♪ >> good morning from bloomberg's european headquarters in the city of london. this is "bloomberg daybreak: europe." containing the spread. the coronavirus death toll rises to 25. the world health organization stops short of declaring an international emergency. china restricts travel for 30 million people as various markets are shut for the lunar new year. christine lagarde gives few details on the central bank's much anticipated policy review amid expectations for a prolonged policy pause. christine lagarde joins us from davos this hour. doubling down on diversity. from july, goldman sachs will not work on the company's ipo

unless the board has at least one person who is not white, male, or straight. ♪ nejra: welcome to "bloomberg daybreak: europe." a number of markets closed in asia ahead of the lunar new year, including china and hong kong. not a huge amount from u.s. futures either, up just 0.1% after a bit of a muted session yesterday. the european session could see quite a big bounce back from yesterday's session. risk coming back on the table. that is reflected in the 10 year treasury yield as well. it has dropped about 10 basis points this week on the general risk off. citigroup saying we could get 1.50-- could get to a

handle. euros-yens across -- is thecross -- euro-yen cross you want to look at. a lot of eyes going to be trained on the pmi data out of the u.k.. it comes from the eurozone as well. will that pmi data save the pound? brent firming up a little bit, heading for a third weekly drop on oil on the risk off sentiment around the coronavirus. the latest on the coronavirus outbreak is that public health experts at the world health organization believe the virus is local. emergency in china but has not become a global health emergency. it may yet become one. the death toll has risen to 25 and china is struggling to contain rising public anger over

the spreading virus, even after it took steps to spread the outbreak. government and business leaders at davos have been commenting on the virus. let's take a listen. >> i think the chinese government are taking serious measures now and very quick. >> i think the hospitals and communities are much better well rsepared compared to the sae stage. >> this is a challenge but we have been aware. >> obviously, it is a challenge. if there is any country in the world that can deal with this kind of challenge, it must be china. >> it can be really devastating, no question about it. this is early days. >> it is an example of why countries need to work together. >> we need to contain it as soon as we possibly can and communicate that it has been contained. >> hong kong has a ready put in place a highly vigilant system.

president trump: we think it is going to be handled very well. >> the virus is not going to bd de-globalized.be nejra: the china open coanchor is in beijing for us. great to have you with us. what is the extent of the virus now and how is it impacting the country ahead of the lunar new year? i wonder in particular about the who not designating it an international emergency. will that make it more difficult for china to contain the virus? >> i am not sure that is the case. we know it is transmitted human to human. we are at the point right now today where you are looking at hundreds of millions of trips across china and the broader asia region. those factors make it very difficult for the central and local government to control the spread of this virus. that is why you have seen pretty draconian measures put in place.

at least 10 cities in the province where this virus originated, specifically in the provincial capital of wuhan, those 10 cities now partially locked down. wuhan is now essentially locked down. transport is limited. that is how far the chinese government is prepared to go to limit the spread of this virus. how much success they will have is a key question. in terms of the numbers, we are looking at 25 deaths at least so far, about 1000 suspected cases, at least 800 confirmed cases. o have not designated this an international emergency but they are monitoring it closely. they will come back and potentially about a week to reassess the impact of this. economic impact on china. people are canceling trips, not going to restaurants, hotels, casinos, cinemas.

all of those could prove a drag on consumption. if you see a 10% drop on consumption, that could translate to a drop in gdp, china gdp of 1.2%. that is significant. we will not know the full extent of this until after the travel week's, and at least in a time. nejra: china open coanchor tom mackenzie, great to have you with us. before we continue, i have just got to break you corporate news. so -- ericcson with a beat on the quarter net sales. the 2020 restructuring charges are estimated at 1% of sales. on the full year dividend per share, we get 1.5 swedish krona.

