♪ francine: davos data for, warning about uncertainty in geopolitical intentions the dueling bills of the u.s. senate to solve the shutdown. the pound gains amidst reports that the upa will support theresa may. chancellor may -- chancellor hammond warns against the risk of a no deal. >> clearly, there is a risk of a no deal. and peoples very need to remember that.

francine: mario draghi warns that economic risks have moved to the downside. -- it ishat it is a too early. >> we knew growth would slow down because it was at a very high point. what the slowdown has surprised us. francine: good morning, everyone. good afternoon if watching from asia, and welcome to the world economic forum's special coverage. i am francine lacqua. haslinda: and i am haslinda amin. they say the upside to know growth is no recession, they said. you have to wonder how much they can actually guess because of the uncertainty of politics. we are getting some news, this is the german business conference. we are spoken to a number of newsmakers for what they worry about.

at 99.1,e index instead of the 100.7 estimated and expectations are also quite low. if you look at all regions in the world, you have the shutdown, brexit, trade tensions, and on all three parts, it seems like europe is kind of secondary, but the one that could be hit the most. haslinda: that is right, and that will impact sentiment and right now, it is all about sentiment. consumer confidence in all of asia is down. francine: coming up, we speak to a director from japan's mccoury holdings and we talk with the irish prime minister. before we get to that, let's get to first word news. the dup decided to back theresa may's brexit plans. the northern irish process propping up may's government is now willing to accept a backstop as long as it is time limited. philip hammond breaking with the official line, saying that both

no deal and no brexit are a betrayal of voters. >> there is no good alternative to the deal. leaving with no deal is a very bad outcome for the u.k.. would be a very that have come and destabilize our political settlement in the u.k.. >> the window for the ecb to raise interest rates is about slam shut. they are slowing growth and they acknowledged yesterday that europe's economic risk moved to the downside. , and ecbexclusively executive board members said that the extent of the downside came as a surprise to the central bank. a lot of the uncertainty is political and has political sources, first and foremost, global trade. ,t is politically engineered and we knew that growth would

have the slowdown because it started from a very high point back in 2017. but the slowdown has surprises. we have been surprised, we have to be very careful to monitor all the data, and that is what we're doing now. itshe u.s. shutdown edges 35th day, the senate rejecting proposals from donald trump and the democrat aimed at ending the impasse. the white house a signal they may be open to a regency, but only if opponents agreed to a down payment on the wall. mike pompeo ordering most u.s. government employees to leave venezuela following demand by their leader nicolas maduro, one of two leaders. the trump administration is declaring maduro an illegitimate leader, throwing their support behind opposition leader juan guaido. veteran investors are watching the situation. >> we are interested, there is a

real change in government venezuela will be very, very interesting. however, this is not all about oil. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much viviana. beverageoldings is a giant which distributes globally. the company has a majority beverages,n food and and one of the world's largest beverage makers after coke and pepsi. haslinda: after joining suntory they have spoken of expanding sales of popular whiskey products in china, india, and russia. so as trade tensions rise and the chinese economy sales -- slows, what does that mean for suntory? joining us now is the ceo of suntory holdings, also the member of an economic advisory panel for shinzo abe.

thank you so much for joining us on this very cold morning. >> very cold! haslinda: just wondering, with the slowdown in uncertainty, is it affecting the consumer sector? >> the momentum in china has been slipping off, that is for sure. we have a restaurant business in shanghai, more or less premium. and the sales compared with last year's 10% down. consumptionchinese lost that confidence. all confidence is somewhere gone in china. so i am worried about that. francine: what assumptions are you making about growth going forward in china? >> this tension between the u.s. and china continues. i believe the china and the u.s. concessions,tain

but what about the tech war. makenk that china will certain concessions about protections. i don't see any solution between the countries. francine: will confidence come back quickly? because't think so, good trade does not bring with it positive impact. as already created negative momentum in the u.s.. so you expect chinese demand to continue to be subdued because of tensions? what makes the chinese confident or not confident? definitely the u.s. and china will keep a dialogue. while the dialogue is a cutoff, confidence will go down further.

but as long as there is dialogue between the two countries and is continuous, i think the momentum will be kept. the government is going to use a lot of money. and a tax reduction. a lot of people do not pay taxes. i do not know if the policy is effective. but having said that, the chinese government is going to spend a lot of money. that is another thing to gain the trust in the market. but still, it is limited. run, they have to push up their private sector furthermore. francine: on the horizon, you bought jim being five years ago. what's coming up next? >> good question! [laughter] brand,nd has a premium

jim beam is a premium brand. like to sell more premium brands. we have no immediate acquisition plans, we would like to brush up a little more. successionn terms of , you are the first outsider to take over the company. was the succession plan of the company? >> wow! question, i will have to ask the shareholders. first of all, it has been pretty successful in suntory. i played a key role in that, and have done a lot of things already. however, we have already decided to globalize suntory. there is a key role for me to play. francine: what would you like to see over the next 3-5 years? haslinda: what is the plan? >> even though the chinese economy is slipping down, their

consumption power is still a lot. such as alibaba, tencent, they are approaching consumers and it will go up. would like to be there, as well as india. any plans of those countries. francine: talk to me about the eu, given brexit uncertainty. last year, because of the tariffs from the eu because the u.s., there is the lateral inventory. hurting, but if this continues let's say for a year or two, our bottom line would be hurt by the tariffs. and i decided to raise the prices of our burden in exporting to the eu. because the eu is it pretty bad

-- eu economy is pretty that in a sense, we have to be very smart. scotch will come to the continent more because of a weaker pound. we have got double negative factors. francine: thank you very much for joining us there, chief executive of suntory holdings. we will also be speaking to a selection of finance and economy ministers from around the world including the finance mr. of canada, and an exclusive conversation with russia's minister of economic development. this is bloomberg. ♪

♪

francine: economics, financefrancine:, politics. haslinda: let's get the bloomberg business flash. pg&e has been blamed -- clear from blame from the 2017 blaze. gavin newsom says the finding may reduce their projected $30 billion in liability from wildfires by $70 billion. analysts now question whether file fore will have to bankruptcy after all. china will grant more licenses to local banks seeking majority ownership is local ventures, allowing more firms access. a senior chinese regulator speaking conclusively to bloomberg have this to say. , they haveand equity to go through what we call a

public bidding process. that takes some time. it is these kind of procedures that have been occupying our time. within the next 12-24 months? >> shorter than that. next sixhin the months, you will see more businesses being granted licenses. >> that is your business flash. haslinda: let's bring you another interview. , some sayobal growth the u.s. economy is not in bad shape. we spoke to jonathan ferro. >> the global economy is in ok shape. our economists are talking about 3.5% global growth. in the u.s., 2.25%. if you look at just the economy itself, i think we are doing just fine. has may betrajectory slowed, but the underlying economy is chugging along pretty

well. there is a lot going on in the world at a high level that particular big picture issues the government is dealing with, whether it is a shutdown, trade negotiations, brexit, just the name a few. -- to name a few. markets are watching this and it is a lot to digest and is actually big think people are focused on, how will these issues progress and what impact will they have? >> well you have already made some waves. >> i have? >> you have! the headline everyone is going to run around with is david sullivan says 50% chance of recession in 2020. -- solomon says 50% chance of recession in 2020. a our economists put together report and they said that in 2019, a 15% chance, and in 2020, a 50% chance.

it is hard to put in context exactly what that means. as you heard we, the economy is in good shape, chugging along. there is a possibility that as we get to the latter part and we see continuous tightening that we will see an economic slowdown. what, it is just possible this run could continue and we could see economic growth continuing. so it is hard to predict those things in advance, but i do think that is an indication we are closer to the end of the cycle, rather than the beginning. that was the newly minted goldman sachs ceo david sullivan. coming up, we'll bring you the first interview of the gay -- the day. that will be on interest rates at the possible end of monetary tightening in 2019. this is bloomberg. ♪

francine: this is "bloomberg surveillance." breaking news, credit suisse is set to lose $60 million. seen thes we have irony that we're sitting here wearing a ski jacket, according to people with knowledge of the matter, credit suisse lost $60 million late last year.

