nejra: good morning bloomberg's european headquarters. i'm nejra cehic. matt: --manus: and i am manus cranny live in dubai. nejra: the shutdown drags on. president trump delays his state of the union address. the bank of america ceo is optimistic about the economy. >> if the u.s. consumer is strong and they are making more money, the u.s. economy has a good position. we see a slowdown, less growth rate. we don't see what other people are seeing yet. a big week for central banks. for the first time in a decade,

the ecb is facing a slowing economy with no planes for stimulus. european leaders brush aside slowdown. -- slowdown fears. >> i am confident of that. president trump recognizes venezuela's opposition leader, putting maduro under pressure. bolsonaroresident says he wants to repair relations with the u.s. >> it is a tradition in brazil that we elect presidents who are enemies of the u.s.. on several occasions i have met with the american authorities and have had to tell them we are friends with the u.s. we want trade common to all.

manus: batting away the blues in tech. microelectronics beats even the highest of estimates on the fourth quarter numbers. net income, $418 million. estimate, $376 million. that is a beat. themargins also 40% for fourth quarter. the market had 39.6%. net revenue also nudging above. $2.65 billion. the estimate was $2.64 billion. this is with apple slashing their outlook. taiwan semiconductor saying you have a plateau in the smartphone market.

the very essence of diversification. the redhead line, it is a beat on net revenue. 39%.argins will be mind the gap. give yourself a little leeway. $1.2are going to invest billion in capex. it is all about the smartphones. get your wallet out. nejra: it was interesting having that conversation yesterday. we talked about the semiconductor industry coming under pressure. some good news from st micro. if this had come through as bad news, there would have been questions about the supply chain. a little but of good news. let's turn to the world economic forum. policy chiefs and business leaders gather. we are live at the meeting all week. haslinda ahmed is there for us. great to have you with us again. it seems as if a lot of the

leaders trying to defend the global order, we particularly heard from the china vice president in what seems like a thinly veiled rebuke of president trump. right.are he referred to trump's america first policy, he said the strong must start ruling the week. imbalance is unavoidable. in the absence of u.s.-china in focus. globalization must stay. that came across from the likes of merkel. said we must rebuild trust and free trade. we must not let that go. they also hope the u.s. and china will resolve trade issues by this year. the march deadline still here. expect a lasting deal take place. let's wait and see.

this morning from dabo's, we will be speaking to the french finance minister and the new leader of -- all that coming up live from the world economic forum. haslinda, we are looking forward to all of that. i know you have a couple lines on airbus. this is a cracking story, isn't it? some of the lines. i know you have been looking at this. they are talking about harm to brexit. >> as we had the pound rally yesterday, all the prospects of a no deal receding. we have had the ceo warning about the dangers of a no deal brexit. anse comments coming out in unusual video message today are the strongest since the referendum. basically co saying -- ceo saying while the scale of

airbus is not going to allow them to vacate the u.k., the manufacturer could be forced to redirect future investment. you are seeing the impact on real business. a potential impact if we don't avoid a no deal scenario. this is a company that employs 14,000 people in the u.k. -- supports another 110,000. factories in the u.k. at the moment. manus: there is a powerful punching line there. he says it is a disgrace businesses still can't plan for the future. you are right. he does make that point there's plenty of other people who would be willing to build wings. a very vocal threat. let's focus on the markets. i don't quite know what to make of aussie dollar. if trade is such an anxious issue, is that a driver for the

aussie dollar? the aussie dollar is down. this is the worst performing currency in the g10 last year. according to the household survey, debt ratio is 190%. returnys we are going to . you are seeing banks raise interest rates trying to stop the property market from exploding any further. crude is lower even though the iea along with opec and all the others say you are going to clear the glatt this year. this year. aussie dollar down, oil under pressure, the rhetoric coming is of great-- davos concern. are we overly complacent? bloomberg wishful thinking does not always come true. they are talking about this potential for no deal being taken off the table. day four of the rally.

it is the longest since september 13. rally we did see a muted in the u.s. by the end of the session yesterday. it closed higher by 0.2% after a whipsaw session. you still have some out there who say constructive on risk assets. futures not giving us a lot of direction. they are flat if you look at these s&p 500. you are looking at a lot of dead flat, but low the surface, interesting things going on. some might have forgotten we've got an ecb meeting today. not me. with the data we have seen in the euro zone it is going to be interesting for mario draghi. what is he going to signal in terms of possible tightening by the end of the year? some thinking the wildcard could be some kind of discussion around the extension of long-term funding to banks. what directionality could we get? there are some great comments from mark cudmore.