the estimate was 1.23. that is higher than expected. is keeping its targets for 2020 and 2022 unchanged. a couple of the other numbers, fourth-quarter adjusted growth margin, 37.1%. the estimate was 37.2%. fourth-quarter net sales at 66.4 billion swedish krona, estimate 66, so kind of meeting estimates ever so slightly better. eric ts were saying that sson might see a sluggish start to 2020. the ruling on the merger between t-mobile and sprint. the coronavirus has now spread to singapore. the prime minister told bloomberg more international collaboration is needed. >> it is an example of why countries need to work together. you may wish to bd globalized -- be de-globalized, but the virus

is not going to be. it seems to have emerged china, butn wuhan, it may emerge elsewhere. unless we share the public infectious, is it are people dying? is the system breaking down? unless you can share that, we will have a big problem for mankind. >> many people will look at this as an opportunity to say this is a reason to put the brakes on immigration, travel. >> unless they are going to .uild a wall viruses can leap over walls. i think it is very difficult. >> in november, donald trump asks the asian leaders for a special summit in march. that is going ahead at the moment? >> yes, it is. i expect to be there. we are expected to be meeting in

las vegas on march 14 for a serious purpose. >> the purpose being? >> it is to me, the u.s. president. i am sure we will be discussing areas where we can cooperate and do more together. sends a message that asia is important to him and southeast asia has its part in the american scheme of things. >> you have a prediction of 0.5% to 2.5% growth. that is a pretty wide growth. you really don't know. >> exactly. we really don't know -- wide range. you really don't know. >> exactly. we really don't know. the potential depends on international conditions. if there is a blow between china and america, -- blowup between china and america, or something happening in the middle east,

well, then all of that is off. >> how do you think phase ii of the u.s.-china talks will affect singapore? they have had this first phase, which deals with a few things. >> you at least stabilize the position for a while. now, you have got to go further. there are serious issues which have to be discussed on both sides. both sides have to make quite basic adjustments. on the one side, on the americans, psychologically, you have to make up your mind. are you doing this because you want to keep a level playing field and make sure the chinese play according to the rules of the game and may the best man win? or are we doing this -- are you doing this because you want to keep on winning and whatever rules of the game are necessary, you will create those rules. >> what is your instinct on that? many people would look at the trump administration and say, if

donald trump stands for anything, it is america first, which bind up -- by definition means america must finish first. >> america first means you do the best for the united states. do you do your best by being a big country in a troubled world? i am not sure the second is a very good answer. on the chinese side, i think they have to make up their minds that they are going to be constructive players in the global economy and in the global committee of nations. nejra: that was the singapore prime minister speaking to bloomberg in davos. while sustainable investing dominates the davos conversation, esg is also dominating the etf market. it is the fastest growing market with assets, more than tripling last year. >> let me put this in context for you. with this record amount of assets in esg etf's, in europe,

there is more money backing these sustainable etf's then all all germanythan etf's. it keeps growing with about 28 billion euros tracking this strategy. the deutsche bank board says this is the most fastest-growing segment. one manager i spoke with yesterday says these flows are entirely client driven. the reason that these keep picking up is just of the virtual fact that they see things like covenants risk as just -- governance risk as just general risk management. this is a global phenomenon. of the 10,000 etf's listed globally, the number one flow msci. i-shares, one of the big things -- prompting this etf flow has to do with larry fink saying he is going to avoid nonsustainable companies.

blackrock has changed a lot of their investing models to put money into esg etf's. this fund has virtually been untreated its entire life. all of a sudden, it sees more than one billion in etf inflows in the past week. blackrock saying we are going to move a lot of our investment and advice into these types of etf's. as larry fink put it, environmental risk is investing risk. nejra: dani burger, thank you so much. some big interviews to look forward to on the final day of the world economic forum. the ceo of volkswagen joins us. we will speak to the german health minister, european stability mechanism managing director, you're a group president, and the governor of the bank of france. all of that live from davos. plus, ecb president christine lagarde joins us for hers firs -- her first interview of the date. don't miss that interview. this is bloomberg. ♪

♪ >> phase one is about breaking down trade barriers. you know, that's a very market oriented approach. we can get those exports in the next year and the year after that. that is a big growth factor for the united states. >> i think it is good we see some degree of détente between the two. it is about time we see some of those nations, you know, at least contain and hopefully rollback. >> do we have a more protections -- for example, in our case, to intellectual property? yes. do we think this is sufficient? no. but is this progress? yes. >> i think the signing of the stage one, i think this is a positive step that both parties

are taking. it will make the momentum continued. >> at the start of the year, we are in a better place then we we wereoctober -- than in october, when precarious was the word we used. why are we in a better place? trade tensions receded with the u.s.-china deal. monetary policy has done a decent job. nejra: those are some of the top guests we spoke to this week at the world economic forum. we heard from the u.s. commerce secretary on the subject. we spoke with wilbur ross. >> we went through a whole process with the 232 investigation of autos. we have a perfect justification to put tariffs on if we wish to.