that is because they were underwriter on the share of 10 million shares by can produce, and of course, they then saw a lot of share price fall as a byproduct of the u.s.-china trade war. haslinda: of course, the offering price was $65 and $.15. this week, mixed messages around the irish border, particularly what will happen if the u.k. leaves without a deal. without a deal, that would mean no backstop. philip hammond told us this morning that a no deal brexit would undermine prosperity. >> i know that for business leaders, the deadline is only two months away. that seems awfully close. political way negotiations happen, we are still at the phase where people are camped on their preferred outcomes. the truth is too many people have not yet moved from their preferred outcome. that is the process which will

happen over the next days and weeks. people recognizing that they cannot get their preferred outcome. they have to find a common ground that they can all live with. protect find a way to the living standards. 30% chances there a we get a no deal brexit? >> i'm not going to put a percentage on it. clearly, there is a risk, and that risk is very real. people need to member that, people on the other side need to recognize there is a large body of opinion. as a large body of in parliament that would seek to avoid a no deal at all costs, including putting at risk brexit itself. the right answer is to find a compromise in the middle which avoids both of those extremes and allows for it to proceed prosperously to a sensible

future relationship with the european union after we left. francine: has the cabinet thought about a second referendum? >> there are real problems around the idea of second referendum. there's clearly no majority for that parliament. we have to focus on our ideas that are ultimately to be supported by a majority in parliament. our judgment is that there isn't a majority for the second referendum idea. francine: what is the majority? >> at the moment, nothing, that is the problem. we know what we are against but we haven't worked out what we are for. we're still at the state for people are promoting the ideal outcome rather than compromising towards a common ground we can all agree in -- on. francine: if we do not find a solution parliament would be in favor of the majority, would you be in favor of delaying article 50? >> that is not the government's preferred outcome.

we are very clear we want to leave on the 29th of march. the problem is this, you asked me a few months ago what is that will bring people together around a compromise, and it is the ticking clock, the sense of the deadline. if you were to remove that sense of an immediate deadline, you take the pressure off of people and you are only going to reinforce their inclination to keep rubbing the preferred outcomes. was a delay,there would be a tray of the british people? >> the trail would be is if we did not deliver brexit or in a way that undermine their a noerity, and i believe deal brexit would undermine britain's prosperity. that is not what people have voted for, they heard from the referendum campaign that we could leave, we could get a deal with the european union, and we can have a smooth and seamless exit. what we majority of people want to do.

francine: is it not fair to ask people what kind of brings up they want because it is unclear? >> it is not unclear to me. it is clear there are a majority of people in britain who wants to see us navigate this process in good order, in an orderly way , a smooth passage to a future arrangement with the european continuet allows us to trading together to protect the jobs in the u.k., but also means we are outside the european union delivering on and honoring the decision of the people in the referendum. francine: that was the u.k. chancellor speaking to us a little bit earlier. coming up, we talk about central banks, brexit, and shut down. this is bloomberg. ♪

francine: good morning, everyone. this is "bloomberg surveillance." haslinda: we are here in davos

for the world economic forum. we speak to the irish prime minister. let's get the bloomberg first word news. window for the ecb to raise interest rates is about to slam shut. mario draghi identified the risk concerns in slowing growth. the ecb executive board member set of the extent of the downside came as a surprise to the central bank. >> a lot of uncertainty is political. first and foremost, global trade, which is a politically engineered uncertainty. we knew that growth would have to slow down. the slowdown has surprised us. we have to be very careful.

that is what we are doing now. viviana: the u.s. government shutdown enters its 35th day. the white house is signaling the president may be open to a reopening agency for three weeks, but only for comments believed to a john -- agree to a down payment on the wall. demanding most u.s. employees leave venezuela. the trump administration declared maduro an illegitimate leader. a veteran investor is saying he is watching the venezuela situation. >> now, we are interested. i think there's a real change in government. venezuela will be interesting. you have to remember, this is all about oil. : a senior chinese

regulators speaking exclusive to bloomberg. it has to go through a public bidding process and that takes some time. these kind of procedures have occupied the time. within the next 12-24 months? >> shorter than that. months younk in six will see more licenses being granted. viviana: global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. in december, sweden's central bank raised rates for the first time in seven years. it is indicated it will slowly

remove stimulus. with us now to discuss the way forward is the deputy governor. it has been a very short while since he raised rates. any regrets? >> no. it was time to start the hiking process. we have been on target for a year and a half. we have now we anchored the inflation expectation. going forward, we see price pressure is slowly but surely growing. francine: with the ecb likely pausing, how likely will it be to go forward? i --cecilia: at the end of the day, it is the outlook for

the swedish economy that matters is how we assess our policy going forward. forecastable with the we are doing for the u.s. and european economy. that we areurprised seeking a little bit of softer data. it is important to remember that we come from a couple of years where there has been considerable expansion and we are at multiyear lows when it comes to unemployment both in the u.s. and eurozone. over not to be surprised the somewhat softer data we have seen. haslinda: do you think this tightening environment is over? which --it depends on cecilia: it depends on which government you look at. francine: what is the next move? cilia: we seek to make new

investments in the end of 2017, and we are now reinvesting the portfolio. we're going to keep the andfolio around this level keep reinvesting until we have reached a bit further in terms of policy rates hike. it is not imminent. we startedarly on, asking another governor what type of monetary policy would be fit. here he is. >> we have indicated price stability. we will remain accommodative because the eurozone expansions dominates our support. francine: do you see any kind of scenario where you need to hike earlier than signaled? ilia: i don't see anything in

the data presently. uncomfortable with the forecast that we have about one hike or six months, 50 basis points a year. ; as you know, stuff happens. this is not a preset plan, this is a forecast. francine: what kind of things would make you change? marketspends on how the and economists respond to that. francine: how difficult is it, if you look at the scenarios, do you have planned a, b, c? scenariowe have a main in how we think it will playoff. . the risks are down.

what do you think is the biggest risk for your economy? disputesi was a trade is the greatest problem for an open trade economy such as the swedish one. that thet is worrying old notion of trade benefits all and that we should have open trade across the globe seems to be going in a different direction. seeinda: where do you globalization going now? how difficult would that be? sweeta: i think we had a spot in history from the 1990's until the global financial crisis where the trends were walking on water and there was no reversal. i think it makes sense that we are seeing a backlash now.

i think well working democracies it should be able to accommodate that people's preferences are moving over time. i think there is -- i think we're believing in a couple of years where this'll be more complicated and countries will turn more inwards. at the end of the day, i hope that most people understand that open relationships, open trade with the combination of ambitious government policy accommodating for the chance of means for households and companies will actually benefit everyone the best. francine: if brexit were to be taken off the table, would that change the trajectory of your interest rates? lia: it depends on how the brexit issue is taken off the table. the short issue is no. britain is walking on her own path on how to handle these things.

we have trade relationships with them, but it depends entirely on what scenarios they take. we just follow the development as everyone else is doing. francine: there has been a lot of questions about the efficacy of negative rates with some saying that they actually raise r.o.e. cost, what is your take? is greati think it that we have so much interesting research. i think we're going to live with negative rates and downturns given where we are in real interest rates have becoming low. the research we have indicates that the pass-through has been sufficient when you look at households actually pay rather than what is published. you can look at different data and come to a different conclusion, but we are satisfied with how the transmission -- transition mechanism has worked. i think we are just in the

beginning of a long process of researching and discussing how the transmission mechanism works in this very special situation where you have negative rates. francine: thank you very much for joining us. still to come, we will be speaking to a selection of finance and economy ministers from around the world, including the finance minister of canada conversationive with russia's minister of economic development. this is bloomberg. ♪

francine: this is "bloomberg surveillance." haslinda: let's get the bloomberg business flash. pg&e has been cleared

of blame for a deadly 2017 blaze just days before the california --lity giant is set to it may avoid around $10 billion of its $30 billion in potential damages. china will grandma licenses to global banks seeking majority ownership in local ventures. this will allow foreign firms greater access to the second largest economy's $40 trillion sector. when -- four o -- for soe to sell, it has to go through a public bidding process. that takes some time.