the euro steady. juliet, how is it looking? welinda: we are -- juliette: are starting to see positivity in late trade. have the msci asia pacific index up led by gains in hong kong, china, south korea. it is the tech players lifting sentiment. we have got a pretty negative to flat session coming through in india. japan closing at the session. hey 10th of 1%. japan had been much weaker than that. the aussie dollar very much and focus in the session as well. increase interest rates. let's have a look at sk hynix shares. they did come through with a disappointing number. they announced an increase in dividends. that has seen sk hynix up by 5%

and boost other tech players. under pressure by 6%. it expects its full-year net profit to fall by around 30%. this story here, this stock in singapore, very interesting today. there was an alleged trade in the session. plunged by 83%. it has recovered. several traders we have spoken to saint it does seem like human error. manus: i know you are keeping an eye on singapore against aussie dollar spread. president trump has said he will give his state of the union address when the government shutdown is over after the house speaker nancy pelosi blocked the president from delivering his speech while federal agencies are closed.

there could be zero economic growth if the shutdown continues. business leaders remain bullish. for more on the shutdown, let's get to our international editor. good to see you. how do things stand with the state of the union and the government shutdown? >> the shutdown continues in the state of the union is being postponed. president trump has said he is agreeing to give it after the shutdown ends. he has been pushing to have it in an alternative location after the house speaker said she was this inviting him from giving it in the house chamber. that's where it is customarily held. the president said he could not give it in the house chamber, he would wait. the shutdown does not appear to be ending anytime soon. it is entering its 34th day. tomorrow, 100,000 federal workers across the u.s. will

miss their second paycheck. what about the effects the echo we hear there could be -- affects? is that the sort of indication we are getting so far, particularly with data being delayed? >> it is hard to tell because we are not getting all the data with the shutdown. certainly with 800,000 federal workers not getting paid and many more vendors also not being paid, this is starting to have effects on retailers, restaurants, those kinds of things. it is very likely figures will be off once people get their paychecks, they will get that back pay. to rebound is likely somewhat. we have seen various figures for how it will look after that. there is talk about a rebound.

a slowing u.s. economy, perhaps not a drastically slowing one. without the data we are used to seeing, it is hard to tell. manus: give me some adjectives in terms of u.s. growth. zero, but he uses a great adjective he says what's going to happen afterwards. humongousing to be after the shutdown ends. the problem is the shutdown does not seem to have much of a path to ending. votes,ate is has taken but they do not have votes to pass. nancy pelosi says she will not vote for that wall president trump once. he says he will not reopen the government until he gets funding for the wall. they remain at an impasse. thank you for your time. great to have you with us. is it time to rebuild

capitalism? that is the call from the french finance minister. he tells chief executives in davos their companies are too powerful and do not pay enough tax. france'st of presidency of the g7. francine lacqua has an interview with us. great to see you. theou were talking about g7, the presidency of the g7, which is french. i am pleased to say that for its first interview of the day, we are joined by the french finance minister. minister, thank you for giving us a little of your time. i wanted to come back to the agenda, but actually, i want to start with firms. protests were a catastrophe. are you sticking to your forecast see apco >> we are sticking to the growth forecast.

the path ofk to reforms. president micron has been clear -- president macron has been clear. system,he pension reform the insurance scheme and reform civil service. reserves, we get need to remain on the path of reforms. alsoe president has announced tax cuts. how much will they boost growth? >> tax cuts that have been whereed, we are at a time we are debating all over france what spending we should cut to be in a situation to cut taxation and to have a better level of taxation. get spending to get

taxes. >> do you worry that we'll push over the french debt to a level european union will start being worried? >> that is why we want to reduce debt. we do not want to have debt that would be unbearable for the french economy and the french people. that's why we have been clear from the very beginning. we want to move on to cutting french taxation. we have to think about expanding. what expanding should be cut to be in a situation to have less toxins -- taxes and france. less public spending to have less taxes. >> do investors believe you and you say we are sticking to the reforms? >> investors just have to look at the decisions that we have already taken. the level of taxation and france, concerning the

markets. we also have to look at decisions we are currently taking. we are taking decisions on the question of sme's, the competitiveness of sme's. have reduced taxation to fuel innovation and investment. when you're looking at the level of public spending, the level of taxation, there has been a clear improvement. just look at the figures. i'm not explaining we are the best case scenario. i'm just explaining we are doing the job and we will keep the path of reforms. unrest, whatsocial do you think is the most important reform for france? >> the two most important, the reform of insurance and the second one is the reform of pensions. >> what -- you say capitalist to concentrated. what will be your agenda g7?