the president had decided it was better to negotiate. we had very constructive negotiations with the german car manufacturers, with the korean and japanese. so far, we have not felt the need to do it. but if people do silly things, if they do protectionist and discriminatory things like the pillar one of the digital service tax, we are obviously going to respond. >> let's talk about the investigation. self-imposed deadline middle of november. from what i am hearing, the outcome of that investigation is that it is a national security risk at the moment. is that true? >> yes. >> where is the followthrough? the middle of november is when we expected to see the follow-through. now people look at the self-imposed deadline and say it has expired. that deadline has expired. >> they simply don't understand section 232. >> walk us through it.

>> what was needed in november was for the president to decide on a path forward. she did. you decide -- he did. he decided the path forward was to negotiate as long as that was bearing fruit. >> your interpretation of the legal issues and that investigation still apply even though the self-imposed deadline has come and gone? >> absolutely. this is an imaginary deadline. the deadline was that he would take a decision. he took a decision. >> let's talk about what could happen and what would need to happen to stop those tariffs from going on. as things stand, the tariff forecast coming out of the united states into europe is 10%, as you know. the tariff for autos coming out of europe into the united states is 2.5%. some big trump tariffs that skew a lot of this. what would you like to see from

the europeans in the coming months? >> first of all, this digital service thing clearly is meant to be discriminatory. there are very few companies in the whole world, other than the american companies, that fit that definition. the clear intent was to be discriminatory. we have other laws that also enable us to retaliate against discriminatory behavior. if there is discriminatory behavior, we will fight back. forget anything else. >> is that a redline? if the french go through with this, is that a redline for the administration? >> that is up to the president to decide at the time. it is clear that this is a protectionist and discriminatory proposal that was made. nejra: that was a commerce secretary wilbur ross speaking to us in davos. it is the last day of the world economic forum.

world leaders, policymakers, executives gathered to talk shop while tackling inequality, the future of globalization, and climate change. francine lacqua joins us in davos with undoubtedly the most exciting interview of the day. great to see you. >> good morning. i have been looking forward to this interview all week. we are delighted to be joined on bloomberg by the european central bank president, christine lagarde. thank you so much for giving us a little bit of your busy schedule. you really laid out what you are trying to achieve yesterday and the press conference. at this moment, what do you see as the biggest challenge? madame lagarde: the biggest challenge is going to be to harness all the views, all the assessment, all the convictions into a direction that would actually serve the purpose that we have been assigned to, which is guaranteed price stability in the economy. that seems like a very dry proposal. the whole point is to actually

create the ground, maintain the ground, and fertilize the ground so that there is growth, so that there are jobs and the economies a the euronet area -- you're area are out -- euro working well and generating value. [audio drop]

underon't think that be any kind of influence, other than reviewing the rights, understanding the reaction, response, the effectiveness of what we can do. the world has changed so dramatically for the last 20 years. last time we had a strategy review was in 2003.

the growth was much higher in those days, inflation was hired. the prospect of the various demographics around the world were different. the world has massively changed. we did not use of social media as much as we do. sense ofu give us a the future timetable for these reviews? will it be a regular thing? madame lagarde: that should be debated. the initial timetable which we are setting for ourselves, which is ambitious, is to try to conclude by the end of this year. december 2020, hopefully we will have reached that platform of consensus on the various topics that we have. do we have to repeat the exercise every year, every five years, eight years, every 16 years, as we have? i have my views as well. we will debate that with the group to see how necessary it is, how helpful it can't be --

can be. >> markets are interpreting the exercise as may be having a little bit of a dovish tilt. madame lagarde: i am not a dove. signs it should markets be looking at in the review to give us a sense of where goes? madame lagarde: if markets are interested in what happens in the next 12 months, they should not pay too much attention to the strategy review. we are conducting two separate exercises here. we will have our monetary policy assessment and review as usual. every six weeks, we all get together, look at the numbers, look at the markets, look at the views of the citizens in terms of inflation expectations, and we decide whether things should be vary one way or another. that exercise will be conducted irrespective of the strategy

review. we might have different signals but we might reconsider. it will be two different exercises. the strategy review will be on its own, on a standalone basis. we are looking at what we do in the future, not what we do next week or in may or july. >> is it a warning to the markets not to over interpret to quickly?- too madame lagarde: issue dovish, hawkish -- is she dovish, hawkish? i told them on day one, do not over interpret. upset weme people are did not say much more yesterday. . the strategy review starts here, finishes there.