haslinda: within the next 12-24 months? >> shorter than that. sixink within this next months you will see more licenses being granted. david solomon says this year underwriting has been prospect. there is no question that underwriting has picked up based on market volatility. slower given the government shutdown, which is putting a relatively meaningful ipo along. if the market environment continues to be what we see today, i think we will have a relatively robust underwriting calendar for 2019. viviana: that is the bloomberg business flash. back to you. ecbcine: ben is an

contender to become the next president. he said the euro areas's persistent economic weakness has -- >> a lot of uncertainty is political, has political sources. global trade, which is a politically engineered thattainty, and we knew growth would have to slow down because it started a very high points back in 2000 17-2018. the slowdown has surprised us. we have to be very careful and not as what we are doing now, analyzing the data, trying to understand what is going on. what we have to understand is this persistent shock to eurozone. francine: when you talk about a shock to eurozone growth, how much of it is trade and how much of it is internal slowdown? ben: a lot of it comes from the outside.

we have said as governing council that most downside risk -- we say they moved to the downside. francine: what about brexit? ben: first, the ecb is not part of the negotiation. i very much hope it will yield results and we can find a solution. that thered say is are substantial risks to real aswth in the u.k., but also a knockdown effect on the eurozone. we are not complacent about it. but the financial sector is now pretty well prepared to a note of brexit if that were to happen. francine: have companies actually prepared for plan b? ok?say systemically we are

ben: and for the functioning of the financial sector, i think most of the players are on their way now. francine: that was the ecb executive board member speaking to us. staying in europe, the governor of the bank of france says that think is still assessing the extent of the euro area slowdown. we have indicated to our mandate that we will remain accommodative because the eurozone expansion still needs our support. francine: what is pragmatic? you want to talk about hawkishness or dovishness. >> pragmatism means adequate combination of clarity and flexibility.

we took a very important decision last december which is to stop --, and it went very well. then we saw the first rate hike will not come before next summer and it will be data dependent. we will see. anthe third stage, after extended period of time, we will start reducing our investments. which we will maintain for the -- francine: the market is saying they do not believe there will be a rate hike by the ecb this year. do you agree? : it will depend on the state of the economy. we have said the risks are on the downside and you don't need the ecb to note the economic risk in the short term had increased. part of the slowdown is temporary.

the near time growth will probably be reduced in our forecast in march. medium-termhead will continue to be supported. we are part of that. by employment and wage gains. francine: give me a sense of the linkage between markets, market behavior and central banks. the central banks follow market behavior? francois: the short answer is no. we follow our mandate in the economic data. francine: is there a danger that the market wants to be spoonfed to much? now that it is off the table you need to be clearer with forward data? francois: we have been extremely clear with what we call our change forward guidance. this one we decided last december.it was a very important decision.

now is the timing, which is the question from the market, it will be data dependent. francine: that was francois speaking to us. if you look at europe and eurasia and the u.s., there is a lot of concern that it is europe that will lag the rest of the world. this is a confluence of lack of structural reform, but also this trade war with the u.s. and china that has europe as byproduct. haslinda: we are at the mercy for fed. interdependent walk. still to come, with brexit uncertainty continuing to's move swiftly, we speak to -- that conversation live from davo this is bloombergs.. ♪

>> if you look at just the economy itself, i think we are doing just fine. the growth trajectory has maybe slowed a little bit, but the underlying economy is chugging along pretty well. more than likely, they will probably be another financial crisis. actually think this time, there's a chance that banks will be the buffer as opposed to the cause. >> i think the economy is slowing. that doesn't mean we are in any sort of a crisis type mode that people like to talk themselves into. >> if the u.s. consumer is strong and are making more money, the u.s. economy has a pretty good position. we see a slowdown, less growth rate, but we don't see what other people are seeing. we will see what happens.

namessome of the biggest have been speaking to us in davos. this is "bloomberg surveillance." one of the big names that francine spoke with earlier was the u.k. chancellor philip hammond who said that were infractions will agree to a compromise under time pressure as the clock ticks down to the exit day on march 29. as a result of that kind of statement and another bloomberg report that the dup might give theresa may a deal, we saw basically the best week for the pound in a year. the second-best week for the pound in a year. here's a chart going back to january of 2018. you can see we had a great week then as well. in the last 12 months, we have not seen anything like that since this week. $1.31 as morehing people think we are going to

avoid a no deal brexit. let's get a check on what stocks to watch. : let'se: -- annmarie kick it off with auto. ericsson to the upside, more than 2% this morning. on huawei, 21% higher for fuller. they are selling beer brands to a japanese beer maker trying to expand in europe. we're going to have so much more from davos. this is bloomberg. ♪

francine: davos, day 4.

tensions in the u.s. to dueling bills in the senate failed to stop the government shutdown. warns on the very real risk of a no deal scenario. draghi's closing window. he warns economic risks have moved to the downside. good morning, everyone. good morning if you are watching from asia. this is our final day from the world economic forum. 2019 it has been wonderful. a little hectic and cold. tom: very cold here last night. the cold here has really been a different davos. inre has been another davos

my 15 years where there was a jumble of things wrapped around politics on the outside. francine: i like how we have done it this year. wednesday,litics, bankers, today we focus on central banks. in a few minutes, we will be joined by daniel professor. a little -- a yale. though -- the irish prime minister. we will also speak to the canada finance minister as well as the chairman of ihs markets. data, i wouldttle say in the final day here, it is a good day to put everything together with a key trend. i see disinflation. thean't ignore brexit with

gentleman from ireland and also the shutdown in the u.s. francine: those are key themes we will get to, the let's get straight to the bloomberg first word news. viviana: wilbur ross of the trade deal with china depends on whether beijing is open to further reforms. telling bloomberg equal market assets is a big stumbling block. he says so our intellectual property rights. talks resume in washington next week. new efforts are aimed at ending the longest government shutdown in u.s. history. senators began to block the impact after blocking two rival spending bills. the white house has signaled president trump is willing to reopen agencies for three weeks while border security is debated. a spokeswoman only says that will happen if there is a large down payment on a portable. elizabeth warren is proposing a wealth tax on the richest americans. they would have to pay 2% on every dollar of their net worth above $50 million. for every dollar above $1

billion, there would be a 3% tax. members of parliament proposed the amendment demanding prime minister tincher direction on brexit. the measure that may have the best chance, it would require brexit be delayed until the end of the year. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. back to you. tom: thank you so much. a little bit of movement over the last couple of days. looking at a grinding euro and clearly stronger sterling. the euro 113.30. what an unemployment claims number. under 200,000.

that is extraordinary. not much movement in equities while we have been in switzerland. i think sterling is front and center. i put in canadian dollar because the most important politician who didn't cancel was christopher linda of canada. that.ne: i like i'm looking overall at a pretty challenging week. the market is seeing that in europe, there trying to end it at a high. i would say we also go on to gold. i will put it in my next hour. gold and oil climbing. brent 61.09. tom: we begin this hour very strong with a gentleman who has been with us through all of my business here. he is committed to the world yalemic forum and

university. i want to talk about the unspoken here, this gilded age that we are in. how gilded are they gilded of davos? what is the level of inequality in income and wealth represented in this valley? bob: you say unspoken? i thought it was prominent. the reputation of davos depends power, both to wealth and government. the heads of state who have come here are very impressive show of power. the world watches that. people are attuned to the. your 2012 book, this morning an incredibly important

paper on why wages won't go up in the u.k. it is this huge mystery of the psony, which isno where the corporate elite control wages because of their power. bob: there is buying power. i haven't seen this paper, but it sounds like a monopolistic company might be able to exploit. tom: google or facebook? would you categorize them as having the power? bob: i would call the natural monopolies. we tolerate their monopsony power because we value so much what they produce, which would be damaged if they were split up. francine: is it better if they are split up? so many politicians are asking them to be split up. what would that mean for the fabric of what we are seeing? bob: i haven't taken a stand on it. tom: now would be a good time.