>> what will be at the heart of the french g7 is the fight against inequality. everybody is aware, even in dapo's, that capitalism -- davos , that capitalism is no longer delivering what people expect. they want to have less differences between the highest wages in the lowest ones. we need to fight against inequalities. we need more transparency and we need what we call common decency. dad's -- dad it in for common decency. we need to reduce inequalities, which is unfair. >> how do you do that? is it breaking up companies? >> we should have more transparency, which is one of the solutions we will put on the table.

also attry to have it the level. a clear transparency between the highest wages in lowest ones. we will put emphasis on taxation because justice, that means new international taxation which would be fair. nobody can accept that you have the biggest companies of the world paying less taxes than -- that's why you have dues taxation of internet giants, we will also try to introduce taxation of internet giants with the support of many countries. this is one of the points that will be raised during the french g7. also in the defeat of taxation, the question of minimum taxation. we want to introduce minimum taxation at the level of the g7.

>> how much support will you have from countries? everyone is thinking for themselves. it is the end of multilateralism . it is a more protectionist approach. will they sign up? >> it will come from the closure of borders. we need a multilateral list approach. g7, you're looking at the just look at the question of international taxation. we have the support of the u.k.. we have the support of germany, of italy. we are trying to convince munition to go the route of -- mnuchin to go the route. we need a new international taxation system to be more efficient. >> is france ready for a no deal brexit? >> it is up for the u.k. to decide. we are ready.

we would prefer to have an agreement. there is an agreement on the table. now everything is in the hands of the british people. the bridge citizens -- british citizens and politicians. it is up to the british people to know what they want. >> we have had verbal attacks from italian politicians on france and germany. how would you describe italian-french relations? >> those statements are childish. when you're looking at the situation all around the world, the rise of china, the risk of having war between the u.s. and china which would jeopardize the world war, when you are looking at the situation of all citizens which expect more growth, more jobs, more justice, do you really think we can have so many

divisions among european nations? we need to gather the forces of european nations. we need to speak with one voice. in this world that might be divided. we need to show that europe remains united. able to defend its economic interests. let's avoid that kind of statement, which are quite childish. >> have you ever seen a europe that is more divided than now? >> friendly speaking, never. that's why i'm concerned by those kinds of statements. i am also looking at deposited things. when you are looking at the treaty signed between france and merkel, i macron and think france and germany are on the right track. the are proposing new measures. there proposing new policies.

we are doing what we can to unify europe and open a better future for european citizens. ghosn just resigned last night. now it is down to put a new governance in place. what is today the most important future. a better an importantill be session which will choose a new governance. we have to think about the future of that great company and that alliance between volvo and nissan. >> do their need to be more safeguards? >> it is up to the new governance to decide what they want. the key is to move on and think about the future. >> do you really believe, given be --as happened, should

that can choose the leadership yet >> first he has to choose his new chairman. he has to choose his own governance. he has to define the task of the new chairman. for us, we believe the first task of the new chairman is to consolidate the alliance between -- and nissan. >> you think the alliance is safe? >> yes. it is up to the new chairman to take all the necessary decisions to strengthen that alliance. >> one final question. how divided is the world? we have u.s.-china trade concerns. have a u.s. shutdown. what is 2019 going to be like? >> it will be the year of

europe. you can see there is a strong opposition in europe between thinkies and forces that we have to get rid of european ambition. in are also strong forces, strong politicians, which strongly believe we need more europe. a united one able to respond to the requirements of the people for more justice, more efficiency, more growth, more prosperity, more transparency. i am deeply convinced that those forces will win. >> thank you for your time. that was the french finance minister. i'm going to send it back to you in london. plenty more from davos throughout the day. just turnedthat had away, the minister confirming

carlos ghosn resigned last night. there will be a meeting, the future of the company will be discussed. with that in mind, let's get a quick recap. csi back on track. possibly infrastructure upgrades. futures are up in the s&p 500. what is the shutdown doing? interestllar down as rates are raised on mortgages. 130a: cable powered above yesterday holding three days of gains with the prospect of no deal receding as voices call for an extension of the brexit deadline. oil, the focus seems to be from -- on signs rather than on venezuela. euro stoxx 50 futures pointing higher. coming up, we speak to the ceos of some of europe's biggest companies including merck.

don't miss those conversations live from the world economic forum in davos. this is bloomberg. ♪

>> people have certainly diminish their growth expectation. we do not think they have done enough. earnings expectations in the u.s. are too high. generally, the fed and other policymakers are expecting stronger growth then we see. >> if there was to be a materialization of the risks we see on the horizon, the point is this horizon is getting a little closer to what we had in october. that is the reason why we slightly revised our growth forecast. >> we see an economy that is slowing in terms of growth, but not stalling by any means. was synchronized growth this time last year. now there is synchronized

slowdown, but it's not really synchronized. some areas are slowing more than others. up towth finally kicked high levels, coming down a little. that makes people nervous. 2020 is about for 1.9, 1.8, something like that. back below trend. slowdowns, synchronized slowdowns, recession warnings, zero growth in the u.s. stocks are rebounding. msci asia pacific up. dividends coming from the tech side bolstering this story. there is one other big story. perhaps it might get drowned out. that is, drum roll. >> mario draghi in the ecb. it's going to be a subtle meeting today. the euro goes nowhere at the moment. what mario draghi has to

