francine: make no assumptions, christine lagarde tells us it is still very much up for debate. facts.arde: look at the look at how the economy has evolved. we need to be fact-driven, we need to be clear in our communication, which we will be today. don't be assumed we will be on autopilot. francine: more on that through the program.

the death toll rises. the government expands its lockdown to 30 million people. plus, the chief executive with power. good morning, good afternoon, and good evening, everyone. this is "bloomberg surveillance ." i am francine lacqua at the world economic forum in davos. july,s for the month of actually, the month of january, services following the 52.2, the forecast pretty much in line with expectations. are your go, there markets, these dog gaining, you're a 10 year yield at 1.75 -- the euro 10-year yield at 1.75. christine lagarde spoke to me earlier this morning. ms. lagarde: if markets are interested in what is happening in the next 12 months, we should not pay too much attention to

the strategies, because we are conducting two different exercises here. we will have our monetary policy access met and review, as usual, every six weeks, we all get together, we look at the numbers, we look at the markets, we look at the views of the citizens, in terms of inflation expectations, and we decide vary onehings should way or the other, and that will be constructed irrespective of the view. to say it will be stable for 12 months, i think eh, because things change, and we might have different signals, and we might reconsider. we might. i don't know at this point in time. what i do know is it will be into different exercises, and the strategy review will be on its own, on a standalone basis, and look for programs, because we are looking at what we do in the future, not what we do next week or in may or in july. francine: is it also a warning

to the markets not to interpret really quickly? ms. lagarde: they will interpret, they will get my face, "is she dovish, is she hawkish?" i told them, from day one, do not over interpret, i'd i told them from day one, but strategy review starts here, finishes here, and you cannot say here what you will do they are, otherwise you do a strategy review. we need to do a lot of stock-taking, learn from other countries around the world, and we need to take time to reach out to the parliaments to those who are interested to hear the voices, and we will listen to markets as well, but they are one of the voices that we listen to. francine: i constantly hear that

the monetary policy at the ecb will be on autopilot. is that a mistake? ms. lagarde: no, i just told you, to think we will be on autopilot, that is ridiculous. there is a forward guidance, which is strong, which is striking a very clear timetable, but let's look at the facts, let's look at how the economy evolves, that is what we do. we need to be fact-driven, we need to be clear in our communication. do not assume we will be on autopilot. francine: yesterday, you spoke quite extensively and said carrying is working well, but do negative rates mean you need to be scaling it back? ms. lagarde: we need to look at the side effects, there is no question about that. we need to be attentive to that. financial stability is not our first driver of concern and consideration, but we will have to look at it, of course. and really do not forget that we need to have a banking sector in

the euro area that has a good channel of transmission. francine: that was the ecb president christine lagarde. let's keep it on european central bank's. is françoist villeroy de galhau. thank you so much for joining us. we had an extensive interview with the ecb president this morning, saying she wants to focus on the facts. sheavor of -- in the past, has argued for symmetrical practices. do you think there is a bias towards that? françois: we use a window of opportunity, and there is a good, clean spirit, let me stress it, around our new president, christine lagarde, and second, there is some stabilization of the economic outlook, confirmed by the last pmi this morning.

so we have got favorable conditions, we use them. we should not confuse the strategy today as we just announced yesterday, if you allow me. let me express one point, inflation target will be one target, but let me stress the outlook of the strategic review. it should go beyond the theester specialist, with economy, markets, etc. it should go also to businesses anti-to european citizens, and it is very important, not only for reasons of democracy and accountability, but also for reasons of economic efficiency, because at the end, our source and businesses are the price makers, so this will be another important dimension of the ecb. francine: mr. governor, what have you done, are you just keeping your options open at the

moment, when it comes to your preference for inflation? about theno, i set inflation target already that it should be, in my view, symmetric, credible. we will discuss the various implementation of this. to be stress it has credible, which is directly linked to what i said earlier about our outreach. policy, andary our strategic review, we have got to communicate better with households and businesses. we have got to an explained to them our targets and also listen to them about, for example, the inflation expectation, which we do not measure very well, at the present. francine: how would you measure inflation expectations? françois: about inflation expectations, we have obviously an issue about measurements. if i look at five years and five

years, it is about 1.3. at the forecast published this morning, it is 1.7. elsewhere, it is probably higher, so it is a key technical issue, but we have to enhance the power of our inflation target, and if i look at the real data, there are three interesting figures. first, it is inflation, one point three, also for core improves, it slightly, and wage increase, 2.5%. in between, 1.8, and the key question, is the wage increase, which is continuous, to services inflation and the core inflation. we are confident about this path, but how can we improve it

is the key question. francine: how can we improve it? françois: it is a question of our policy measures, which is strong and efficient. it is also a question about our communication, but it will be a part of the strategy. again, francine, it started yesterday, and we have until the end of next year. francine: governor, how do you explain to eu citizens negative rates? françois: negative rates will not apply to all european citizens. france -- somein banks gave intention, but for the wealthiest customers, so it is a very special case. but negative rates are useful for the economy as a whole, as lower rates are, and there is little doubt, if you look at all estimates, they are very economy, 0.5% the additional growth yearly, which is very significant. it can grow to 2 million