we are in switzerland. bob: i am an academic. you have to weigh the pros and cons carefully. maybe google should be split up. francine: what is the economy needs? if we look at some of this sharing economy in the future of technology, you could say it was this way that brought populism, you could say this is depressing a lot of the wages. what kind of big tech companies does the world economy need? need -- i't know if guess we have grown independent on the. google is a prime example. how long since you have been on google? francine: 0.2 seconds? at least five minutes. i shouldould -- bob:

try taking a vacation from google. tom: are they bordering on utility status? i think of wikipedia, which is entirely nonprofit. it hasn't been captured, as far as i can tell. it represents -- there is that inspiration. google isn't nonprofit, as you know. francine: it certainly isn't. what is the mood like in davos? we have had a lot of different interviews and it is different from sector to sector. what is the overall mood? bob: this is very subjective. me is thiscross to time is that we are more idealistic, and not so much business people. tom: i need to ask you about the

redistribution of income and wealth, particularly the senator from massachusetts, elizabeth warren is talking about a 70% tax of some form on the very, very wealthy. in our study of economics and society, this has been a debate. do we need to revisit a tax on the ultra wealthy just because they are wealthy to redistribute it to the government process? bob: that is not my position. i've advocated installing a plan that would take in in the future, hopefully 10 years in the future. to do that is inequality becomes catastrophic. i can't see why that should be -- their proposals have no chance. tom: there is a wide value of americans that believes we are at catastrophic right now.is that a policy democrats can run with the middle ground of america, a

more conservative america, including the diehard trump supporters? is america ready for a redistribution of wealth? bob: i would say no. book, they researched over 20 countries, some of them up to 200 years. they look at what triggers rises in taxes on the wealthy. you would think that taxes on the wealthy would go up when inequality gets worse. that is not history. instead, taxes on the wealthy go up during wartime. in wartime, the ordinary people are suddenly euros. -- heroes. taxes are raised to finance the war and repay war debts. that is an environment where you can do this. right now, i think that elizabeth warren has just harmed her potential by bringing a

proposal that is not going to be popular. this.ou are living connecticut is not one of the 200 nations, but it has taxation like nowhere else in america. that has harmed the connecticut economy, hasn't it? bob: that is my state and the population is declining. we do not see any new houses being built because the population is going down. there is a problem with the wealth tax. people leave and take a business elsewhere. tom: they come to london where there is low taxes. francine: let's see what happens after brexit. do you see this risk on all politics? inequality is maybe the fuel that is doing this? bob: that is the argument i have used for my proposal, that

we make a tentative plan for 10 years in the future. the real weights to the bottom half may be declining, but not very much. people are not starving, maybe someone is. but it could become catastrophic. we're not planning for that. tom: you wrote a beautiful as they recently on john vogle. i will retweet this out today. your thoughts on the era of john vogle. bob: he is presented as a believer in the futility of trying to beat the market. i don't quite agree with that, but i still admire the man. he created one of the biggest investment companies or asset management companies in the world. investors in 170

countries and 20 million people, but it is nonprofit. tom: can active management survive? bob: i think it has to because it would be absurd is everyone gave up. people give up, there will be more profit opportunities. tom: wonderful. thank you so much. up, canada's minister of finance. an important conversation of canada cop between a trade war, china and the united states. we continue here in davos. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." shares of intel are following. it came out with a forecast for this hour. it cited a slowdown in spending of large cloud computing customers. bloomberg has learned that they lost about $50 million on the luxury parka maker. canada goose tumbling. conglomerate credit group is taking steps to dismantle its global empire.

the company has been selling off assets around the world to reduce billions in debt. that is the bloomberg business flash. francine: thank you so much. philip hammond told us this morning that in no deal brexit would undermine peoples prosperity. leaders, for business the deadline is only two months away. that seems awfully close. but in the way political negotiations happen, we are still at the phase where people are camp on their preferred outcome. the truth is, too many people have not yet moved from their preferred outcome to an acceptable outcome that allows a compromise. that is the process that will happen over the next days and weeks. people recognizing that they cannot get their preferred outcome because there isn't a majority for it. we have to find a common ground that we can all live with and accept, which represents a sensible way forward for the country and protects the

interests and living standards of the british people. francine: is there a 30% chance that we get a no deal brexit? phillips: clearly there is a risk of a no deal. and that risk is very real and people need to remember that. people on the other side need to recognize that there is a large body of opinion in parliament which seeks to avoid no deal at all costs, including at risk brexit itself. the right answer here is to find a compromise in the middle around a deal which avoids both of those extremes and allows britain to proceed prosperously to a sensible future relationship with the european union after we have left. francine: has the cabinet thought about a second referendum have a plan b? philip: there are real problems around the idea. do we have to focus on his ideas that are likely ultimately to be

supported by a majority in parliament. our judgment is that there is no majority for the second referendum idea. francine: what is there a majority for? phillip: at the moment, nothing. we're still at the stage of the argument where people are promoting their ideal outcome, rather than compromising towards a common ground we can all agree on. francine: if we don't find a solution or something that parliament would be in favor of with the majority, would you be in favor of delaying article 50? phillip:phillip: we believe we n leave on the 29th of march. you asked me a few moments ago what it is that will bring people together around a compromise. it is the ticking clock, the sense of a deadline there. if you were to remove that sense of an immediate deadline, you

take the pressure off people and will only enforce their inclination to keep their preferred outcomes. delay,e: if there were a would it be a betrayal of the british people? what would be other trail is if we didn't deliver brexit for them or if we delivered it in a way that undermined their prosperity. that is not what people voted for. they heard in the referendum campaign from the leaders of the leave campaign that we could leave, get a deal with the european union, have a smooth and seamless exit. that i think is what the majority of people in britain want to see. fair to: is it not actually ask the people what kind of brexit they want now because it is unclear? phillip: it is not unclear to me. it is clear there is a majority of people in britain who want to see us navigate this process in an orderly way.

a smooth passage to a future arrangement with the european union that allows us to continue trading together, to protect jobs in the u.k., but also means we are outside the european union, delivering on and honoring the decision of the people in the referendum. francine: that was the u.k. chancellor, philip hammond is speaking to bloomberg at the world economic forum. tom: lots to unravel their. francine: as you look at eurosterling, it moves a little bit. coming up this hour, we speak with the irish prime minister. our interviews of the day when it comes to brexit. we will talk about the backstop. this is bloomberg. ♪

francine: this is "bloomberg surveillance." brexit.ocusing on this is your eurosterling chart. this is on speculation that there are chances of a no deal brexit that are receding.

this is quite unclear. we did see a little bit of a bounce when it came to pound as you mentioned, we were talking about this. tom: this is about as inflation and slowdown in europe. and an interest rate hike this year. tom: francine demanded we do eurosterling. coming up, she speaks with the russian economy minister. stay with us from davos. this is bloomberg. ♪

tom: from the world economic forum in doubles, francine lacqua and tom keene here. davos, francine lacqua and

tom keene here. i did not see one single snowflake. francine: it did not snow. can we move on? i'm going to save you. tom: the weather has been perfect and what has been great here is a mixed debate. francine: and it is different whether you speak to a chief executive from germany, the u.s., brazil. tom: our first word news. viviana: the leaders of the biggest banks in the u.s. may face questions on capitol hill. the house been all that overseas wall street may seek testimony from ceos. new house financial services chairman maxine waters has promised aggressive oversight of the biggest banks. the trump administration may take steps to limit the ability of states to block interstate

gas pipelines. the president might take action through an executive order. it will be faced -- based in the northeast. it has presented shale gas from reaching consumers in new york and other cities. in venezuela, military leaders pledging their loyalty to the embattled president. they say they will never accept an imposed government. after thethat move u.s., canada, and 11 countries recognized guiado as the rightful head of state. the u.s. department of state order government employees to leave venezuela. the explosion of wealth in san francisco has priced lower and middle income residents out of the market. it is backing an effort to fix that. facebook has faced multiple scandals in the last year. critics are demanding changes. >> what is happening at