balances this slowdown in economic data. does he still get signals we are going to see tightening from the ecb? does that get offset with mention of ltro's? manus: yes. the he tacitly acknowledged slowdown everyone in davos is talking about? a lovely article this morning. investors seek a flattening yield curve. -- officialial update in march. let's get to davos where the debate continues. haslinda amin is standing by. is anda: whether it synchronized slowdown or not, there is slowdown. the australian finance minister, let's get his take on the global economy. how weak is the global economy? how weak is the chinese economy? >> in australia we are very mindful of the global economic headwinds.

what happens in the rest of the world matters to us. in australia the economy continues to perform well. we have continuous growth. inare looking at 3% growth real terms moving forward. the unemployment rate has come down. wages growth is starting to pick up. our outlook is broadly optimistic. >> broadly optimistic, but there are risks. take a look at consumption. that is slowing. surely you are concerned. >> there are always downside risks. people are very mindful of the geopolitical events. brexit, the u.s.-china trade tensions, which we would like to see resolved in an orderly fashion as soon as possible. there are always downside risks. , weou look at fundamentals

have one of the fastest growing economies. >> what will you do to boost consumption? will that involve a cut in income tax? inwe have passed legislation the last quarter to reduce income taxes. >> more than that? >> we have a budget coming up. people in australia will be very surprised. budget withg the you in davos. >> is it something you would consider to boost consumption? toour instinct always is keep taxes as low as possible. mindful that we have a responsibility to sustainably fund the central services. our national security and so on. obviously, we will be releasing the budget and all will be revealed then.

>> property also in focus. prices have been falling the past year. what is the outlook outside the downside? >> we have had increases in prices. just under 50% increase in property prices. there was a need for a level of correction in the market. there has been a level of correction. it will probably continue a little bit longer. governance hask made the point that was quite desirable. >> talking about the reserve bank, there is a 50% probability of tax cuts. do you think australia should be headed that way? >> the australian government is always focused on keeping taxes as low as possible. belowp the tax burden 23.9% of shared gdp. that is something we remain committed to. we legislated significant cuts for hard-working families in australia.

$144 billion of income tax relief. we are always looking for opportunities to reduce taxes. it is fiscally sensible. >> what about rate cuts? >> that is reserve bank monetary policy. property importantly is independently -- he is trillion government does not -- australian government does not comment. >> 2017, australia was the second worst performer among developed countries. >> the value of the dollar is set by the market. it helps us manage the ups and downs in the global economy. it is one of the automatic stabilizers that helps ensure we continue to grow into just accessory to the structural challenges we face. >> what do you make of the volatility? >> the value of the dollar is set by the market. when commodity prices are higher

, artificial cash rate is higher , in other parts of the world, that has an impact. obviously, there are adjustments that help to ensure the remainder of the us trillion economy can be more competitive. the lower exchange rate is not all that. love exchange rate helps ensure many of our exporting businesses are internationally more competitive. u.s.lot hinges on this china trade deal. how optimistic are you a lasting deal can happen? shinzo abe talked about how he wants to see a trade deal by the end of this year. >> we would be keen to see a deal. resolving all the issues as soon as possible. we were very encouraged by the interactions between president trump and president xi jinping. we hope the momentum will continue and lead to a positive conclusion as soon as possible.

>> australia's finance minister giving his assessment of the global economy. >> haslinda amin, think you so much. joining us from davos with the australian finance minister. brazil's president bolsonaro has pledged swift measures to fix latin america's biggest economy. bloomberg's editor-in-chief. cutting state presence is to eliminate corruption. programs havel not reduced property -- poverty. the concern was to get as many votes as possible. we have no other alternative. we have to do well by brazil. otherwise the left will get back in. we have to get away from this left-wing ideology that was

getting worse in brazil. the population did not want this, so they elected a candidate who upheld the truth. >> most people would say the local trade pact is one of the more useless trade deals. what can you do to improve it? you have talked with the european union for 20 years and nothing has come of it. to grow or togy start again? >> it began well when the labour party got into power, trade begin to overlook the ideological question. this held brazil back. we started talks with argentina. superficially, we had begun talks with uruguay and paraguay. a country the size of brazil cannot be tied to merck is sore for its trade. we need to be free and make eye