we knew to do a lot of stock-taking, looking at the effectiveness of what we have done, learn from other countries around the world as well. to reacho do a lotwe need to te out to the parliament, academies, people interested in these issues to hear the voices, to understand what their views are. we will listen to markets as well but they are one of the voices we will listen to. >> economists believe monetary policy at the ecb will be largely on autopilot from next few years -- for the next few years. is that a mistake? madame lagarde: i think that is ridiculous. there is a forward guidance which is a strong which is setting a very clear timetable that is fact dependent, but let's look at the facts. let's look at how the economy evolves. we need to be clear in our communication and we will be. don't assume that it will be on

autopilot. >> yesterday you talked quite extensively about negative rates. tiering isaring -- working well. is one of the side effects of negative rates that you need to scale it back? madame lagarde: we will be looking at the side effects as part of the strategy review. we will have to look at it, of course. don't forget that we need to have a banking sector in the euro area that acts as a good channel of transmission. >> which means you could extend tiering. madame lagarde: there are multiple responses. we are not considering the at the moment. >> president trump left davos saying he is still thinking about tariffs against germany and europe in general. you are seeing growth in europe. how do you match up the two? madame lagarde: we see modest

growth in europe. we see a bit more modest downside risks as well. that is probably the reason it is slightly balanced to the upside, but very slightly. we shall see. what i was pleased about was to see there had been a good first meeting between ursula von der leyen and president trump. off onetter to start good footing. there will be difficult relationships going forward and points of negotiations that will be hard. you know, whether that's trade, tax, technology, energy. there are multiple topics. europe and the united states have been friends for a long time. it will not go away. in many instances, they have joint interests. europe operates on different values and different systems. that needs to be secured and preserved. biggestariffs the

concern that you see for the european economy? madame lagarde: it is a big concern, let's face it. there is a trade entry europe -- that will notand be affected. trade with the united states would be affected if there was a sudden rise on tariffs, yes, or a tariff war. tit-for-tat. that will operate as a break on the economy. >> you have done a number of public events in the last couple of weeks. what concerns do people raise with you? madame lagarde: you know, it varies. family members, they say, explain what you do, mom, please. that is a real good signal for me that we need to communicate in a more explicit way about what we procure.

you know, because if we explained that exactly what we do, it is technically sound, the experts will understand. family members and taxi drivers, hairdressers and shopkeepers will not understand. if we explain what we do actually procures growth, facilitates investment, and creates jobs, then it mean something -- means something. >> is it reconnecting with the citizens? madame lagarde: i think that is an important factor, yes. area aree in the euro quite bullish on the euro. we do everything we can to make sure that euros can flow easily, that payments are secure, that what they have is solid stability. i think we need to do a bit more. >> a lot of focus here is on sustainability. is there a danger that we have outsized expectations about what

central banks can do to tackle this? madame lagarde: possibly, but i think that nonetheless, each and everyone one of us has to explore what he or she can do about the current risks. i think that it has been -- the ss by climate change have been largely an estimated, and for good reasons -- largely underestimated, and for good reasons. many risks are difficult to assess. we are talking about what years. in 30 it is not in the cards of a stress test or to anticipate what happens in 30 years. you look at the immediate future, the market risks, macro risks. the climate risks in 30 years that need action now if we want to remedy those risks, that's difficult. we need to do it, absolutely. >> do you worry that the more questions you ask -- madame lagarde: by the way,

central bankers can do quite a bit. >> like what? if you force or ask financial institutions to stress test climate change, how much complexity, how much cost does it involve, and how much more complex issues come to the surface? madame lagarde: no mind the cost, beware of the accident, number one. even if it costs something that, the risk that it protects us against is so much bigger that it is really worth a bit of investment and it is a source of economic opportunity. let's not forget that. but that is where everybody has to rally at the table. because it requires good and probably different accounting principles. i am delighted that the big accounting firms are taking the series and i hope they deliver -- this seriously and i hope they deliver. it requires the regulators to be on board as well. policymakers, governments have to take it seriously and not pay lip service to the risk.