facebook, mark is working diligently on and we have the opportunity to make sure we internalize those lessons as well. we have an independent organization, with strong leaders that are dedicated to this work in the long-term. we are excited about the opportunity to be best in class and learn those lessons while building our own organization. viviana: global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is "bloomberg." francine: thank you. now to brexit, 10 days ago theresa may's steel was defeated in the house of commons thanks to the notorious backstop. defeated in the house of commons thanks to the notorious backstop. how can a no deal be avoided and difficult not, what happens to the irish border? the european commission said no

deal means a hardboard appeared little says his government will never build one. a hard border. varadkar says his government will never build one. are you looking for solutions? what we areu're -- looking for is what we have been looking for since day one. a legal guarantee and a mechanism which will ensure we do not lose the progress that has been made in the past 20 years in terms of the good friday agreement. a lot of people talk about the impact on trade, jobs, the economy and all of those things. for ireland, it is different. we have peace in northern ireland. closerand, we have had

corporation. at the foundation of that was the european union. it swept away many of the differences between people and we do not want that undermined and the backstop is a means to end, a mechanism by which we know there will not be a hard border and that is why we have held firm. francine: is there room for compromise to avoid a new deal which could make it worse? openwe have always been for compromise and been willing to listen to any proposals that they government may have. if the u.k. was to change its redline, our position could evolve. was drawnget, this around all of these self-imposed red lines that the uk's said, leaving the-- set,

customs union and the backstop was designed with that. we would have been happy to accept a backstop that applied to only northern ireland. ae u.k. government wanted u.k. element. francine: would you be open to exploring a compromise if it means you do not get the hard border with the no deal? leo: the objective is avoiding the hard border. another mechanism, if the u.k. can come forward with a proposal that gives us that guarantee, we would listen. i am hearing from a lot of people, british politicians saying we are against a hard border and the backstop. the only alternative they can offer is a promise to sort it out later. up ae not going to give mechanism we know will work. tom: if you see these technologies -- leo: they do not exist.

why would we give up a legal guarantee and something we know will work for he promised to sort it out later or to invent technologies. that is not serious. -- or a promise to sort it out later or to invent technologies. that is not serious. francine: what about a five-year in some kind of arbitration? leo: what happens after five years. francine: you negotiate. what i am trying to understand is it seems we are locked down. no one is willing to give. the worst-case scenario would be a no deal brexit. is there anything you can do to make parliament go with a solution? leo: let's not forget this is a ,ecision which britain has made which has great harm for other countries.

and yet, we are the ones who are giving. a review clause in the backstop and we agreed. country that is being victimized is the one that is always asked to give. tom: if i'm in ireland and i go end up where there were major battles in 1922. what is that borderline? it is just before you go into northern ireland. what is it going to look like if they screw this up? leo: at the moment, it looks like the border between any two -- if things go wrong, it will look like it look like 20 years ago. want you to paint a picture of what that border is going to look like. leo: it would involve customs

folks, people in uniform, and the need for cameras, physical infrastructure, possibly police presence. the problem with that in the context of history is those things become targets. we have had violence in the last two weeks. tom: let me be the ugly american. ,s there an opportunity here not now, not within the voting , is this an opportunity for you to reach back to the 19th century and further reunification? the good we have in friday agreement is called the principle of consent. inthe majority of people northern ireland want unification, it will happen. that is provided for. i do not like to have that mixed up with the brexit. i do not think it is helpful.

it adds a new constitutional element and there are people in thehern ireland who joined british identity and we have to respect that. francine: are you talking to the dup? leo: yes. not negotiating, talking. this is what happens. dup represents maybe 30% of people in a small party in the united kingdom. when we talk to ireland, we talk to other people. most of the parties representing the people in northern ireland represent this. francine: what are the chances brexit will never happen? leo: very unlikely at this stage. obviously, as somebody who is european, i am sorry to see the united kingdom go and i am

conscious it is being done at a time when the younger people want to stay. that is a decision for the people and we have to respect that. francine: what kind of deal do think we will end up with? leo: i think that is part of the difficulty is that the united kingdom will split down the middle whether they should labor not. those who leave do not agree among themselves as to what that meant. these things should have been thought out. we could work of a can ago model -- canada model with arrangements for northern ireland. the people who caused all this have to come up with a solution. we could help. francine: when you say you can help, what does that mean? it means what we have been doing for the last couple of years is trying to negotiate an orderly brexit with a transition

giving businesses and people time to adjust with special arrangements for northern ireland that allows us to avoid a hard border. mind, a lot of mps did not vote against the deal because of the backstop. some want the second referendum, someone a different model. -- some want a different model. francine: could you change some of the words in the political agreement to make parliament come round? leo: absolutely. we should not forget the basic principles that this is a problem caused by britain. we came with a solution, the

deal on the table and parliament has rejected it very -- it. why are we the ones being asked to help solve the problem they created? what are they offering us? tom: what are they offering? leo: nothing at the moment. tom: if you look at the reach of iis back to the 19th century, think of gladstone and the failures on the way to where ireland is. all of it is about a domestic united kingdom debate which is conservatives and labor. is labor missing in action now? you like to see a different tack, the division between mr. corban and others within his party? that they complicated are divided on europe and on this issue. is tost thing you can do

stay out of other internal politics. what i have to do is look after the interests of -- tom: what does the backstop look ?ike in the irish sea explain to our audience what the backstop will be split down the middle. is notat is envisaged any walls. to beecks that might have done, checking animals, food be done at the ports and airports, done in dublin, done in court, in belfast and that is a different picture. it would be more than currency. us to avoidow physical infrastructure on the land border. it is the border that goes

through farms. tom: many of the interviews that francine and i have had is technology to the rescue and i do not hear that from you. to havebecause i've yet anyone demonstrate to me whether there are hormones in the before not. what is that? -- in the beef or not. what is that. are the rounds of proposals about a possible compromise. leo: we have a withdrawal agreement and the political is still sitting in the u.k. parliament. we heard about the polish proposal, there must be other countries that say, why don't we do this with this? troubleshoot? leo: i had a good chance to talk

and the suggestion was an attempt to be helpful but not the position of the polis government -- polish government. here and we have talked about brexit. ultimately, we took a year and a half coming to the solution. it is not perfect. it involves give and take. if the u.k. is unable to ratify this agreement that took 18 months to agree, there is no solution. francine: could you tweak anything that you would be happy with to avoid a no deal? leo: i do not know what that means. fundamentally, the backstop is a is theo an end and it objective that matters and that is a legal guarantee we will

never see the emergence of a hard border as a consequence of brexit. it is the objective that matters, always. tom: we mentioned earlier the good friday agreement. what appears to me that a younger group does not know this history, the challenges of your ireland, of a northern ireland. are we being naive about the the republic of northern ireland, about the risks we're taking if we screw up brexit? leo: people are aware of it. do notounger people remember what it was like when we had a hard border. i think irish people are aware of risks. timeent a lot of explaining those to our european partners and they have been behind us in this. germany has a history of hard

borders and understand it well. other countries, less so. been overwhelmed by the strong solidarity with al. -- solitary we have felt. francine: is a time to change that? leo: not at the moment. they would like it to be changed. tom: monday or tuesday? leo: one of the big pressures we have now in ireland. we balanced our budget for the first time in a long time last year. we are increasing pay for the people who work for the government. there are demand's to increase it more to the extent we would have to start borrowing money. i do not think we could suddenly for bankers and say to our teachers and civil servants, you cannot have a pay increase. francine: what is the mood like os?dav

how many questions on brexit did you get? brexit,has been heavily on the business side, it has been about investing in ireland. have got a pro-business environment, a lot of talent, we know where we want to be in the world which is in the european union and there is a strong pipeline of investment coming to ireland. tom: one final question, can you jfk tore flights from dublin? leo: i can try. what we would like is more direct routes to other places in the states. tom: i know you're watching. get it done. francine: thank you so much. that was leo varadkar.

this is the world economic forum. this is surveillance. ♪

tom: good morning. francine lacqua and tom keene. vice-chairmanhis was in that commodities investment bank. let us begin with commodities and the immediate news of venezuela. there is instability there, does it lead to a abrupt hydrocarbon flow changes which would lead to the price change in oil? >> the reaction has been a little bit of that. if you look at what has been happening and the continuing decline in production with the lack of dollars, it does not global balances. see thispect to continual decline in venezuelan production. clearly, if things become

disorderly in venezuela, what it does to regional economies, we have seen what has happened with a flow of migrants from syria into your. -- into europe. that is the bigger economic impact. tom: you have lived european banking. one of the themes we have seen is an urgency for european together, get its act to get its house in order. i do not mean to pick on deutsche bank. can the banking system heal itself in 2019? problem is not so much healing themselves from a balance sheet point of view. that seems to have been done. it is difficult to make an adequate return on capital because there -- they are a less leverage model and the answer is scale which is something

national regulators have resisted. i cannot see how you get to a profitable actively lending banking community without a degree of profitability and the way to do that is to merge cost bases and improve margin. is it 2019 and visit domestic or cross-border? -- and is it domestic or cross-border? >> probably domestic. regulators are concerned about fail.g to the logic would be cross-border m&a. tom: you have a rich cultural ,nowledge here out of england all of the different machinations of international economics. david rubenstein told me there is to make these banks merge.

where does it come from? desperation? frustration perhaps. shareholders continue to see 60%, 70% of net book value and are looking for people to unlock value. boards are starting to feel that pressure and christine lagarde said yesterday, the compensation culture is causing problems. what will investments look like under brazil? >> it is an exciting time for brazil. you have got two or three factors. brazil has been pretty well run for the last couple of years under the outgoing government which was politically confusing but from a macroeconomic point of view, good. you have a recovery driven by credit expansion, driven by a

pickup in employment. if the government are able to implement fiscal reform, the change to the pension scheme, to solve what is basically a future problem in terms of government expenditure and they bring in and idea of privatization microeconomic reform, the opportunities look attractive. tom: thank you so much for joining us today. up, to synthesize all that we have seen here. this is "bloomberg." ♪

tom: the queen desires her united kingdom to seek out calming ground. into the weekend, they many britons consider a choice -- the ains consider a choice. the president desires his united states to build a wall and crime will fall. clean up thempt to shutdown. no word if they can get home this weekend. , they earnestly desired t to exit. good morning, everyone. this is bloomberg surveillance, live from our world economic forum. francineeene with

lacqua. how did i do? rate out there. we are here today -- right out there. we are here today. we will sum up the different international relation issues. and important conversation with we will beleaguered, discuss whether the toronto maple leafs can catch the tampa bay lightning. the bloomberg first word news. wilbur ross says a trade deal with china depends on whether beijing is open to reform. equal marketberg access is a big something block. talks resume in washington next week. this morning, new efforts are aimed at ending the longest government shutdown in history. senators began talks after

blocking two rival spending bills. tosident trump is willing reopen agencies while border security is debated. that would happen only if there is a large down payment on a border wall. elizabeth warren is proposing a wealth tax on richest americans. they would have to pay 2% on every dollar of their net worth above $50 million. for every dollar above $1 billion, there would be a 3% tax, underscoring populous methods at the heart of her campaign. the u.k., parliament are proposing amendments demanding theresa may change her direction on brexit. their chances of success depend -- how may -- it would require brexit be delayed until the end of the year. global news 24 hours a day and

at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. back to you guys. thank you. equities, bonds, currencies, commodities. there is movement, euro-sterling with the dynamics of disinflation in germany and the battle of brexit. curve flattening in the united states. .he euro, 113.37 the vix, 18.15. francine: i am looking at equities in europe and asia. futures in the states as well. gold and oil are climbing. 113.37. see gold we will have plenty more of course from the world economic

forum. we spoke to participants here. they have released the reports in global risks of trade wars. populism topped all lists. these have been a good by leaders and dabbles. davos. >> the danger populism is high .n europe and in the ukraine adding to that, we have a , russia used a democratic influence. >> the american administration conducts its politics with a great deal of sanctions with leaving a number of international agreements and this is not a good way of working with others. >> when you're looking at the situation all over the world, the rise of china which would

they were law, when you're looking at a situation of moreitizens which expect jobs, more justice, do you think we can have so many divisions? >> countries are looking inward when making policies. increasing and unilateralism and populism are spreading in the world. all these are posing serious challenges. >> new winds are blowing across the world. is this, do they signal fairweather or do they foreshadow a storm? is this a force for good or not? i would argue this is a positive development. that is my favorite of

this, the voices a populism finishing with the secretary of state of the united states of america. ofood international student this is the gentleman who has provided leadership to the chatham house in london. thank you so much on this last day for being with us. i said to someone, everyone gets book,bag and they have a "diplomacy." ofhave got to read 800 pages how we got through war, diplomacy. do we have a theory of international relations and diplomacy? twon: it feels like theories are competing, the realist theory that might is and you heard mike pompeo.

disruption, i think it is a force for good. the u.s. administration has to say that because they are creating disruption. we see china and russia. you have got a different agenda which has been around a long time. interdependent challenges, climate change, workrism and you have to together. those views are battling it out right now. good discussion is the liberal order because no one is going to be full they china -- before old that china -- be fooled that china, austria, is not a liberal order. it is still that. the institutions are still there. it might be weaker.

the u.s. wants to jettison that and rewrite some of the rules. does the u.s. leave the wto or doesn't reform it? -- or does it reform it? it is worth testing it. francine: there's only one question i want to insert. you can argue the strongmen are doing it because it is popular back home. if we were to enter a crisis, would governments come together to find a common solution? robin: my big worry is you look at when the g20 was reformed after the financial crisis, china was a willing player along players to avoid that. if we have that today, the financial system is more resilient than at that point. i think countries would be looking to see who wins, who is going to benefit.

i dois different today, not think they will come together the same way. francine: it would be to the bottom? robin: it would be a race to test were the bottom is. no one wants war. people have got too much invested in the upsides of what we have developed. there has been a rebalancing of who is at the top of the chain. at the heart of this is u.s.-china. tom: do you and your team trump foreign policy and ffreign theology is a one-o or is a new permanence here -- or is there a new permanence here? robin: i think this is something that is closer to -- i think this is closer to something that is going to last. the idea that has to restrain

itself within instants rational -- within answered -- within international situations, you either sure leadership. you spoken to her experts. what do they say? robin: i have not spoken to experts. it is amazing how people are willing to apply violence are willing to hang in longer than you expect. the majorca government has been presiding over one of the urof-inflicted -- the mad government has been providing presiding -- presiding over one of the biggest self-inflicted crises i have seen. tom: on teddy roosevelt this morning, how is russia going to influence a nation in the turks and caicos? robin: they want to put into

trump said, is this worth going all the way on. this is not panama. head, is this worth going all the way on? this is not panama. francine: will it work? week, from the russians e, from the russians to, are on their doorstep. francine: let me go back to the u.k. i do not follow the markets as closely as you do. people happen underestimating the risk of a no deal brexit. you have a government actively pursue a policy.

otherwise, you have to have a parliamentary revolution against the government. question of the morning, what about a no deal macedonia? it is foreign to so many of our audience. explain how important macedonia is to that and what it means for russia? has been trying to stop enlargement of nato from taking place. has happened and there are stories they tried to engineer a coup to stop it. tom: is nato extended too far? o's promises to make ukraine, georgia, moldova members, you could have been drawing the man but to have made that -- drawing them in but to have made that pledge. areacedonia joins, there

more and more people inside nato who are taking a more pro-russia line. nato is getting wobbly internally. alvini.got so bee francine: thank you so much. we will have more great interviews here. coming up next, william morneau. we will ask him about trade, about trump. this is "bloomberg." ♪

tom: good morning.

from the world economic forum, francine lacqua and tom keene as we discuss the ability of the toronto maple leafs to catch the tampa bay lightning. you do this with the finance minister of canada. i'm going to talk about your colleague and crime. she showed up at davos. every other politician in the lens of global tension did not show up. she showed up to represent canada on china, on u.s. and on the huawei issue. what did you listen for? we speak on almost a daily basis so i did not have to come here to talk to her. are going through a diplomatic moment with china, a challenging moment. , making sure here

that our allies, the people that care about canada are representing the fact that we are a rules of law country and we need to follow our laws and the only way we can approach issues like the current challenge. tom: i grew up in southern canada, we grew up across lake ontario in our childhood. is that relationship broken by what we have seen from mr. trump the politicians in washington? william: absolutely not. -- from mr. trump and the politicians in washington? william: absolutely not. we have had a few challenging moments but we got to a conclusion that we think is going to work and continue a great relationship. sometimes, you have tough discussions and it is important when you get to the end. signsne: are there any

that china is acting against the canadian economy or against your financial interests? , iliam: what we are seeing cannot directly say i have seen that but what we are seeing, for investors, there is a moment where people are having pause. aretravelers, you questioning your ability to do the business you want. is the moment we are in and we are seeking paths to get past this. our long-term interest is to have a trading relationship with china. francine: they have not slowed at bond buying or anything? , weiam: on the contrary issued canadian government bonds last week and we saw strong demand internationally and that included chinese demand. what happened in alberta, the price plunged of canadian

you had to come in and support canada's oil industry. again, going to do that is there a feeling your solve the price problem, that you have -- you have solved the price problem? william: we do not think we've solved this. it is a global issue. wehave step -- the thing have stepped in to resolve is how we get our resources to international markets. purchase the transmountain pipeline moving resources to the west coast so we can get to asian markets. we did that because we had a political impasse. francine's question, you have got the pipeline, with these china tensions, is that trade blocked? william: asia is not just china.

we see the potential for liquid natural gas, were we have an opportunity to move into asian markets as well -- where we have an opportunity to move into asian markets as well as national interest. this is something we are engaged in and making progress. francine: canada's economy looks like a soft patch. how much of a problem is that? william: you identify what the soft patches. the oil shock hit our resource sector. we had a slowdown in q4. we think we will have a positive year this year. we have got private sector economists predicting that. there are headwinds because of trade and recovering from that oil shock is going to take time. francine: it is a temporary soft patch? william: i think that shock is working its way through the system. to get alberta back up to where

it should be, it will require improvement. francine: how immediate is the risk of a recession? william: we are continuing to forecast growth this year. we have the lowest unemployment rate we have seen in 40 years. approachue to have an to making sure middle-class canadians see opportunities. there are headwinds. we do still see growth, opportunities are and we have trading relationships with two thirds of the economies. this year, a theme are the european banks, their inability in everymarkets and conversation is the canadian banking system. road --years down the you are 10 year stem the road, the state of your canadian banks, -- 10 years down the

road, the state of your canadian banks, why did they do so well? principale have a -based approach to how much capital we should hold. we take an approach that has been conservative and cautious. we did not leverage up. our system is concentrated. we did not have many outliers to drag the system down. 10 years later, our banks are well-capitalized, loan losses are manageable. we have continue to be resilient. they are strong and it is a source of strength. asia, we look to oil to a less. i routinely -- to last. only -- how are

the maritime economies doing? william: there is a bigger challenge in the maritime economies. coal are the canary in the mine in canada because it is an older population. we have sources of strength, nova scotia is doing well. newfoundland and labrador, the oil and resource sector has been a challenge. we are doing well. tom: thank you so much. we have breaking news in washington we have to go to. look forward to speaking with you in the future. we have important breaking news out of washington. this is on the mueller suggesting that roger stone arrested in florida. with the trump

campaign. it has been anticipated by many including our tim o'brien that he would be in the public eye with the special counsel and with mr. mueller and this is the morning in washington. what is so important, forgetting about the shutdown, the special counsel is not shut down. they had to move on from me midterm elections and this is that, i would suggest, this is about when we would see these actions. we should probably update our viewers about what we know right now which is not much this is fact that linked to robert mueller to investigate this potential collusion with the trump campaign. roger stone seemed like a clear target. tom: what is so important here,

forgetting about the presumption and theence interpretation of our experts, is the success that mr. mueller has had in finding guilty verdicts. d all.as sobere have led to final guilty verdicts including michael cohen . it is a good time to speak with kevin cirilli. your thoughts on this? kevin: this is remarkable, a longtime confident of president , one of his earliest political advisers dating back decades ago to win donald trump explore the idea of running for governor of new york. he is indicted on seven counts, one count for obstruction, five

counts of false statements. indicted by a federal grand jury on one count of witness tampering. he is going to make an appearance later today at the federal courthouse in fort lauderdale where he and his wife resides. roger stone is someone who has known the inner workings of the right wing, the alternate right, if you will, someone spotted on capitol hill several weeks ago at the google hearing with alex jones. now, on a federal indictment. this is a remarkable arrest and development. tom: does this signal further but is it an additional tension within the inner circle and their family that they are involved with mr. stone? kevin: yes.

roger stone is someone who has been someone who knew everyone in trump world. enough, stress this someone who has been on capitol washington,d in someone who knew the alternate right universe and now he has been federally indicted and he will face in fort lauderdale, presumably within the next 24 hours. tom: have we seen any documents, that detail that has come out of mr. mueller? kevin: this is breaking. i have not had a chance to read the indictment. as soon as i do, i will have more. the charges are that he lied to , that isal prosecutors devastating. frequently,one who

spoke like trump in the sense of , had a different relationship with the truth then many people are used to. for mueller to do this and to say he lied, it shows you cannot get around bob mueller. francine: what exactly was roger implication in the u.s. presidential election? what did he do? he was someone who had said publicly and privately that he had a way to get in touch with wikileaks. he went on to say after the campaign he was lying to reporters. he made it out to sound he had a becauseet to wikileaks they had devastating information on hillary clinton. for him, then he said he did not

have that relationship. his connection with wikileaks, his connection with wikileaks, that has been at the heart of what mueller was investigating. testifyeen called to before members of congress. he sought to do that publicly. he was someone who, during the republican convention, said that if the republican establishment tried to take away the domination -- the nomination from than canada trump, there would be writes in the streets -- from than canada trump, there riots -- from then candidate trump, there would be riots in the street. tom: i am speaking as an amateur

here. is different, this is closer to the family. the distinction is this is closer. francine: it feels like, after months where we were asking ourselves where the investigation was going and no one had any clue, this feels big , the timing feel significant, the fact is is in the middle of a partial government shutdown. should we recap? we know that roger stone was arrested on friday. this is following an indictment by the federal grand jury according to the special counsel office. tom: let's go to marty schenker in new york. different moment for the mueller investigation.

describe why roger stone is different to the president and to mueller? marty: roger stone has consistently said he expected to be indicted and he got what he was asking for today. it is different because the indictment, as far as i could read it does describe communications between roger stone and the campaign, senior people in the campaign. they are not identified but that -- but that does bring it closer to the president. strategy is to start from the outer edges and work his way in. he is moving closer to the front door of the white house. francine: i know this is breaking news. from the special counsel that the indictment,

which was unsealed upon arrest contains seven counts. obstruction. could he be dealing between wikileaks and president trump? marty: it is interesting. is not theate, it crime, it is the cover up. accused of doing anything illegal in terms of campaign efforts. what he is being accused of is lying about it in interviews with fbi. thatis the real reason mueller went after him is for not being truthful. tom: let's hold a clinic on witness tampering. we can bring this over from roger stone and the documents we will read to michael cohen and that he was delaying

his house discussion. tampering, is that it equivalent to obstruction of justice? is it worse? are from aink they legal perspective, rather it equivalent. witness tampering, there is a fine line to prove that case. in the indictment itself, it says that roger stone attempted influence an individual who is not named to give false testimony. that is one count. side, michael cohen donald trump and rudy giuliani, kind of issued threats about what could happen to his , you could argue it either way whether that represents witness tampering and it would be hard to prove.