lateral agreements. whatever the agreement, there will be restrictions suggested by france. we have reached an impasse which will not be cleared up quickly. >> i have talked to a lot of business people. there is a great enthusiasm for your administration. you also cause difficulties for business people here for various reasons. to do with the environment, to do with what you said and to do with the continuing issue of corruption. on the environment, most business people here do not want to be associated with deforestation. pulling talked about brazil out of the paris accord. are you going to go ahead with that? >> the first question on the environment, brazil is a country that more than many protects its reserves and the environment. it is enshrined in law that a

farmer must protect 20% to 80% of his farm without state support from the brazilian government. this has to be respected. any change will be made according to the law. for some time, brazil has been playing its part. we are not getting the financial return. we will continue with the paris agreement, but we are developing country and we have duties, but we also have rights within the agreement that are not being met. >> you are holding the option of pulling out if they don't treat you well? davos with many questions. equalt to talk on an basis about what is really happening in brazil. some complained my talk was short. i only had seven minutes instead of 30. better to speak for seven minutes and be concise. there are serious journalists

that understand my statement. we want an agreement. we want respect for everyone, including brazil. this is the new brazil showing the world what i mentioned is our first objective, which is to grow our credibility. bolsonaros president speaking with our edit her -- editor-in-chief. the historical epicenter for recessionary fears is enjoying a calm month. , despitemarket assets the warnings from davos, the imf , the world economy is stumbling. record sums of cash are flowing into funds that track developing nations. are fools rushing in? dani burger, what do you say? >> we are seeing emerging markets be remarkably stable, even though we have a volatility in the fourth quarter and volatility this year. they have not moved much.

this is the spread between developed markets and emerging markets. emerging markets are less volatile. let that sink in. that rarely happens. not only does that rarely happen, but the spread on the board for 60 day volatility is the widest since 2013. it is very odd considering the warnings we have gotten the have caused markets to become volatile between trade, between the fed. growth concerns as you said. these things usually hit em very hard. perhaps what we are seeing is the value floor for emerging markets. that is how people are voting. we are seeing emerging market funds get record funds of -- sums of money. this one got $2.5 billion so far this month. now it has the highest a um on record. will the good times last? was last year the worst we would see em get?

certainly pay attention to those davos interviews from emerging-market leaders to see where markets go from here. nejra: great work. thank you so much. coming up, we are going to speak to some of the biggest names in banking, including the ceos of barclays, morgan stanley, and goldman sachs. all of that live from the world economic forum. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. manus: i'm manus cranny in

dubai. let's get back to the slopes of davos where francine lacqua is standing by with a guest. chief joined by the executive and he has a good idea of what's going on in the employment markets for the biggest companies when it comes to temporary employment. it is interesting to speak to him to look at where he sees. exactly where we see the biggest growth and opportunities. thank you so much for joining us this morning. the world economy. are you worried about it? is it having an impact on your industry? >> we are related to the cycle and we see that currently in the u.s.. the business is still going very well. also in asia and where we see the more worries is europe, where the geopolitical situation has impact on the business overall. >> what are you seeing as the fault line? is it certain industries that

require your services hiring less? is it country by country? >> it is more country by country. for sure, automotive and europe has had trouble. admissions policies in germany with a lot of impact. some regulations, political uncertainty in, and with uncertainty, the are stopping to invest. >> what will happen with brexit? what does it mean for your industry? >> at this stage, i must say we don't have any impact or significant impact. i think british -- has stopped to hide during a certain period of time. they need to rehire again.

>> how many of your staff are actually french italians, spanish, or how many people you place are coming from the european union? are you going to have a shortage of staff if we have a no deal brexit? impacto not have any because people are exiting u.k. it is very limited. we see also companies relocating outside u.k. are limited. especially if you look at the number of people's exiting u.k., it is quite limited. >> what is your take on the u.s. alco we are hearing a lot of -- usc? -- u.s.? >> today people have the choice between temporary staffing and

they tend to go for permanent recruitment. the strength of the economy and the confidence in the future. to reskillb is it workers? is it governments, businesses, someone else? davos wherere in discussing the transformation of work for many years, we see now technologies are accelerating this process. it is time to act for government, for employers, and -- itself. employers are putting the right framework, the right incentives for companies to reskill. it is important for employers to also take action regarding --killing people because of

coming in. seeing -- or just talk? >> too much talk, not enough action. >> how do people realize this can save the growth of tomorrow? >> not only the growth of tomorrow, because you need to prepare. we also hear that a lot of companies have scarcity. cybersecurity is a good example. i am convinced in a lot of cases you can reskill people. you don't need highly skilled in cybersecurity. you need a lot of people with average skill you can reskill. so much.you the chief executive officer of adecco. i'm going to send it back to you.