ey also have to take the right measures. central bankers cannot eliminate climate change along. i will do the best i can to participate. it is not the business of central banks. >> should chief executives and governments take it seriously? madame lagarde: governments have to take it seriously. they all signed up to the paris agreement. not many countries are at the point of beginning to deliver. >> if you see a recession or a tilt downwards for the economy, is there a risk all this goodwill goes out. madame lagarde: we have seen that in the past and i think we might see in the future. public opinion will be around to remind us that this is not something we can put on the back burner, because we have an issue. >> what is the one thing you would ask of the european commission when it comes to tackling climate change right now? , definition -- european commission -- common definition?

madame lagarde: it is not just up to the european commission. the agenda by urszula via -- ursula von der leyen is a repurpose and of additional budgets and new financial instruments. it also takes the european parliament and they are heading in the right direction of identifying a taxonomy, without which, it will be difficult for others to move and say, here, we need to take a provision. that collateral is not really worth the face of it. >> is this one issue that you think europe can speak with a common voice on? madame lagarde: i would hope so. i know it is difficult. i would hope so. just as europe has moved and is moving the world on data protection, as it also has moved the world in relation to safety, you know, everybody complained about reach at the time. reach was this legislation that

actually helped regulate better chemicals that could be dangerous for people. -- goodt of good views uses on a daily basis around the world because of that. europe is often criticized for being too bureaucratic, government intensive. it is also helping people. >> is this something that will deliver the real fiscal spending that you and your predecessor have been asking for a long time? madame lagarde: well, i am watching. i am watching. i do not have a voice concerning fiscal policy, so to speak. much morery policy is effective if you dish out where you have the space some fiscal tools as well. when i look at some countries, they are beginning to put money on the table. >> christine lagarde, i know you have to go, so i final question.

if you look at the central bank stands around the world, there is a lot of talk that central banks are coming to the end of the tools that they have. can somehow fiscal spending across the road make up for that? madame lagarde: first of all, -- around the world -- across the world make up for that? madame lagarde: first of all, i don't think that they have used all their tools. i think that creativity also applies to central banking, number one. it will not be a substitute. .t is a coordination >> if you look at how markets kilt.eacted, out of market economy is in a little bit of a standstill. madame lagarde: there are times when i think so. >> is that because we don't price risk? madame lagarde: i think some of

them clearly do not price climate change risk for sure. >> christine lagarde, thank you so much for joining us. that was the european central bank president joining us for an exclusive interview and davos -- in davos. nejra: the work. her message -- great work. her message to markets, do not assume the ecb is on idle pilot -- autopilot. david solomon told bloomberg he does not expect from the fed this year and the boom and bust cycle is not over. >> the monetary policy that has been around for some time obviously is an enormous stimulus. i think we are now in a period this year after three midcycle cuts that i do not expect a lot from the fed in the context of this year. the balance sheet has come down a lot. all of this support impacts the quotidian markets.

i think the fed -- impacts liquidity in markets. i think the fed has done a reasonable job managing liquidity in markets. any time the fed uses its resources to affect liquidity, it is having an impact on markets. i am not going to answer the question the way you are looking for me to answer it. you tell me what curious -- qe is. >> we get a lot of different dudleys, including mr. of the new york fed. we get all these different opinions. what our audience wants to note is what younow learn from the pros on that desk. observed you actually in the market that gives you information about these balance sheet challenges? >> well, i think that everyone observed that the fed had a very significant balance sheet investment and they have reduced

that balance sheet. there has been a bunch of regulatory input. at some point, you can reach a supply-demand where for a variety of reasons, some of them , that thediosyncratic supply-demand liquidity changes and the price on liquidity rises. we want to make sure there is enough liquidity in a system. i think all the banks also -- i know we did, i can't speak for others -- we position ourselves at the end of the year when we thought liquidity might be tight. >> are you constrained by the new set of regulations? are you happy with them or do you need to see amendments so you can fit in better? >> we are an adapter to the regulatory framework. i think we have adapted very decade to the fray -- regulatory framework.