francine: of course, he has been under scrutiny for months. would this be something the president would be expecting? is thaty understanding before bob mueller takes action, he goes to rob rosenstein and that he has been consistently briefing the white house before any events. i would suspect the white house was aware of this. give me an update on the state of the presidents legal team. one of the things we noticed is the analysis, of mr. giuliani. would you presume we will see silence from the white house or do they come out in defense of mr. stone? i do not think they will be in defense of mr. stone. what they will say is there is

no indication in this indictment that donald trump new about these activities or that there was collusion between donald trump and the russians. i do not think he is going to issue some defense. he is probably going to say this has nothing to do with me. tom: let us get a shutdown update. i made a joke in my opening that the politicians have to get out of town through tsa. give us an update on the state of airline security during the shutdown. the tsa is doing an incredible job reallocating resources where they see issues. all of these people are working without pay and doing a magnificent job. keeping the level of pain in their trouble to a minimum. there is this glimmer of movement after these votes

yesterday in the senate. this may behat that this is still, donald trump is insisting there be some payment on a wall which the democrats refuse to do. this could drag on. you so much. our chief content officer the day of indictment against roger stone. we are going to look at the political calculus on this. greg valliere will join. stay with us. this is "bloomberg." ♪

tom: from the world economic forum, francine lacqua and tom keene. we welcome all of you. they look to washington. at washington of the indictments of roger stone. everyone, kevin cirilli and marty schenker, our team poring over the document. this will be the news story of the day, pushing the shutdown the side. this is different. francine: it is. audience, he was a trump campaign aide until his to parch or in 2015. he remained in form -- until his departure in 2015. he remained an informal advisor. tom: let us go to our first word

news. with walmartegin pulling out of a global effort to challenge amazon. it removed its products from google shopping action service. it launched last march. walmart has built up its own e-commerce capabilities. that may have reduced the need to join forces with google. pt -- pg&e has given no indication that will not file for bankruptcy despite being blamed for a wildfire. funding will reduce the projected $30 billion in liabilities the last two years. pg&e could face significant cost. shares are down more than 70% since november. that is your business flash. tom: good morning.

a lot going on right now. we have got the market stable, disinflation. what have we learned from the irish prime minister? francine: he feels cheated because we learned he is not willing to compromise. tom: he said it is their problem. the idea there is that there is a no deal brexit, they can have a hard border. whether hedering could get the deal through parliament. the news flow has been incredible. we heard that roger stone has been arrested on seven counts. tom: as we heard from marty is not aboutmuch being involved with a crime but lyingea of a cover-up and within all that. it is still unfolding.

discussion is on detail. .ou said on such as such a date francine: we had no amazing -- we had no idea what robert mueller would look at next. the timing seems significant. we are in the middle of the shutdown with no resolution in sight. we have got our team in washington looking at that. it is an annual visit here. yurgen is the -- daniel yurgen is definitive. he joined us for a discussion yesterday. the energy level would be a. -- would be up.

we were making jokes that everybody walked around and they ol.e co the ones that read it, reread it. 20 5, 30 people have come up to me and said it was one of the best books they have read. tom: is venezuela in your book? daniel: venezuela is a big part of the prize. it was one of the founding members of opec and here is venezuela on the precipice of falling over and this has the largest oil reserves in the , north dakotay produces more oil than venezuela. i want to look at venezuela and the ability to recover. everyone is listening to you this morning.

someone goes in, straightens out the politics, how quick does it take for venezuela to become caracas? daniel: i do not think it will happen overnight. so much of the middle class have left. there are 3 million refugees around venezuela. people will because she us about going back in the country will need investment. -- will be cautious about going back and the country will need investment. it is his inflation, the banana republic. francine: do you think maduro can hold onto power? balanced right now, right on the precipice. but to havethere this united front of canada and the united states and a lot will depend upon sanctions and a country that has a big stake in venezuela today is russia.

francine: they have oil reserves. what is the implication for the price of oil? daniel: venezuela production has fallen dramatically. it would have lester maddox a. it would hit -- it would have less impact. it would hit the west coast. it is a threat. like it wasthreat about 15 years ago were you lost 2.5 million barrels a day. it would be a jolt to the market. tom: we have the privilege of speaking with you about russia and venezuela. you taught me once about the munro dropped her and -- munro doctrine. is it still in play here? how do russians influenced venezuela? daniel: they influence it by investing. they are active investors.

tom: china as well. daniel: china as well. tom: how does a new regime deal with that? daniel: that will slow things up because there are few western companies left. service companies do not go there because they cannot get paid. tom: this is critical. it is not going to be standard oil to the rescue. it is not what we read in the history book. daniel: they have to consolidate a government and you still have that says we're standing there because we have so much at stake. francine: how will history look back at opec plus? daniel: the agreement is an adjustment to a new world, the world of the big three, united states, saudi arabia, and russia.

the opec plus is a reaction to what is happening in the united states, surging production of howe in this country and suppliers adjust. francine: how does oil find a range? if you are a producer or you are saudi arabia, you need different prices to break even. daniel: there is a technical price and what you need for your budget. the view is somewhere between $60 and $80 keeps shale in the business, it is not bad for consumers. tends to shift up and down. tom: we are so fortunate here. francine has the rockstar desk. organ recital the

other day. what would thatcher do about brexit? you are one of her great students. what would margaret thatcher given the insanity of domestic politics? daniel: she would be working to not have it be from 10 downing street versus parliament. she had a skepticism. she believed in national identity. to be in this situation where you do not know what is going to happen would be unacceptable to a leader like margaret thatcher. the tension you have written of, what are the new commanding heights? where are the new commanding heights? hear isfrankly, what we sweeping back toward the commanding heights.

listen to what we are hearing from the candidates to the democratic president, it is going back to a different era. tom: does it sound like another book? francine: it does. tom: what should we call it? daniel: the retaking. tom: thank you very much. market.th ihs will join us with the news of mr. stone from florida. this is "bloomberg." ♪

tom: good morning, everyone. the meetings at the world and attending, the headlines out of washington, and indictment by mr. mueller. iere joins us. he has been brilliant on folding the political debate into these indictments.

let me go to the immediate moment. how will this change the investigation in the democratic house of representatives? greg: it empowers the democrats more. this sends a signal to everyone else the fbi is talking to. we can come to your door and start pounding and arrest you. this is just the beginning, more are coming. tom: do you believe this is closer to the president's family and the people around him? greg: yes, i do. mueller wants cooperation. if he does not get the cooperation, he will go after people close to trump. francine: how will the president react? greg: that is the question. he could react. sleigh, he could revive -- he could react furiously.

he could revive links about pardoning everyone. leaks about pardoning of room. francine: what would happen if you were to fire mueller? greg: it would elevated to a serious crisis. even the republicans, loyal to trump, would rebel. around it is his immediacy of hiring a new legal team. he has lawyers who seem to be the kind of lawyers in the president would want. do they have the trust of the president? to say.rd i think the president has moved away from giuliani. he is becoming a now contrast he is not helping. ross, he is not helping. tom: his lawyers have to step

up. will they be more visible starting this morning? greg: they are going to have to come up with a defense. think this weakens trump ahead of an important series of meetings with the chinese next week. we have the shutdown, this indictment. you do not want to go into talks with weakness. for our international audience, can you describe the relationship, how close were they? greg: stone made it sound as if they were close. --o think stone was month was one of his most vocal defenders. this has to shake him this morning. i think the president will say that stone played a minor role in my campaign. this hurts trump, no question. tom: thank you so much, a quick

reefing here. -- briefing here. he will join us on radio. we move around from washington, to england, and we forget there is an international debate around russia. francine: there is one question, if the economy were to get worse, with the countries come together and given the strong men around the world. tom: we are going to drive forward this debate with the russian economy mr. -- minister. this is "bloomberg." ♪

alix: a new hope. theresa may could get support

from northern ireland for her brexit plan. chip fears. until 2019 outlook missing estimates. outlook missing estimates. ross says a deal could get done. oneal is possible but hinges a visit to d.c. next week. tom: welcome to "bloomberg daybreak." news and evolving the white house. -- involving the white house. arrested,e has been indicted in fort lauderdale, florida. a big development, potentially. this could connect the campaign to the wikileaks league of