we will have plenty more right here in davos. manus: have a great day. . prime minister giuseppe conte brushed aside fears italy is headed for a recession. >> we have not discussed corrective action so far. we just approved the budget. we are at the beginning of the new year. it is too early for those provisions, those perspectives. importantat we have provisions, including the budget , there were structural reforms. confident of our economic growth will be much

higher. >> how much better can growth be ? do you have a projection in mind? 1%.bout it will be higher. i am confident of that. >> investors worry about the stability of politics in italy. can this government hold or will we see elections? >> we have a strong coalition. a lot of stability. we are working hard. there is a spirit of unity. i am very confident. >> to make the government more stable, does it make sense having the third party?

well with them. their perspective of different composition of my government. >> we have heard from mr. salvini and mr. dimaio they are unhappy with things and france. do these verbal attacks actually heard the relationships between italy and france and italy and germany? a traditional friendship between italy and france.

between italy and germany. a few issues is not -- that was italian prime minister giuseppe conte speaking to francine lacqua. from political risk in europe to brexit uncertainty in the u.k., and of course geopolitical risk dominating discussions at davos. we speak to the former prime minister of the u.k. tony blair. manus: yes indeed. -- wel also hear from know in his last conversation he was talking about preparedness for hard brexit. what does blair think as the political climate is rising? behind delaying growth. that seems to be the consensus at building in parliament. is that best for the country

yeah, that will be the question we put to tony blair. the team on the ground there did a fantastic job. all the news from davos on bloomberg. ♪

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manus: good morning from dubai, i am manus cranny and this is "bloomberg daybreak: europe." are today's top stories. stickier economic adviser warns of zero growth if the shutdown lasts until march. the bank of america's ceo is optimistic about the economy. >> if the u.s. consumer is economy has as. good position. we do not see, we see a slow down but we do not see what other people are saying yet. we will see what happens. manus: for the first time in a

decade the ecb is facing a slowing economy with no plans to boost stimulus. at davos leaders for us aside slowdown worries. minister saysce carlos ghosn has resigned. not -- what now for the country's biggest carmaker? >> carlos ghosn just resigned last night and now it is time to define and put a new governance in place. avoids today the must thing is to prepare the future of renault and the alliance.

nejra: policy chiefs and business leaders gathering on day three where we are live at the meeting all weekend francine lacqua had a great group with the french finance minister. you have been doing many fantastic interviews. tell us about this one. francine: we caught up with the french finance minister and talked about growth and reforms and we talked about the yellow vest movement. carlos ghosnut resides. renault will need to find new leadership. i asked whether, given what had happened, renault is the right and right find a boss now they are focusing on the company. they will have to put measures

in place but that will be up to the company. he was explicit in that he was optimistic the alliance will stay together and possibly become stronger but he told us that carlos ghosn resigned last night. another day, day three. francine: it is much colder than day one and two. heads of goldman sachs and we will be speaking to more chief executives from the retail world. able be an interesting take on what happens to globalization and the impact on their business. nejra: francine lacqua 4s in davos. with look forward to more coverage all week. let's get to the market, we are under an hour away from the cash equity market open here in europe. yesterday, we saw some modest gains in the u.s., the s&p up, futures not giving a lot of

traction and these are the bond futures, the equity futures have been moving higher. i will talk about the bonds, why not, since we are here? bondmovement in the futures, it is biased toward the 10 year yield loving down. if we take a check on the treasury yields we are dead flat on a 275 handle. in terms of the btb bund spreads if anything you might see a touch of tightening, not a lot going on. we have had some of the sides from the prime minister conti talking about growth. i was going to talk about the equity futures, i will hand it to you. manus: keep an eye on those bonds because you have a nice auction from germany. the bond markets themselves are not pricing in many rate hikes until 2020. if all 2020 is when the market

is putting in a rate hike. markets inhe equity europe, we have a slightly lifting town in the asian second best section. that is carried through here, stmicroelectronics deliver a nice beat in terms of batting away the angst and the blues from autos, the angst in the blues from the smartphone , comfortablew nice numbers come through. equities are higher, it is ecb day. juliette saly is standing by with the asian lift we had. ecb date, also the bank of korea and central bank of malaysia met and malaysia has kept their interest rates on hold as expected. earlier we had the bank of korea keeping their seven dave rate at 1.75%. on across of risk

asian markets, not much news flow, we are lower in the early session. chinese markets have listed on 1% andse up .6 of australia had a fairly good session. coming through with disappointing numbers but boosting the dividend by 50% and that saw quite a lot of investors moving into tech layers. when we look at the currency markets, the yen steadying against the dollar. higher by almost 1% against the dollar. it is a little bit weaker, down by white one of 1%. japanese stocks slightly lower. the aussie dollar an interesting one. jobs numbers came through better than expected, you had one of the big four banks raise interest rates outside the rba. that has everyone concerned about the housing market and the aussie dollar up i've point 61%. -- up by .6 of 1%. we heard the bank of korea saying it is not time to