the regulatory framework continues to evolve. we do not see constraints to serve our clients well and run our business. >> we want your take on the markets, the price action we have seen over the last couple of months. the investment community in the world economic forum pretty polarized on what we are seeing at the moment. we have had a whole range of views. someone from bridgewater said the boom bust cycle as we know it is over. where do you come down on those extreme views? >> generally not a man of extremes. there will be booms and busts again at some point, although i do not see one again anytime soon. as i have been around talking to clients the last few days, i have seen -- i would say i see and i hear a confident middle-of-the-road view of the current economic environment. u.s. economy is in good shape. manufacturing sector is a little

bit soft. europe, little bit better. head to one's of the fate -- headwinds of the phase one deal helps a little. that was goldman sachs chairman and ceo david solomon speaking to bloomberg at davos. he issued the latest ultimatum from davos. the era of the white male board coming to an end. goldman has become the latest to back away from doing business with such firms. annmarie hordern joins us. >> what you need to know is all ite, all-male is not cutting anymore, at least for goldman sachs. the biggest underwriter in the u.s. will no longer do business with a company lacking a director who is either a woman or diverse. the board must have at least one person who is not white, male, or straight. next year, the bank will raise

the threshold to two diverse directors. the decision came after it learned that more than 60 u.s. and european companies in the last two years went public without a woman or person of color on the board. a professor at boston university says for goldman and wall street, this is a seismic change. we cover diversity and equality a lot here. questions will remain. how will other wall street firms follow goldman sachs on this? will they, will they not? is this just the beginning to bring greater representation to boardrooms around global wall street around the world? nejra: great question. let's get to the first word news with juliette saly in singapore. china's virus is not a global problem yet. the world decided against declaring the new coronavirus outbreak a worldwide health emergency. that is as the death toll has jumped china's virus is not a global problem to 25.

10 chinese cities are restricting travel. the outbreak will not impact credit ratings at its current scale. new roles are coming to put even more limits on u.s. companies supplying huawei. the company was blacklisted last year as a security threat. that prevented many companies from selling its components. some found a workaround. the ultimate goal is not to cut huawei off from supplies, but protect national security. >> huawei has been out encouraging american companies -- u.s. laws and regulations we have. that is a very dangerous practice and it will not be good for them longer-term. juliette: bushfires in australia are set to push the rise in global co2 levels to a record. most recent estimates suggest the fires will release -- metric

tons of carbon dioxide into the atmosphere. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: juliette saly in singapore, thank you so much. some other big interviews to look forward to on the final day of the world economic forum. the ceos of volkswagen joins us and we will speak to european policy makers, include the german health minister, you're a president.ro group all of that live from davos. rarely do you hear analysts saying s&p 500 index is not richly valued enough but that is the latest advice from wells fargo investment institute. this is bloomberg. ♪

♪ >> let's look at the facts.

let's look at how the economy evolves. we need to be factored driven, clear in our communication, and driven, clearfact in our communication, and we will be. do not assume we will be on autopilot. nejra: that was one of the key messages of christine lagarde, saying that markets should not assume the ecb is on autopilot. there is the monetary policy review around -- on one hand and the policy review. central banks have not exhausted their tools. one area where they might want to implement some of their tools is in tackling climate change. she says central bankers will not eliminate climate change alone. speaking of climate and the environment, that has been a huge topic of discussion at the world economic forum in davos this year. from greta thunberg to president

donald trump, there was a diverse sea of views on climate change. attendees hadvos to say on the topic. >> thanks to young people pushing. of course, from another perspective, pretty much nothing has been done. >> we do need a real breakthroughs. >> we have to set up policies around the world to change the demand patterns of markets. >> we are pushing our industry to be more responsible. we think it's working. greenwant to invest in technology, green new procedures. we know there is a lot of innovation behind it. >> i am a supporter of a carbon tax but i do not think i am naïve about it. it is one of many policy options that need to be used. >> climate change is not going to be fixed by a central bank. it is going to be fixed by a combination of public and private. >> all of us need to embrace