additional jobs in the last five years, if i look in the euro area, has created 11 million jobs, so monetary policy played a significant role. we increased the inflation, our target, so no doubt our convention policy measures are good for the economy. rates for longer, which is the present situation we have, due to the economic slowdown, put pressure on stability, it is true. mitigateuld try how to -- is exactly the point. it is not the only answer, but it is a very significant answer. it will diminish this year the cost of negative rates for the euro4 billion as area as a whole, by 8 million for the french banks. these figures are not very often quoted by banks, so i took the

opportunity of your invitation to stress them. they are significant. we had a debate -- it is not a secret -- i strongly believe for tearing. it is very welcome. it is a good way of combining the general economic interest and economic stability. francine: governor, if tiering works so well, why not tier more? françois: because we have to -05%, balance between should pay obviously in the financial market, so i think the calibration was not great, according to our own calculation. francine: but, governor, are you suggesting or even telling me that actually banks are using negative rates as an excuse to justify poor business models? françois: no, i did not say that. i did not say that. and this is the important part.

each part has an important part of the job. one part of the banks, many banks do not like negative rates. it is a right. but they should acknowledge that negative rates are here, and they will play a piece for a while due to the economic slowdown, so they have to do that. aboutf the job is theirs, digitization, consolidation, operational efficiency, etc. but if we can help, tiering is an example, and if i take the case of france, which just decided to diminish the nominal interest rate on the growth and it was act, difficult political decision, but we made it. recommendations on how they should adapt to this , but we should not

make too risky loans, so each part has to add its share of the job, not to say it is the other part who has to do the adaptation. francine: governor, thank you so much for your time this morning, françois villeroy de galhau, the governor of the bank of france. showl be back later in the with a panel on the use of single-use plastic could you can also watch the terminal on . this is bloomberg. ♪

politics, andcs,

finance, i am they are to pitch in london. on the corona violence, -- i am neighbor to pitch -- nejra cechic in london. on the coron coronavirus, china is struggling to contain widening public anger over the spreading virus, even after it took unprecedented steps to slow the outbreak, and tom mackenzie is in beijing for us. tom, thank you so much for on what must be a friday evening for you. a, media is reporting at least 26 deaths as a result of this virus, 887 confirmed including beijing and

shanghai, traveling to the city wuhan, hand come -- which is the epicenter of this virus, the corentin themselves for two weeks, 14 days. least 10 in the province have been effectively closed off, all travel in and out of those cities have been incurred. you're talking about a population of almost 30 million people whose movements now are being curtailed as the government tries to get ahead of this crisis. there are real and significant question marks as to how effective that will be. you talk about the anger and concern in china, there is a lot of anxiety as people are celebrating the new year with their families. of course millions of trips across china and the region. but there is discussion online about how the local government at the heart of this issue, reports about how some of the virus outbreaks as early as the end of december. nejra: yeah, and it is

interesting, tom, because there has been a lot of conversation in china from authorities there, but globally, the reaction from china at attempting to contain the virus has been a little more forgiving, and in the meantime, o. saying we are not talking about crisis on a global scale. tom: you make a valid distinction there because earlier we heard from the german defense minister praising the chinese government for actions. you are absolutely right that health officials have globally praised china's response and compared it to the response bakken 2003, the sars crisis, but domestically, there is a trust deficit, and this will: the question really the capacity of the communist party here, how much trust is left over at the end of this process. services, as a result, people curtailing their travel, not going to cinemas.

in fact, cinema chains have been closed across the country. we have disneyland in shanghai, closing its doors, restaurant chains. but the domestic consumption, that is where the focus is. the s&p, if there is a drop in 10% of consumption, that could lead to one trillion of china's gdp by more than 1%, 2%. there is a potential for significant economic damage as well as health implications, and we will not know the exiting -- extent of that for at least a week, because of the integration of this virus. we can get a fuller picture of how far this virus will spread. courseyeah, exactly, of bloomberg economics ran the numbers at the peak of the sars virus, two percentage points were knocked off. that was tom mackenzie joining us on the latest of the spread containment of the coronavirus. up next, more of our exclusive

ecberview with president christine lagarde, and why she is not a hawk or a dove. ms. lagarde: i am not a hawk, i am not a dove, and there are hawks and doves around the table, i take it. [laughter] ♪ take it. [laughter] ♪

nejra: this is "bloomberg surveillance." i am nejra cehic in london. let's get the bloomberg business flash with viviana hurtado. claiming$10 billion, the weedkiller causes cancer. bloomberg has learned they are