consider further monetary easing and they cut their inflation forecasts down to 1.4% from 1.7%. nejra: but get the first word news from hong kong. -- let's get the first word news from hong kong. speaker of the house saying she will not let the present give the annual speech unless government agencies have open. there could be zero economic growth if the shutdown continues through the first quarter. business leaders are made bullish on the u.s. economy. -- president trump has recognized the opposition leader as head of state. this puts nicolas maduro under pressure threatening the

six-year rule of the south american nation. international ido as theognized gua leader minutes after the declared himself head of state. and a plan toion establish a minimum retirement rate -- age. he does not want to risk that america's largest nation turning into a venezuela style regime. >> the aim of cutting state presidency is to eliminate corruption. many people have become used to being clients of the state. even the social programs have not reduced poverty. the concern was to get as many votes as possible. we have to confront this, we have no other alternative. we have to do well by brazil, otherwise the left will get back in. it could come close to the venezuelan regime.

rate -- hiking rates six times policies -- policymakers are getting a breather from a more cautious federal reserve. with investors scaling back on their fed rate outlook, foreign inflows have returned to indonesia and the currency has rebounded. the governor of indonesia's central bank say it may -- says it may be nearing the top of its policy cycle. possibility of hiking farther, this will put our policy rate near [indiscernible] giving to the market. >> is there hope for a cut? >> it is difficult to say. our monetary policy is [indiscernible]

debra: global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. manus: thank you. debra mao with the latest from hong kong. let's get back to davos. francine lacqua is standing by. one man that knows a thing or two about the challenges of change in banking. arecine: he does and we pleased to be joined by him, thank you for being -- braving the cold. whether banksut in general, european ones, u.k. ones are ready for the next crisis. the banks are in very good shape, the level of capitalization is a multiple, our capital assets is more than 3.5 times what it was in 2007. the calculation of risk on our balance sheet is two to three times more stringent than it was

in 2007. the level of liquidity we are required to hold, the banking , more than likely there will be another financial crisis. inwill occur somewhere else the financial ecosystem. i think this time there is a chance the banks will be the buffer as opposed to the cause. you see theere do next crisis coming from, what region? jes: what i would say is there is a high amount of debt that has been accruing in corporate balance sheets and on the back of risk free interest rates. hasink the banking sector shrunk its capacity to take on bet -- debt on its own balance sheet. the has gone to collaborative two investment products that have tranche, remember the trudging challenges that were created in 2007?

the question will be whether there is sensitive liquidity shock and whether that will pull credit away from the capital markets and put issuers under pressure. we saw that in december. there was zero high-yield debt issued in the world in december and there were a lot of companies that have high-yield ones that need to roll them over. and to the extended first quarter that would have created a credit shock. francine: talk to me about potential shock from a no deal brexit. what a be a systemic risk and are the banks ready, are you ready? macron terms of the grand challenges, there will be enormous levels of uncertainty coming into march 28 and 29 if we do not have a more organized union.om the european we already feel that now. there is no question there has been an economic cost paid by

the u.k. consumer and u.k. industry because this uncertainty has gone on for so long. our obligation is to make sure that no matter what happens barclays will be open. we can do all the business tomorrow that we can do today. there will be a lot of secondary shock effect if it is a hard brexit. i do not think that would be constructive either for the european union or the u.k. doncine: if european banks not get better, are they always going to be second-best to the u.s. banks unless they consolidate? jes: no. barclays isnk second-best to a u.s. bank. we announced the largest buyout rbc, in thempany, u.k. and that is led by barclays. i think there are three things you need to think about when you have this conversation around

consolidation. one is in retail banking, scale matters in your national markets. and royalat lloyd's bank of scotland, i do not care about the size of bank of america in the u.s., as long as brian money and is not opening a branch and liverpool, it does not matter. jamie does not sit there and say the cow big the postbank of china is, that is one to chase. we look to your national market. and investment banking, scale does have value. we have the same balance sheet rave -- risk-weighted assets and balance sheets that morgan stanley does. barclays has the scale today to compete with the large american banks and do see that gaining market share in terms of our activities and debt capital markets. and then if you do not have the scale, if you talk to any

investment banker who has been through a merger, they will tell you they do not work, talk to someone from doj, first boston, jpmorgan and bear stearns and i was there, merger of investment banks does not work as a way to get scale. scale and iave the think that is one of our manages, you cannot buy your way into having that scale. and perhaps the most important is consolidation. every banker that you will talk to recognize his we are in a race around technology. there are fin tech companies, big tech companies, we need to digitize our offering and protect data in a safe, secure environment, we need to go to the cloud. that is an incredible amount of work for the banks. if you do a major merger today, just the process of integrating your systems, you're putting a heart break on any innovation in the technology platform and no

one should do that today. francine: what are your plans hiring, business lines? are hiring great talent over the last 18 months, where 70% through the rollout of our new trading platforms which are going well and we are seeing increases involvement -- volume where there is cash equities and we have given some balance sheet but we are controlling the amount of risk-weighted assets we have in the investment bank. we like to -- the progress we made in 2018. in the markets business, we gained market share for the first three quarters of the air and let's see how the fourth quarter rolls out. we feel comfortable how the bank is positioned. the feedback from clients is great so we like where we are positioned. francine: thank you, jes staley, the ceo of barclays. we will have plenty more in that post. you for joining us.