that we have a climate change problem, that we have to have a purpose to do what we can to get to a carbon neutral world. president trump: but to embrace the possibilities of tomorrow, we must reject the perennial prophets of doom and their prediction of the apocalypse. are joined live from the economic foreman davos -- economic forum in davos. where were the points of agreement and points of disagreement? >> even though there was a lot ,f talk, remember, privately there were definitely a lot of ceos who were sick of talking about this to me. there is more action than there was before. scott minor wrote a letter to clients this morning saying that this is going to be a very hard challenge without much stricter guidelines coming from

regulators and then economic incentive to get companies to focus on climate change. even christine lagarde was saying we will do our part as a regulator to make sure companies are held accountable for this, but others have to help. the big four accounting f irms could take a front seat. scott minor had told him, this needs to be tracked with the data more aggressively. we are starting to see investment banks starting to take action. bank of america had made a group focused on this effort. a lot of those leaders were here. meanwhile, the ceo of barclays was the first european bank to really face a strong shareholder resolution that will be voted on in may about their interactions with the fossil fuel industry. let's see how he ends up engaging with those shareholders , who he says are becoming very strong activists. nejra: thank you so much.

let's head back to the world economic forum in davos. francine lacqua spoke to the ubs ceo about the banks strategy and how it plans to handle its high cost income ratio after it reported earnings earlier this week. >> generally speaking, we are in a business that has high cost-income ratio. so we offset this higher cost-income ratio with high efficiency on how we deploy capital. we are the fifth best bank in the world in terms of return on regulatory capital, which is very important for us. the noise that we have in our tangible group, because we have a lot of different tax assets, so there is a big gap between tangible and regulatory capital. as long as we trade at the high end, we are the best non-us firm.

there are one or two other u.s. firms behind us in terms of return on capital. >> do shareholders understand that? >> some of it, yes -- some of them, yes. some of them still need to analyze this issue. there are some other commentators, they don't want to listen to that, they look at the cost-income ratio as an indicator of inefficiency and that is not correct. >> talk to me about the french case. do you know how that will go? any further share buybacks contingent on that? >> i think the french matter is an important decision point for in respect of how we are going to implement our capital return policy the second half of the year. for the first half of the year, we say that our aim is to return to buy back more than half of what we did last year.

then we will await the outcome of the french trial, which may come late summer, early autumn. we will reassess the situation. >> every year i ask you if we will see consolidation in the banking sector in europe? is 2020 the year? >> one day it will come and as time goes by, we are getting very close to that moment. the second half of the year will be a very important moment. you will see the finalization of the rules and how they will be implemented in europe. before that or after that, you may start to see people realizing the need of offsetting shortage of capital with a combination. i think it is a necessity for europe. it is not a matter of if, when, .ow, and who

>> would that be a catalyst for banking consolidation? >> already today, without any , you havevelopments an issue of focused critical mass. i am not saying scale per se is the solution. when you are focused and have capabilities that you are good at, you still need scale. no matter how good you are positioned in the competitive landscape, scale matters. scale allows you to create the resources, not only to offset margin compression, but also to savings ofter unattractive capital return and -- an attractive capital return and to invest in the future. >> would you be part of this consolidation? >> nobody can afford it to say

they are not considering being part of the consolidation process. we do not need per se to do consolidation, but we considered all the time. it is our job to look at potential combination that creates client and shareholder value at the same time. nejra: that was the ubs ceo in davos. the focused still on concern around the coronavirus in markets. futures looking firmer, both in the u.s. and europe. europe looking like it could bounce back quite firmly from losses yesterday. we have lost almost 10 basis points this week. citigroup says we can go to a 1.50 handle. cable very much in focus ahead of u.k. pmi data today. 60% probability priced in the market of a boe rate cut this month. brent a little firmer but oil headed for a third weekly lust. some big interviews to look -- weekly lust -- weekly loss.

some big interviews to look forward to. we will speak to european policymakers. on of that live from davos bloomberg tv and radio. this is bloomberg. ♪

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>> good morning. welcome to "bloomberg markets: european open." i am anna edwards alongside matt miller in berlin. matt: the markets say keep your composure. futures to pirate despite ongoing concerns from the coronavirus as chinese markets are closed for the lunar new year. the cash trade is one hour away.