billion-- earmarking $8 for claims, $2 billion for future claims. thousands of lawsuits may come within the month. governance, lacking diversity,, goldman sachs will not do business with them. by the way, goldman sachs has four women on its 11-member board. we end with this figure, $31.5 million in compensation awarded to jamie dimon after another knockout year for jp morgan. this includes 25 million dollars of restricted stock on top of a base salary of $1.5 million. dimon has run the company since the end of 2005. 2019 saw record profit for the second year in a row. that is the bloomberg business flash, nejra. nejra: thank you so much, viviana. the eu and 16 nations are

forming an alliance, including china, to settle trade disputes. joining us to discuss his bloomberg brussels correspondence maria tadeo. maria, great to see you. should we focus less on the alliance being formed and more on who is being included ? maria: exactly, and that is the point here. we knew for a wild eu was working on this. already available at the wto, but the u.s. has taken steps to almost paralyze the institution, because they do not agree with it, and they do believe it is not really working, so the eu was working, we knew this was an idea on the table. what will insignificant as they have extended the networks, norway, canada, now countries like china, and china is significant for two reasons -- one, the system where you would want to appeal decisions, you would want to stop trade disputes. of course the focus is china,

the u.s., you do not want to take countries you are friendly with, other european countries to the wto, you want to take the u.s., you want to take china. you do not have the u.s. now, but you will want china. also politically, significantly, what it shows as both china and the eu is saying if trump is retrenching from the global states, it is fine, we are sticking with this, so politically, it is also very significant. nejra: great to have you with us. maria tadeo in brussels, thank you so much. up next, more from our interview with ecb president christine lagarde. also, china has ordered suspension of sales of packaged tours. the coronavirus has taken effect. this is bloomberg. ♪ bloomberg. ♪ when you move homes, you move more than just yourself.

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francine: make no assumptions. christine lagarde says if they debut it is ategic up for debate. christine: we need to be fight driven and clear on our communication and we will. don't assume it will be on autopilot. viviana: more from that interview throughout the show. the government expands the lockdown to 30 million people. much more from davos. we speak to the chief executive of the world's biggest maker of wind turbines. this is bloomberg surveillance. let's get to the bloomberg flash p.m.i.'s. the manufacturing p.m.i. coming in at 49.8 a a beat on the survey 48.8. the confident p.m.i., 52.4. the estimate was for 50.7 and is an increase from prior reading and back in confident

territory and services a beat 52.9 versus a estimate of 51.1. the prior reading was 50. going into this we were seeing rate cut bets at just even odds with cuts from b.o.e. the end of january. looking at the action from the pound we were stronger going into the data and stay .2 stronger at 13148. volatility was rising going into the data but for the moment perhaps the pound reflecting the market might be overpricing the prospect of a rate cut from the b.o.e. this month. something to discuss. over 1 1/2 hours in the trading day let's check in on the european stock movers with emery. emery: what's up with car four, one of the biggest gainers across the entire group. they met estimates for sales but did suffer in france in the home market.

it was already priced in as you see here a lot of analysts were saying these re25eu8ers you want to watch. and remy down. dropping 11%, twice as much as forecast. hong kong sales put a dent in cointreau sales. and ericsson down 7% and comes as u.s. phone companies are reluctant to spend a lot of money on new next generation wireless network as we're waiting for the clarity from team mobile and sprint merger. viviana: dropping the most since july. let's get the first news. viviana: the werled's health organization deciding against

declaring the coronavirus outbreak a worldwide health mergency as the death toll rises to 25. the outbreak won't impact credit ratings. facebook may be in cahoots with president donald trump to get him re-elected is what george soros says. the billionaire continuing to elaborate there's nothing to stop facebook from spreading the information. the social network's goal is maximum profit without regard to the harm it causes. facebook rejects this and saying, quote, they're plain wrong. most recent estimates are the fires will release 900 metric tons of carbon dioxide into the atmosphere about the same emitted by all commercial aircrafts in 2018. new rules in the near future will put more limits on u.s. companies supplying mawae.

they were blacklisted as a security threat and some found a work around. the ultimate goal is not to cut huawei off but to protect national security. >> huawei is encouraging american companies to flaunt the u.s. laws, to flaunt the regulations that we have. that's a very dangerous actice and not a very good practice and in longer term won't be good for them. >> news 24 hours a day powered by more than 2700 journalists, i'm viviana. neja: better than expected numbers out of the u.k. let's go back to davos where chad thomas is with the finance minister.