with brexit uncertainty in the , we and geo-political risk speak to the former prime minister of the u.k., tony blair. that conversation live from the world economic forum. this is bloomberg. ♪

>> as for us, european union states, it is not clear what great britain wants, what kind of changes they would like to have and what things they would like to renegotiate so we need so thathe next weeks great britain can what it wants and then they can

pick up the discussions with europe. manus: that was the head of sit -- germany's cdu. andeditor in chief surveillance anchor francine with the former prime minister. who was it and what did he say? francine: i am here with my editor in chief. are you ready to talk to tony blair? >> where do we stand with brexit, you have been talking to many of the same people as the rest of us, the europeans are slightly more optimistic about the chances of a second referendum. where do you said at the moment?

tony: i do not think the majority in the british parliament or any proposition, i hope the people go through different options, they will finally realize there is only one way of resolving this and that is to put it back to the people for a final decision. >> what would you put in that referendum, is it one where you need to say three questions, hard brexit, soft brexit, or remain? tony: it is whatever commands a consensus. you could have remain hard brexit or soft brexit. it is possible. the reality is there are two propositions that command real support amongst the british people, one is remain and the other is a hard brexit. the polls seem to be similar to the day before the referendum. do people not feel like they would be cheated if you go to second referendum, are you not going to have protests and

social unrest? tony: i am a skeptic. we are going back and asking the british people, we are not asking some other people. we're going back. be thee: it could not same question. tony: the context is different. in june 2016 evil voted to leave the eu but if you fast-forward we have had 30 months of negotiation. the one thing that would be, everyone would be in agreement with is the thing is in a complete mess. is it unreasonable to go back to the people and say what we have different versions of brexit, the prime minister is subject to no-confidence votes from her own party, is it unreasonable to say in the circumstances, do you ort to proceed, think again, do what you said last time? reasonable and that is probably an unreasonable qualification to put on it, if

politics was reasonable it would be obvious in these circumstances that parliament cannot reach an agreement on the right form of brexit, then it should go back to the people. the real difficulty with theresa may's deal is not the backstop. that is a separate problem. it is a subset of a bigger problem. when you do brexit, you want the brexit that keeps you close to europe because you have been 4.5 decades in the trading system but you end up with a pointless brexit has you stayed close or in line with europe's rules. or you lose your say. what you break out of the system you have been in in which case you're going to suffer economic circumstances. that will be damaging. a do you see any sign of change or is there a quiet sense they think there is a chance of our -- a referendum. -- this is a reasonable

strategy. tony: the europeans are incredibly mindful of interfering in the process. they think rightly, it is for the british people, for us to make up our minds what we want. one thing i have noticed about month,ns over the last -- months, they have come to the opinion,htly, it in my britain leaving europe is bad for europe and in a world that is changing fast, by the middle of the century will be dominated by america, china, probably india. if europe loses a big political and economic player it will be less capable of defending its interest in values. >> do you think that theresa may will -- in some ways she wants this to be taken away by parliament. it could and up splitting her party. withu have any sympathy her from the point of view of a party leader? tony: i have sympathy from the isnt of view i know how hard

to be prime minister and take decisions. i think she is dealing with a difficult situation. there are people who are unreasonable. i do not think it is responsible with the deal that is a bad deal to drive the country towards this and say if you do not do this bad deal, i will take us off the cliff with no deal. that is not responsible. reasonables it not or fair to have a general election that a second referendum? tony: the labour party would like a referendum. this is a sui generis issue. if you look at the conservative party and the labour party, there are different points of opinion. in a way, dealing with this issue on its own merits makes more sense to me. youcine: tony blair, thank for joining us, that was the former you keep prime minister and our editor in chief has a

huge day ahead of him. we will have plenty more from the interview with the new leadership of the cdu. this is bloomberg. ♪

anna: good morning, welcome to bloomberg markets, the european open. we're live from our european headquarters here in the city of london. i am anna edwards alongside matt miller who is in berlin. them today the markets ask a where the catalysts? asian equities mostly climbing as investors weigh for first ability to on trade talks in signals on how deep the global economic slowdown will be. the cash trade is less than 30 minutes away. ♪ anna: