. is the basis, the slow down and the tip over in all the debate that goes on. point, what our experts say, their view is the world grows at 3.5% in 2019. the second view, what consumers do in the united states in particular. $3 trillion in payments made using debit and credit cards, that is up 8% from 2017, still running at a strong pace from early january. the u.s. consumer is strong, employed and making more money. the u.s. economy has a good position. growth, slowdown, less

we don't see what other people are seeing. think we struggle to draw a distinction -- going back to 2% on gdp? brian: that is the point. you have a long cycle, a very long cycle, growth that finally kicked up to a high level, that makes people nervous, will it climb back out to the trend growth and projection for 2020, 1.9, something like that? jon: the global story is a bit different. weakness in china, some softness in europe. i'm struggling to get my head around what the policy response will be as the year progresses. have you identified what it will look like? news andere is good

some not so good news. the china growth story that's been resilient for many years, there's discussion of slowdown, it's clear the market sees that . the question is how they handle reshaping the financial services business. do they overshoot or under shoot? that will play out. continue to resolve to to drive the growth in that country. they've already started doing it. between brexit and europe, you've had a lot of uncertainty. the common theme across all of uncertainty is not the best friend of economic activity. five,about investing on a 10 year pattern, i have to --

that is much higher outside of the u.s. than inside the u.s.. jon: the growth scare of early 2016 -- the federal reserve backed away. the ecb got behind it and china through everything at it as well -- threw everything added as at it as well. brian: at the end of the day, if you think about the central bank response 10 years ago 12 years ago,, when the issue arises, they have to respond. the central banks have to respond. we will see what ideas they come up with. can't sit there and watch an economy without having some monetary help. in the united states, they are

taking accommodation out. other countries may need more accommodation. cutsthe prospect of rate in america at the end of the year. is that a bit premature? brian: i think it probably is. the federal reserve has been clear, they are in the neutral range. they will be careful. they will look at the data they are faced with. that put them into the neutral range they talked about months before. level,say ok, at this accommodation maybe isn't neutral. if the economy is stronger, they will picking up more -- pick it up more. there isn't a lot of mileage and reflecting on your primary regulator.

the economy is doing fine. jon: this seems to be a lot of confusion around the balance sheet roll down specifically. do you see any signs of that in your business? what the central bank is doing is hurting liquidity? brian: there are some technical areas -- the markets are huge markets. as they've been getting out of their balance sheet, rates have come down. clarity what they are doing, the markets are absorbing it. there has to be a gap at times. brian: that is a trading question, not an economic question. if you think about it, the fundamental 10 year yield and

cost is as low as it's been for a long time when you take out the context of the postcrisis rate structure. the effect of cash cost of debt is still very low. there's a reason for that. demand is not there. jon: brian moynihan joining me on bloomberg tv. i want to welcome in our listeners on bloomberg radio as well. the man at the top of bank of america will stick with me for a little while. investors perceive your business to be working right now -- look at the yield curve and say this will damage bank profitability. the net interest continues to go up at a time when the yield curve has continued to narrow. are we looking at the wrong thing? brian: people look at banking

and get all involved in rate movements. we provide a service to clients. what the business model is that we give great services for that cash and therefore people give it to us in interest-free accounts because they are getting 60,000 atm's and 4000 branches. all those services come together. the confusion about the rate is because it is so abnormal -- now, we are closer to normal status. interestroduce more margins -- jon: you offer so many services around the checking accounts. brian: they are zero interest checking accounts. what beta can there be?

jon: beyond that -- brian: the dominant value in banking is driven off the transaction accounts. , $20hecking balances billion year-over-year, that is a strong growth rate, 7-8%, that drives a lot of value at low cost. the corporate side is the same thing. thean keep driving profitability of this company in a stable rate environment. it will be driven by volumes. the economy growing at 2.5%. 22 buys, not a single s ell on the stock -- the enthusiasm seems to be there on the surface. i can reconcile the

profitability with the stock performance over the past year can't reconcile the profitability with the stock performance over the past year. brian: largely, industry got caught up in the question of can we grow everything in the context of an economy slowing down. jon: fixed trading has been tough. said thepeople have banks needed volatility. we got the volatility, bad volatility. what is bad volatility? brian: if you look at our capital markets business over the last seven years, we've had a range of revenue from $12.9 billion to -- all different environments, different quarters coming out different ways. they've taken the right risk in moving, we do it in support of our customer base.