>> made an agreement we will have talks with trade and everyone is brilliant to get solutions from its peers and shouldn't forget some years ago there was a debate about free trait agreements between the united states and european union and was brought mainly by the united states. so it is the progress we now again discuss about and i think it is absolutely important that we do not make new trade barriers. the wealth of the nation iser ith when we have free trade. >> do you think it's possible to reach an agreement before the u.s. election with the u.s.? olaf: it's possible to reach an agreement and if there's enough effort it is always possible to do it really soon because we have agreement so if we put something to it, add something to it, it is something that's

really feasible but in the end it depends on all sides having to work very hard. solutions are possible and to reduce trade barriers from both sides. chad: we have a meeting here today to discuss the wto and the way forward. from your perspective, what do we do to get out of the dispute we have with the wto and is there a need for reform? olaf: i think it's necessary we establish more support for the wto. t has been and is still a very successful organization and due to that fact the union decided to accept the decisions of the wto and we urge others to do the same and to help that all the bodies of the w.t.o. work

as they should. my view is there should be more compromise on the international level because in the end global growth depends on better trade and something the w.t.o. has responsibility and big opportunities. chad: christine lagarde is here and will be on the panel with you and is in the process of doing a review currently. what does germany want to see out of that? olaf: first, germany decided to report the idea of a independent e.c.b. and is one of the main topics we raised when the discussion about the euro started and we established common currency of the european union and we are not commenting all the actions of the central nk but it is a wise decision

and something that shows leadership by the new president. chad: germany had a record surplus and a position many countries would like to be in. your colleague peter altmire is calling for a reduction in corporate taxes. is this something you would support or how would you spend this surplus that germany currently has? olaf: we are do a finance will policy, we reduced spending and reduced taxes $25 billion a year in the next year 2021 if we count all the different decisions together taken in latest period and we already are doing a lot of things which would help to expand investments so germany now has one of the highest vestment figures we ever had

in the history and this is important so public investment will continue as in the past and with the surplus we have the possibility to be very strong in this field as anyone asks us to be and as we really want ourselves. chad: climate is obviously a huge topic here in davos as well. germany is in the process of implementing a huge climate package through the government. what more does germany need to do on this front from a climate perspective? olaf: germany decided to establish a climate package which was brought up by the is rnment but now already accepted by the parliament and is legislation and we will have the start of co-2 pricing in 2021 as one of the first countries to do so and this price will increase constantly with the effect that all the

participants, the people, the companies can take their next decisions looking how they can reduce the emissions from their dution and activities. then we decided to go out of which is a very strong question because it will not be any more used in less than 20 years. now the big task is to do that and on the other hand to go into renewable energies. our next tax is to have 66% of renewable energies in 2030 and is a big aim where hard work is needed. chad: finance minister olaf schotz. thanks for joining us. nejra: of course francine lacqua is at davos hosting a panel breaking free from single use plastic. watch that on live.go on the

bloomberg terminal. stay with "surveillance" plenty coming up including plenty of talks but will there be any action as this year's forum comes to a close and ask if progress was made. and don't miss our interview with the world's largest maker of wind turbines later this hour. this ising bloomberg. ♪

>> the communities back in apan, the offers have to include local businesses and sidents in the area so the stakeholders, how to include them in that context is

definitely a challenge. yet once we know who is there and then to decide on who can take part and that's where we start. for example, not just pushing for the government but -- a a: francine is launching discussion on single-use plastics. christine lagarde saying investors shouldn't assume current policy is on autopilot. the new president of the european central bank spoke to francine lacqua after discussing a debut of policy tools. christine: those who think it is on autopilot is ridiculous. there is a forward guidance which is strong and setting a very clear timetable that is fact dependent but let's look at the facts. let's look at how the economy evolves. that's what we do. we need to be fight driven and

clear in our communication and we will be. and i'm saying today, don't assume it will be on autopilot. francine: yesterday you talked extensive by about negative rates and said tiering is working well but is there a point negative rates means you need to scale it back? christine: we will be looking at the side effects at the start of the strategy review, no question about that. we need football attentive to that. financial stability is not our first driver of concern and consideration but we will have to look at it, of course. and we -- don't forget, we need to have a banking sector in the euro area that acts as a good channel of transmission. francine: which means what you can extend tiering? christine: multiple responses. it's not as i said yesterday, we're not considering that at the moment. francine: president trump left davos thinking about possible tariffs against germany and others in general. you're seeing growth in europe.

how do you match up the two? christine: we're seeing modest growth in europe. we're seeing a bit more modest downside risk as well and probably the reason why it's kind of slightly balanced to the upside but very slightly. you know, we shall see. what i was pleased about is there had been a good first meeting between the president of the european commission and president trump. so it's better to start off on a good footing and there will be difficult relationships going forward and points of negotiations that will be hard, that trade, whether it's tax or technology or whether it's energy, multiple topics. but as i said, europe and the united states have been friends for a long, long time. it will not go away and in many instances they have joined interests. but europe is different, europe operates on different values, different systems and that

needs to be secured and preserved for the sake of the europeans. francine: are tariffs the biggest concern you see for the european economy? christine: it's a big concern, let's face it. don't forget there is trade and trust throughout europe and will not be indeed affected but trade with the united states which is an important trade partner would be affected if there was a sudden rise on tariffs, yes, or a tariff war, tit for tat, you tariff me, i'll tariff you and will work on the break of the economy for sure. francine: you've done a number of events the past couple weeks, what's the concern people raise with you? christine: it varies, when i talk to family members, they say explain what you do, mom, please. we don't really understand. and that's a real good signal for me we need to communicate in a more explicit way about

what we procure. because if we explain exactly what we do, it's technically sound, the experts will understand. how many members and the taxi drivers and hairdressers and shopkeepers are not going to understand. but if we explain what we do actually procures growth and facilitate investment and retain jobs, then it means something. we should not be the only one who tries to do that. francine: reconnecting with the citizens? christine: that's an important factor. people of europe, they are quite bullish about the euro and pleased to have the euro as their currency and we do everything we can to make sure euros flow easily and payments are security, that what they have is solid, stability. but i think we need to do a bit more.

francine: you talked about sustainability. is there something the central bank can do to tackle this? christine: possibly. but nonetheless each and every one of us has to explore what he or she can do about the current risks. and i think it has been under -- the risks caused by climate change on corporates, on the economy, on general stability have been largely underestimated. and for good reasons. because many of the risks are difficult to assess. we're talking about what happened in 30 years. it's nothing with regards to a stress tester to anticipate what happens in 30 years. you look at the immediate future, you look at market risks and macrorisks and the climate risks need action now if we want to remedy those risks. that's difficult. but we need to do it,

bsolutely. nejra: that was christine lagarde speaking to francine lacqua. environmental risk happens at the top of the agenda all week to the economic forum. let's head to davos with another live interview. has linda amin is with us. haslinda: joined by c.o.e. investors, the largest maker of turbines. thank you for showing up. here i am with a big jacket and you're without one. you're the number one player gaining traction in the americas as well in asia outside of europe. it's hard to stay on top especially with competition from china. what is the strategy? >> we're literally pursuing the same and put our assets up, technology and power and houses up for more than four decades. what is also superinteresting to see is the whole allocation

into now, the energy sector, and also the renewable sector led to an acceleration of that. to give you an example, a decade ago compared to today we have reduced somewhere around the levelized portion, just 2/3 10 years ago and it also means we now have an energy source from wind that is idle on or below other enter sources globally which for me is perfect. haslinda: can you compete solely on cost when competing with chinese developers? >> i don't think it's a question about chinese developers. it's a global market and the reality is it you look at the demand on the supply i'd we're constantly expanding many powerful footprints. it's not a cost question but more how effective are your as either going to be and for how

long. you would appreciate when we talk about energy transition today and it's not what happens in to do -- to do or do 30 or 2040 and that is bigger than two questions about companies and is a global question because as the global capacity provider on the supply sides we're constantly expanding that. haslinda: confident on staying on top and being number one. >> confident as i sit here. haslinda: looking at the cost of carbon which is expected to be to 30 years by year end, how is that impacting you? >> for us when we look at things we constantly try to live with varblinges and there will be variables in the supply chain and in the market we live with. i think what we have kept really throughout now many years is the long-term view of where we need to be from a km

pettive point of view and as we came out of the year as we commented on a number of times you would have challenges in a veer when there are many variables like the tariffs and trade wars and others which probably affected us negatively within the year but our losses say that is to be overcome with a jobal organization like this and a leadership team shows the strength of it. haslinda: does it create problems for you, is it a challenge? >> no, honestly not. the challenge is we have ale in of companies and countries around the world we need to serve as customers for our energy solutions when there are variables coming to that it comes out only to us but the world. henrik: i think we say how will we do with the compareabilities on the energy solution. haslinda: given the opt miss

imgive us the outlook for wind turbines in 2020-2021. henrik: i'm not falling into the trap and will release results in february. it cannot avoid affecting you when you walk around three days here in davos. you literally -- as customers you need countries and other stuff. we have all the time said that the transition happening right now from the various energy sources, it's not about closing an energy source down but about dealing with there will be a demand side in 2035 which is 40% higher than demand for electricity. renewable won't cut it alone but we'll take a material part of it. instead of talking about your 20's now that i'm 24 days into it, i need to talk about what happened in three, five, 10 years because that's actually how we need to focus on, how to expand my footprint and glad

we're an exciting part of the industry. haslinda: it is quite inspiring with the china-u.s. relations. do you see the face 1 deal helping to alleviate the cost you're bearing. henrik: the phase 1 deal will not touch too much on our supply chain but we're now coming in a serks where there were less tensions to more markets and look at it at scale and say we are easing it rather than further tensioning it and i'm hopefully that as we look towards 21 and 22 that we have more value or more ordinary circumstances. if not, it's up to us to adjust the supply chain to deal with those parameters. haslinda, henrik anderson, c.e.o. investor of vestas wind

solutions. nejra: we continue next hour, more from davos with the j.p. chase chairman. and we look at the markets, across european equity benchmarks, u.s. stock futures pointing higher after a little opt miss imis coming after p.m.i.'s in europe and germany perhaps signaling a bit of a turn and bobbling in the european metro. organization off and were higher in theation section heading to a third year loss. this is bloomberg. ♪

tom: good morning, everyone.

"bloomberg surveillance" the world economic forum in davos, switzerland. every day is different and friday is different. we welcome you to one of the most interesting and frankly best days here every year at davos. it's a time to sum up some of the scenes, really is a time to look forward to the real world out there and decidedly davos is not the real world. more than anything, it's to capture what we heard from the politicians, from those in investment financing and certainly those in economics as well. good morning, i'm tom keene with the always francine lacroix and doing what she does best which is a panel. on what we do. this is something francine is very good at looking at single-use plastics and we heard the chief executive officer of coca-cola speak about this at long length,

including the panel i did on sustainability and climate change and there was the idea of plastic across the pacific ocean and the ramifications for too many nations to comment on that. francine doing this with any number of friday luminaries in davos. francine will be back in a half-hour. the panels here are always very different. friday panel have a special tone. some are just arriving including christine lagarde, and after that important e.c.b. meeting. there's a snapshot into francine lacroix's day as well. before we get started we need to look at an outside issue which is emergence. years ago we saw the virus and we spoke to bloomberg news in geneva and they gave us the update on the world health organization and we go to our

best correspondent out of china, tom mckenzie. give us the dynamic of this crisis into the weekend? >> the timing couldn't be worse for china because of course this is the eve ahead of the lunar new year festivities where you're expecting hundreds of millions of people going home to celebrate with their families and happens the same time as the government that is trying to get a grip that spread to every single province by one. the latest media reports say 26 people have died and 886 confirmed cases. you've got shanghai and other cities putting up the highest emergencies now and asking anyone who is traveling from wuhan, the city where the source of the virus and those traveling from that city have been asked to stay 14 days. you have 40 million people in

the province essentially out of run down to try to occur veil china and you've got a days in he u.s., u.s.c., yeah pan. -- japan. there is a lot of anxiety here being expressed online that those at the local levels didn't get to it quickly enough. whether 14 million people will do the job is a key question. tom: great uncertainty there on the story that will evolve into the chinese weekend and when we get back to new york on monday, this will be front and center with what we hope will be good conversations. speaking of good conversations, it was always important to speak to the international monetary fund, christine lagarde know it was this time president lagarde, the body language is different and as

madam lagarde goes through the conference center it was different as e.c.b. president. she spoke to francine earlier. christine: for those who think it's autopilot is ridiculous p. there is a forward guidance setting a very clear timetable but that is act dependent. let's look how the economy involved. we need to be fight driven and clear in our communication and we will be and i'm saying today, don't assume it will be on ought himo pilot. you said tiering is working well and is there a side effect of negative rates meaning you need to scale it back? christine: we will be looking at the side effects as the start of the strategy review. we'll do that. financial stability is knots of concern trol

but we'll have to look at it, of course. christine: we need a banking sector in the euro that acts as a good channel of transmission. francine: which means you could extend tiering or? christine: as i said yesterday we're not considering that the a the moment. francine: president trump left davos thinking of possible tariffs against germany and europe if possible. you're eeg growth if europe. w are you matching the two christine: modest, a bit more downside risks as well. that's probably the reason why it's slightly balanced to the upside. >> what i was pleased about is there had been a good first feg between the president of the european commission and president trump. it's better to start off on a

good footing and there will be difficult relationships going forward and points of negotiation that will be hard, whether it's trade or tax or technology or whether it's energy, multiple topics. but still i said europe and the united states have been friends for a long, long time. it will not go away. and in many instances they rejoined interests. europe is different and operates on different values, different systems and needs to be secured and preferred for the sake of the europeans. tom: christine lagarde. carefullyly phrased as she was yesterday at the e.c.b. anthony from new york, if you could write back about a one we just saw on tools. i want to emphasis this, folks, the theme of davos, this is a tool kit and i take it back to the 90's, a study of wheads

available and is really one of the great focuses for christine la yard is to present her analyst with the tools given. a perfect person to speak to on this determination with investment. sheila 5 tremendously, fran seen, we are thrilled she could join us for a four-hour conversation. i have eight things to talk about and only a time or two. we need to talk about your obligation to the goldman sachs company, goldman sachs asset management for years has had not a stumble but a deleed to bring practice. you bring a new frame to global asset management to compete out there. hat's the 5 tell focus there as inest vment. >> you have to have your client needs.

we intend to reinvest it on the questions clients are asking. >> they're canning us about e.c.b. and sustainability and asking us what to do in the low yield environment and how to think in the broad term of all our stakeholders. tom: we asked about pacific frontier and i don't want to get into "boom bust" with you. your lead leader was quite about on it as well. i want to put money in the market after bonds up, yields down, stock up, up, up. is the answer to buy more tesla. but i will say people have and then lized code with exposure to equities when you believe growth is stable. do we think growth is growing exponentially getting better the next year? no.

but do we think the u.s. looks decent? there are hot spots in europe of both growth and pain and we have interesting opportunities particularly in japan. your arm, you came up on the trading side of what i'm causinging the execution side. you have prodigious academics, though. from an economic trading size wurks you're a observer, is the liquidity in the markets given the shocks? >> we were a year ago had everyone worried about liquidity and worried where the markets were head and i think today you have people working aboutry quidity given the mix of private to public they have in their portfolios. where we see the balance is making sure the overall portfolio has low agetted energy than you need which

would be different for a insurance company. tom: portfolio insurance, before your time, 1987, are e.t.f.'s newport folio jurns. with everybody listening and watching, should they be frequently side of the fact e.t.f.'s are the only way to go. >> i don't think it's a newport folio insurance. there's a huge diversification of the options. they expand a incredible number. tom: understand. >> it's a broad markets. what we have to think of e.t. frment's, what's the purpose of having them in your portfolio? is it a exposure to a particular segment. and do you want active or passive in certain sets of the market. it's a question investors need to ask themselves over and over again. we love binary. and we see a balanced portfolio

including passive and active where you think the opportunities is in an asset class. tom: i was talking about c, d, e, f and wasn't binary. we'll come back and lots to talk about. i'll circle back to talking about e.s.g. what does it mean and what's the downside of too much focus on e.s.g.? it's all the rage. we'll do that next. right now we want to take a look into francine lacroix's panel that is front and center within this sphere and that's single use plastic. let's listen to francine's panel. >> i gave a small example that in japan, like more people we're trying to ditch the plastic straw but at the restaurant people leave it but what happens after it, they just throw it away. that doesn't change anything. if you could at least communicate to the person who brought the straw to you and say well, i don't need it, then

what will happen is people don't want to be refused so they will remember that ok, some people are, you know, don't really want to use the straw now. maybe that's a trend. and if that happens twice they will say ok, from now on i don't want to be refused, how can i change how we offer it? so they start asking do you need it or not? that's a level of a change but something. ♪

>> climate change, it's certainly survival of our civilization. >> the conversation i've been having in davos the past few days are for many c.e.o.'s saying we've been doing all the work around e.s.g. already because it's important to our employees.

>> all the companies i interact with in the u.s. are very committed and believe climate change is an issue and are committed to taking actions and i see actions being taken. >> our company has been useful in reducing the carbon intensity of the product. >> a longer term transition changing the energy source and move to a greener economy. but it is a transition. >> it this whole conversation around climate, we will see an him ambition to invest in low carbon climate resistance economy. tom: it's all the rage. when sights a rage, everyone dives in the pool. that's the way it is in davos. this year there's a rage. e.s.g. is not the rage but has been around for some time but what clearly has been said, it's been morphed to change into something because of the demand for it. i'm thrilled to tell you as you saw earlier of bloomberg green. this is a dead serious project by bloomberg to not do so much

green, it's in vogue, i get that but to do it with data. you'll see more from our bloomberg green platform. living the rage is sheila patel and comes into the meeting e.s.g. and comes out more e.s.g. baloney. let's talk to the chairman of goldman sachs management about what this means. cut to the chase, what i see, whether it's your shop, bank of america, morgan stanley. kid make alpha with e.s.g., true? sheila: actually, we believe it is true. it ties into what you just said about data. as you and i both know. tom: data discipline. sheila: we have written pieces on linkedin. this will be the year, the catalyst davos and the other work being done, to get data to the right place to drive alpha. some examples because examples are key. if you think of data driving alpha, data has shown diverse sports gives you better

results. tom: do you write this one? why one woman? help me here. what is it did one woman? are you kidding? go with three. sheila: first of all, david lee is in the front and he's been the person driving many of these initiatives. from an asset management perspective, we've been voting our ploktsies even before i recommended it that haven't inspectioned on a diverse sport. one, two, the point is the change and we see the value and we see making the statement as an active manager in the way we vote our proxies and david stands on behalf of the entire firm and one example we're not just doing it because it's good but doing it because it addses values to shareholders and stakeholders. if you think of climate change which has been the topic, there are many ways the economics change can affect our investments or investors and re worried about assets.

tom: american water work is a small company in new jersey, a wonderful water company and where an example of not just large cap, happy people in do you haveosis but mid cap and small cap companies can do e.s.g. with a vengeance. do you observe that at global assets, not just the 12 companies big, fat and happy but moving down the capitalization structure where e.s.g. is imbedded? >> i agree with that philosophically. with we think of environmental impact, that's the space we're looking in. e wrote a piece on carbononimics, less than 1% of renewables quent to carbon sequestration and carbon capture. that's the thing if someone wants a net zero future is investment opportunity and small to mid cap companies take lead innovation which is key to solving issues.