business, the team has done a good job. we made nearly $4 billion last year. pretty --was into wasn't too pretty, but you get to january, people getting back to work -- jon: he was nervous that a lot of his trading floor had not seen a timing cycle from the fed -- how would they be able to operate and generate return in that environment? maybe some people are struggling with something they've never seen before. brian: our average age on the trading floor, the people on that trading floor, a fair amount of them went through the crisis. important.e

if you think of the rate environment change at the time hasrisis, anybody under 35 never seen this kind of environment change, but they will learn it quickly. jon: what is your approach to leverage loans at the moment? a lot of people aggressively chasing mandates. that you a sign in q3 guys were being less aggressive. brian: we've always been consistent. set, one good business of the better businesses on a relative scale. we pretty much stuck to it. that is our posture. december.ed up in there were no deals done. jon: you were optimistic in that

space for the rest of the year. 2018 was huge for supply. for underwriting, it was a huge boost for the banks as well. brian: we will see. it will be more how the equity dispense -- we are in high-grade. plus billion0 ,ollars of real revenue something will go right and something will go wrong. leverage finance is not as strong this year, high-grade may be better, fx may be better. we will keep serving our clients. jon: if you were to have a dashboard, what would you be looking for certain risks to materialize? brian: we don't change our risk posture. jon: ever? brian: we have risk parameters

we set from the board all the way down to the desk. let's decide to add more risk today. we do so by volume. , you gond of the day back in commercial lending -- 2019you will do in th first quarter will have no impact on 2019. jon: many of us have spent much of the last few months talking about downside risk. what is the big opportunity for you guys in 2019? brian: to continue to drive responsible growth and use our to drive those

products out there. we are a big company but we have small market share in a relative sense. is that our success may be better then we project -- then we project. than wee project -- project. jon: coming up from davos, an interview with steve -- york, futures shaping up as follows, positive across the board. this is bloomberg. ♪

tom: from the world economic switzerland, tom with jonathan ferro as well. the moment, the populism of the moment as well. populism, to me, is front and center with every conversation. jon: i struggle with one aspect of this conversation. the idea that all populism is bad, the idea that everything within populism is negative. there has to be some positive forces within this reaction. tom: coming up, scott minerd

will join us. jon: really looking forward to that. an interview in the last 10 minutes with brian moynihan, who spent most of the last week telling people that things are ok. he told me that a lot of people share that view, too. here was thatay bank earnings were very uneven from bank to bank. moynahan is taking a victory lap on a q4 doing better. jon: take stock of 2018. the earnings were great. the stock performance list so -- less so. a lot of people sitting here solid,yes, earnings were i want to know what 2019 will bring, what 2020 will bring.

what the possible downturn may look like. tom: it's been measured as well, the idea of a downturn. jon: what has become clear, we have this real fear that maybe it was 2016, a real profound growth fear. simon kennedy stopping by to join us. do you get that sense that maybe things aren't as bad? if it that is the lesson, is a lesson or misguided advice, they are not quite sure how we get from where we are now, amazing employment data in the recession, what that path is.

whenever you get a bit of a slowdown somewhere, everyone begins shouting "recession" in the theater. a decade ago, 11 years ago, the ofe crowd was shouting impending crisis. jon: it is the policy response and the capacity that some of these countries have to deliver a policy response. who is looking good, who is looking bad? >> the big question for the ecb tomorrow, the language coming out from mario draghi is this is all within the road that he laid out. they still have that forward guidance that is possible after the summer. mario draghi might not be the

man to raise rates. recalibrated has -- chairman powell has recalibrated his model, talking about a bit of patience, rich miller talking about how the fed is grappling with its balance sheet as well. kennedy, we will catch up with him. looking ahead to mario draghi -- earlier on, we spoke to bill gates. he's the cofounder of microsoft and chairman of the bill and melinda gates foundation. >> our foundation has put over $10 billion into those efforts. billion,it is $100 most of the money has come from foreign aid budgets. we are saying let's look at that track record, let's look at the constant learning that is taking place and maintain that

commitment because we can get even further. replenishment for those two funds coming up over the next year. the first one is in october in france. any time someone looks at this, they are enthused. avoid the fact that it is far away, there's other things, we will avoid this getting overlooked. worry thats there a this will get overlooked? innovation through medicine -- what kind of advice would you give to investors? how do they do good without losing money? bill: these are grants. you are not going to get a direct return. the economic benefit because you have kids surviving, participating in the economy,

you have them being healthy, the returns overall are fantastic. return.ver a 20 to one if that's not coming back in the form of a dividend, you are taking countries that are not kids, 15%ere lots of die before the age of five and you are lifting them up so that over time, they graduate from being aid recipients, they participate in the world economy and you get this stability, meaning you won't have to spend defense resources there, you won't have pandemic there -- with the right perspective, which is a long-term perspective, these are very impactful. of all the dollars the spend, you are

not saving lives for less than lessow dollars per life -- then $100,000 per life anywhere but this area. truly one of the most interesting guys in investment in america. wonderful to have you here today. brady -- mrs.m tom brady, he is a slave to fashion here. you are the brand ambassador this year. and thee the company ceo has done a great job. our company is now worldwide. i want you to explain your pixie dust when you go into a company and you don't hear management apart -- tear

management apart. give us an example. >> i go all the way back to the founding of bain capital. timere unique at the private equityr fund spawned out of a -- you could buy them directly, work with management to build those companies. that was 35 years ago. at the time, no one thought that would work. institution put money into the fund. tom: my closet at home is loaded with canada goose. how did that happen? jon: back then, it was harder to raise capital, easy to deploy it. now, it is easy to raise

capital, hard to deploy it. stephen: we first met a great entrepreneur. he wanted to take the business global. we have a great retail consumer team. we laid out a vision on how we could open -- could help him get global and help him with his supply chain. he really liked that idea. we bought about 60% of the company at the time. now, the company is a multibillion dollar company. bad, my dog has canada goose. pooch. copyright issue -- canada pooch. copyright issue there. --: a lot of people thought

stephen: we had been looking to get into real estate for 30 years. we never thought it was the right time in the cycle. where they an issue decided to outsource investment management. value, look for unique product lines -- they were focusing on medical offices in the biotech industry. we saw a lot of growth and profit in that. that was a seamless transition. harvard,they were at all 20 people came to bain capital. we thought this could power through the potential recessionary approach and real estate. jon: you can raise capital, great, but the playing it is challenging. -- deploying it is challenging.

talked to you guys every question has been about too much money chasing too few deals. it is a model that works. you havecapital model, to be selective in this environment. tom: rams or patriots? stephen: absolutely patriots. tom: what a shock. an exclusive there. stephen: it's been a great 20 years. stephen pagliuca from bain capital. up next, catching up with the guggenheim cio, scott minerd.

stephen: i will have to get you guys some coats. tom: the interview was over, steve. ♪

lisa: this is "bloomberg surveillance." let's get a check on the bloomberg first word news. --k: for the first time taylor senators will, vote on president trump's plan, which includes money for a border wall. the british parliament is trying to avoid the risk of an economically damaging divorce from the eu. the main opposition labour party tonow increasingly likely

support a proposal to extend the deadline. in venezuela, the national assembly leader tells bloomberg the opposition will seek financing and debt relief. he's been pushing for an government and the venezuelan military to recognize him as the legitimate head of state, rather than president nicolas maduro. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. lisa: let's head over to taylor riggs, looking at two stocks making big moves ahead of the u.s. open. taylor: synchrony financial up 11% here. better than expected earnings and a net interest margin that also beat expectations. they are benefiting from capital

one purchasing their portfolio from walmart. they also established their partnership with sam's club after losing that walmart account. they have increased their loan provision for losses a little bit. procter & gamble beat on the top and bottom line. really boosting their full year 2019 sales outlook by 1%, now looking at sales from -1% to 1% on organic revenue growth. they are beating this quarter, coming in at 4%, beating estimates of 2.7%. that matched the 4% they got last quarter. be areas for growth has to e-commerce, the u.s. and china -- nelson peltz was critical of the company before joining the board. this company appears to be turning around. lisa: we will be keeping an ion

on all the earnings coming out -- eye on all the earnings coming out. coming up from the world economic forum in davos, an interview with guggenheim chief investment officer, scott minerd. now that we have a government shutdown and questions about a trade deal. from new york, this is bloomberg. jon: this is "bloomberg surveillance" from the world economic forum. i'm jonathan ferro alongside tom keene. thinking about this global market -- tom: speaking with madame lagarde and other world leaders, it is ultimately about the markets and the positioning of global wall street within those markets.

with minerd joining us more of a wall street perspective on the fed. moynihan talked to jom on about banking moynihan talke. how bad will the cost rationalizations be? will they be made in this quarter? scott: i think so. everyone sees the window open because we've had people like blackrock come out and say they will do staff reductions. everyone in the industry sees there moment. tom: how lean are you guys into those cost cuts? will it be micro cuts here and there? scott: more micro cuts, strategic, or surgical. we sold our etf business last year. there's a bit of redundancy. we are not going to take it like some of the big guys do. jon: in the depths of december

, whathings looked ugly did you guys do? scott: it was tough. you wanted to adjust the risk based on the volatility. on this ewert -- unless you were trading really liquid, you could get good prices -- couldn't get good prices. a couple billion dollars of bank loans would move the stock price -- same thing with asset -backed securities. blatherall the economic and the reality --, this is -- this isous really serious, folks -- you lose a point and everything changes. scott: what's really amazing to

me is to watch in the wake of that fed meeting how crowded and congested the exits got. it really is a warning sign. when we get to a recession, it is going to be tough. jon: communicate to our listeners our viewers, how difficult it is to trade loans. scott: on a good day, you can close it in two weeks. typically, something delays it, so it will take three weeks or even four weeks to close a loan. that's the challenge when you get into more liquid products like etf's. the etf's provide you next day liquidity. you are trying to liquidate wens in the etf to get out, did see it in the selloff, you

see gaps of nad below. fromhow was it different what you experienced in 2007? how was it unique this time? the etfhis time around, market and mutual fund market has become a much bigger player. tom: beneficial player? scott: from the standpoint that it gave asset managers and firms the opportunity to make more money. it allowed retail investors to get into a market that is traditionally an institutional market. having said that, given the amount of money that is concentrated in some of these more exotic fixed income it is making the downdraftsin these -- jon: what about the risk? scott: great question. tom: that is a question for

"real yield." who is holding the risk? scott: it depends on how you define risk. if you look at the leverage loan market, you will ride this off. if you are trained to rebalance your portfolio -- trying to rebalance your portfolio, you hold the risk. tom: this goes back to the reserve funds and money market funds of 30-40 years ago. the government will come in and say this is not appropriate for retail. how do we work through this? scott: the regulators need to take another look at these products. to try to get rid of the liquidity transformation that is occurring of taking a fairly liquid security and turning it into something that is highly liquid with next day cash.

jon: i want to know who's going to get the buying power. we've seen these coming to market, the space becoming competitive. what does this look like later this year? does it become a buyers market? or does it get even worse? scott: i think it gets even worse. when you look at the incremental issuance of new leverage loans versus the incremental issuance those people have sold the risk away. all they are looking for is to get the assets. tom: what you just said there is a 2007 memory. they sold the risk away. will we sell ourselves into events?2007-2009 set of

scott: i think so. extreme,be nearly as hopefully, but let's be careful, too, relative to the subprime is muchthe clo market larger but the price gaps will be just as nauseating. un-davosthis a very conversation? jon: that's what made it a great conversation. coming up, we will have been interviewwith -- an with the canadian central bank governors. -- canadian central bank governor. yesterday, a ton of risk aversion injected into this market. this morning, a better morning

for you over in new york city. tom: a bit of movement in foreign-exchange, sterling up as well. stay with us on bloomberg television and bloomberg radio. from davos, this is "bloomberg surveillance." ♪ >> we will take a look at comcast earnings. internet subscribers up 1.5%. they are also losing fewer tv subscribers, which is a good thing in the era of cord cutting. the increase their dividend by 10% to $.84 per share. boost free cash

flow and pay down debt from the purchase of sky. added 300-1000 new customers -- 350,000 new point for what analysts were expecting. they introduced faster internet service, continuing to offset the drop from cord cutting. we will keep you up on all the earnings announcements coming up soon. this is bloomberg. ♪

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jonathan: this is bloomberg surveillance live on bloomberg tv and bloomberg radio from the world economic forum in divers, switzerland. i am jonathan ferro. , we will beter catching up with the ukraine president. that is coming up the next couple of hours. you and i will be conducting the interview. tom: we welcome all on sirius xm across the states and on canada. one of the great things about davos's conversations about central bankers. rarely do you have a central banker at the nexis between china and the united states as a german from canada. editor stephanie. >> we are glad you have the governor of the bank of canada here in davos. thensistent theme among

delegates is that the global economy might have stumbled, that it is not about to fall over. does that describe the canadian economy? >> i think that is a very good summary. the economy is in good shape. we have a couple of things we are dealing with. low oil prices and the uncertainty around the future of the global trading system, but that is something we all share. we had a big change in rate expectations between december and january. you did raise rates in the expectation in the market is we might not see anything this year. is that your view or would you hang onto the idea that there are few rate hikes to go? >> there are a couple things. oil prices were week during the fourth quarter. not just global prices but canadian prices were lower than that. off .4ll probably knock

percentage points from outlook. we have to monitor the economy and adjust to that. the bigger picture is that markets are flushed. global outlooko coming from the u.s. led trade war. that is affecting many countries and we are in the crosshairs earlier than others because of the threat to nafta. infects -- how it affects investment. that is something we all share. there are two sides to it. we think of it as a two-sided risk. it would be a disaster if the whole situation escalated. it would also be very positive if it were resolved. we are somewhere in between. stephanie: if you look at the fundamentals of the canadian economy and the global economy from a medium-term perspective it does not look bad. it looks like you could see more

rate rises. it can also be quite a long pause. stephen: yes. this is the on a side of it. it is data dependent. it will depend how the economy responds to the shocks that were theribed, on top of which housing sector is obviously adjusting to the rate rises we have already put in place, along with some macro moves. it is not quite settled down after that round of changes. we like to see that stabilize and therefore know where we stand. that, wee will watch will watch the trade situation. that is crucial. we also have to watch of the economy adjusts to this slower uptake. stephanie: you mentioned data dependent. some of that data is not being collected because of the government shutdown. how is that affecting you? stephen: it affects certain

reports from the u.s.. one is our main monthly international trade data. the countries share the import to makem both countries the other countries export data. that is where we get the strongest estimates of what is going on. with that shutdown we will have partial export data. stephanie: you cannot see the impact of the trade wars because of the shutdown. stephen: that is so. we can talk to our companies, which is the strongest way to find out how it is affecting them. stephanie: you heard a lot of people this week critical of the fed. they e-gov bought the donald trump line that the fed has moved too quickly. -- they seem to have bought the donald trump line that the fed has moved too quickly. five rate rises

since 2017. if you look at the outcry over the fed policy despite pretty positive outcomes -- inflation heading in the right direction. does that mean you're concerned about the capacity to get to more normal rates? stephen: not really. the cyclea stage in where looks like monetary policy is doing the wrong thing. if we look three years ago when we cut rates during the oil shock, people said how could you possibly consider during that? we go two years ahead and inflation is right on target. if you look at inflation being where belongs. two years ago policy was just right. if the economy really is near its steady-state, interest rate should be near their steady-state. we're not sure exactly where it is.

it continues to be an open question. we think it is between 2.5% and 3.5% nominal. stephanie: if the fed now goes into a prolonged pause, how does that affect you? stephen: the fed would be reacting to their own data and their data affect our data directly. historically, the two economies have been quite highly correlated. the difference emerges when oil prices move. stephanie: is the fear of a hard brexit keeping you up at night? withen: i watch it considerable interest but it is a small effect on our macro economy. stephanie: thank you. back to you. bloomberg stephanie flanders with the canadian central bank governor. it is that conversation that takes place in davos, switzerland, in america, across

united kingdom. brexit,as you mentioned people shutdown. tom: a huge conundrum. that brilliant conversation about the immediacy of the market, the liquidity within the market and then you get perspective on broader economics with a unique national andy in canada with huawei the tensions between china and the united states and you synthesize it together with what they do in davos which is international relations. jonathan: davos has not been that effective at sorting out the story because we do not have the delegation from china. tom: i agree strongly. we do not have the u.s. jonathan: what is driven the market is the huge amount of confusion with where we are with the talks, how we are progressing going to the end of the month as a premier heads to washington, d.c.. tom: i want to see draghi tomorrow. everyone is saying is that a non-event.

i do not buy it. jonathan: i do not think it is a non-event either. i do not think he will change policy. he will not be the president for very long. the next president of the ecb will have a difficult time. they are talking about raising interest rates. a year ago the idea of raising rates by the end of 2019 sounded dovish. the idea of them hiking interest rates at any point in the next 18 months sounded hawkish. tom: this goes to the conversation yesterday with a certain data dependency where's the fiction of forward guidance? to our conversation with john taylor, this is the debate. jonathan: also, how can you be data dependent as the european government counsel over the ecb? tom: that is the issue. he may reconcile the press conference tomorrow. jonathan: we are looking ahead to that news conference. we'll bring you full coverage on

bloomberg tv. be catching up with a foreign affairs editor at the cisco ceo right here on "bloomberg surveillance."

lisa: i am lisa abramowicz in new york. let's get a look at the bloomberg first word news. kailey leinz giving us a look at the top stories. -- bloomberg talk has learned the u.s. and other nations are resisting of plan by beijing to curb the plan. the federal reserve has stepped into the investigation over

money laundering at daca bank -- at deutsche bank. the fed wants to know how deutsche bank handed suspicious transactions. -- authorities are investigating reports of a jerome that briefly shut down flights to newark airport in new jersey. the device was spotted over an airport at an altitude of 3500 feet. london's airports have been disrupted by drones recently. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. lisa: we are seeing a more constructive tone across u.s. equity markets. let's head over to bloomberg's taylor riggs. what is not constructive this morning is abbott laboratories. they came out with earnings. this is after the companies

full-year guidance just masked a midpoint estimate. being in line is not enough to get it done. they are forecast sales growth of 6.5% to 7.5%. the revenue looked a little bit light. that is part of the reason why the shares are down. they did increase their dividend to $.32 from $.28 a share. they now paid out 380 consecutive quarterly dividends and have increased that they out for 47 straight years, something the company is touting in a press release. if we take a look at the makeup of abbott labs, they get about 80% of the revenue from medical devices. 9% organic revenue growth. those sales rose more than 10%. 9% on an organic basis. they are within medical devices. a lot of cardio and vascular equipment. that is something that is driving the shares this morning.

i want to switch to kimberly-clark. we were you remember talking about proctor and gamble and the key focus of them was hitting that organic sales growth target of 4% and beating the peer group of 2% to 4%. kimberly-clark is showing us a different story this morning. you can see those shares are off this morning. therefore the quarter profit and outlook for the year fell short of estimates. interestingly enough, they are seeing rising cost for raw materials and rising costs of pulp and that is putting pressure on some of the margins. are now-clark forecasting growth at about 2%, half of what procter & gamble's organic growth forecast was. they are highlighting these rock consumer and material costs. to pass someg able of those costs on to the consumer. i will read you a statement we

got from the ceo from kimberly-clark. he said it was a challenging macro environment. our margins declined. -- in experiencing response wait raised prices in the second half of the year. the key is to see if they're able to pass on those costs on to the consumer or not. that has been the taste -- that is been the key challenge. how do you pass those costs on to the consumer? a different story between procter & gamble and kimberly-clark. these reports are what is essential to understanding the macro picture because we're not getting some of the big data due to the government shutdown. coming up in davos, an interview with the ukrainian president. from the markets, more constructive tone. from new york, this is bloomberg surveillance. ♪

tom: good afternoon from the world economic forum in davos. davos with church in the changed view. the hard rock hotel. therean: everywhere we go is a story that involves a hotel and a bar. .om: in this stairway to davos led zeppelin. brian moynihan loves led zeppelin. they have the quote from misty mountain at the hard rock cafe. we know he loves robert plant and jimmy page and led zeppelin. one part ofthan: the conversation on the bank.

i can bring you that part of the conversation right now. >> just take the united states to make it simple. the growth rate will come down but it will still be strong on a worldwide basis and relatively strong for the last decade. slowdown is a tip over and all the debate that goes on. the way i think about this is two points. the first is what our experts say, the research team we have. is if the world goes to 3.5, the u.s. goes to 2.5. the second view is what consumers do in the united states in particular. about three chile and dollars of payments are made using debit or credit cards. it is up to 18% at a strong pace in early january. and aresumers strong making more money, the u.s. economy has a good position.

we do not see -- if we see a slowdown, less growth rate. we do not see what other people are seeing at. jonathan: do you think we are struggling to draw a distinction andeen a return to growth going to something in or around 2%. gideon: that is the -- brian: that is the point. you have a long cycle. a growth that kicked up to high-level and is coming down. that makes people nervous whether it will flatten back out. 2020 is 1.9,n for 1.8. that down below trend. jonathan: that is a domestic story in america. the global story is different. weakness in china, softness in europe. i'm struggling to get my head around what the policy response will be in europe or china. have you identified what it will look like and can you be as

constructive as you are in the american economy in the global economy? brian: there is good news and not so good news. i think the china growth story that has been resilient for many years. there is discussion of slowdown. the government sees it and is predicting it. i think the question is how they handle reshaping the financial services business, whether they overshoot or undershoot the reforms. that will play out. they ever resolve to continue to drive growth in that country and they will have to adjust some of the policies and they have started doing that. between brexit and europe europe a lot of uncertainty. it is always uncertainty whether it is any geopolitical decision. that is not the best friend of economic activity. if i'm thinking about investing on a five or 10 year pattern i have cap certainty of policy

procedure and outcome. we worry about that. outside the u.s. is higher than inside the u.s.. at 2016: looking back and waking up in 2019, it looks like there were parallels. the growth scare of 2016. the ecb threw everything at it in the chinese got involved. do you see those institutions and those policymakers with the same capacity to have that policy response again if they need to later this year? there is always great debate on the technical tools. if you think about the central bank response 12 years ago, 10 years ago, even recently, when the issue arises they have to respond. it is the same will the people that cost the government to respond, the central banks respond. we will see what they come up with. some of the ideas none of us have thought of. you cannot sit there and watch an economy without having some monetary help if it needs it. the united states does not

needed. other countries may have to put it back in. jonathan: it is doubtless whether they will take out of the united states. we've been talking about the prospect of rate cuts and the conversation in america at the end of the year. is this premature? brian: i think it is. the federal reserve has been clear in the statements and chairman powell, they are in the neutral range. in they willomes look at the data they are faced with. right now the data in december is enough for another rate rise and that put them into the neutral range they talked about. it is little confusing. people say at this level the accommodation is not neutral and therefore the economy is stronger. jonathan: brian moynihan there, the bank of america's chairman. tom: is the auditioning for the

boston fed president? he was really warming up. jonathan: later in the conversation we talked about the bank. you can find the full conversation on bloomberg.com. of theer part conversation that is interesting, the communication coming from wall street, things are ok. it was messy, but the fundamentals of the american economy are still good. tom: it is true every year that there are people that show up in the happy valley and on the positive step. ray dalio, no question about it. mr. moynahan performed as good as any of the major banks. a brutal quarter. issue and thebig thing we struggle to reconcile throughout28 teen -- 2018 -- fantastic bottom line but stock price is not great. butissue is 2018 was good show me 2019 and show me 20.

still expecting deceleration this year and people expect that to bleed into 2020. audience with bloomberg radio across america. the other thing is doing gauge the american economy. they are granular and how they look at it. his operative number for the quarter we are in is 1.5%. that is not make america great again. jonathan: and with relative ease even at 1.5% you could still put out a picture of the u.s. economy that is ok. i do not think you can do that internationally. not with europe, not with china at the moment. i think for most people right now, speaking to them on our i know, the takeaway is the american economy is all right but china is not, europe is not. i want a better idea of what the spill over is through 2019 and

2020. tom: making a one-hour appearance. mr. abe of japan with the dead serious speech. he said get on board on free trade. it was heated, pushing against president trump. jonathan: we will try to talk about that later on our special programming coming up in the davos, switzerland. we will also be catching up with the crane president. all of that -- with the ukrainian president. markets, price action set up as follows. good morning to you. futures positive across the board. this is "bloomberg surveillance."

david: from bloomberg world headquarters in new york, i'm david westin with alix steel. welcome to a special edition of daybreak's countdown to the open.

alix: earnings optimism. united technologies, ibm positive for 2019. procter & gamble deliver strong organic sales. uncertainty remain. closer toament moves delaying brexit while money floods out of london. twoh mcconnell holds opposing boats to end the u.s. government shutdown. is an end to the shutdown inside. in the markets we are helping -- you are having earnings -- futures up by about 12, helped by the likes of united technologies, png. currency oneacon the margin when it comes to europe. selling in the treasury market. buying yesterday, selling is the word of the day.