tom: what we do is leave other firms out of it with a good conversation about goldman sachs. it's friday, let's break the rules. there's a guy in the valley, larry friends and works in a small shot a couple weeks. how do you assist your good competitor in imbedding this methodology, the tactics of what you're doing into the mainstream of asset management? sheila: the question of e.s.g. and inclusive growth are ones where firms like larry's, ourselves, many others are in common agreement and can work towards common goals, what kind of things can we do? we can help drive the standards on data that will help evaluate companies and apply our own investment discipline. we can join in organizations like one planet which is a partnership of asset managers and sovereign wealth funds including ourselves and black rock working towards real investment opportunities in the areas such as you suggested,

particularly innovative companies driving change. tom: i want to talk about worse practices. i think of bill priest and people of epic investments. they're brilliant on here's free cash flow and here are some of the ways to avoid mistakes in free cash flow. this is so new in e.s.g. have you even discovered what the bad paths are, what the mistakes are in analyzing towards successful e.s.g., what do you avoid in the rage of e.s.g.? sheila: it's a great question. tom: my only one today so go with it. sheila: i have an anecdote on that with an investor in scandinavia who was talking to us about our quantitative work on e.s.g. and what i was explaining, here are the six factors we found, these are interesting, etc., where are the others and how long have we been working? we're eliminating a hundred factors to find a few that work and that will be the exercise of e.s.g. as we get more data

as we look to a multitude of things companies are telling you, is there a standard for what they're telling but their carbon footprint? is there a standard for what they're telling you about the ways they have inclusive growth imbeded in their companies and how their employees feel? there really isn't. tom: one more question for sheila patel. important for global wall street. are we going to compete the profits out of asset management? is there so much money and so many people that want to compete with goldman sachs asset management that everybody's margins come down? sheila: i actually don't think so. i think one of the things that really helps us is the ability to implement technology in our own businesses both from the efficiency we can now offer to clients and from the efficiency of finding ideas. tom: i'm in the "surveillance" time-out for going too long. thank you, sheila patel. stay with us for the meetings from the world economic forum. this is bloomberg. ♪

♪ >> this is bloomberg surveillance with a look at the markets. european stocks up more than 1%, now trading at a record high. they were losing ground yesterday but catching up with the gains we saw in the u.s. we're also seeing s&p futures not as strong. some of that might have to do with the fact that currencies in europe losing ground across the board. we're getting the currency effect, the euro down as well as the pound. we got some p.m.i. data, the u.k. surprising to the upside throwing into questions of a

b.o.e. cut. now that's your look at markets. tom, back to you in davos. tom: dani burger, thanks so much. nice idea on the record highs in equities and we'll look at that through the morning. coming up, this is an exceptionally important and serious conversation on canada and the people of canada suffering over that horrific plane crash outside tehran. the deputy prime minister will join us of canada. and we're thrilled she could find time this friday to join us. from the meetings at the world economic forum in davos. stay with us. this it bloomberg. ♪

♪ i think the chinese government are taking serious measures now and very quick. >> the hospital's and

communities are much better prepared compared to the south state. >> this is a challenge that we have been aware. they put measures. a challenge, it is but 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, but this is early days. >> whatever damage to the economy, it will be limited. >> it is an example of why countries need to work together. >> we need to contain it and communicate that it has been contained. >> hong kong has put in place a vigilant system. >> we think it will be handled well. >> you may wish to bd globalized but the violence will not be the globalized. -- deglobalized. tom: a string of video and

voices from the weekend and into monday. i am asked worldwide what books one, theand there is most frightening read of school s'theature, albert camu plague because it goes and goes and falls apart. that is the fear of so many manage the message. with us is haslinda a man. always acrossas the pacific rim. what is your reporting and research away from the managed messages? it is an the who says emergency in china but not the rest of the world, but if it is an emergency in china, why shouldn't it be the rest of the world? we are talking about a billion people and there is locked down for some 40 million people, a

bigger population than canada. you have to take it seriously and the world needs to put the precautions into play. tom: haslinda does not even have an apartment or house in singapore, she just hangs out at the airport. the reality is, your airport, full alert. current: even before my virus struck singapore, we have had a reported case -- three right now. we have had cameras to track temperatures, but those are not working. tom: the temperatures of the people. haslinda: people coming into singapore. this is one of the biggest airports in the world. tom: do they line them up and stick the thermometer in their mouth? haslinda: we have a temperature in place as you pass through security, it takes your temperature. that is on the pretext that you can do text -- detect a virus.

we have three cases in my city and that has not worked. we need more precaution. tom: what is the communication of health officials? does it disjoint every country for themselves or do they all get on the same page? haslinda: truth be told, i am not an authority on that. we heard from the prime minister of singapore saying this is a good time for you to be communicating with one another better. with this anti-globalization sentiment, there is a sense we are not doing enough communicating. if there is one time we should be doing that more, maybe this is it. tom: i walked up to ms. lam early in davos and thanked her for speaking to you, and all of

the access bloomberg has had. horrific retail outlook for hong kong. what was the single take away from the most important interview at davos? haslinda: for carrie lam, she is stuck within a rock and a hard place. kongants the best for hong and to meet the demands of the hong kong people, but also the concerns of china to think about. that has been typical. when i asked if quitting would be good for the hong kong people, would she do it? she said that is not the best option. tom: we get to go home to davos -- from davos to the reality of singapore and new york. she gets to go home to hong kong. let's go to the first word news. viviana: house democrats will

conclude making their impeachment case against donald trump. prosecutors say he should be removed for two reasons, withholding military aid to the ukraine and blocking a congressional inquiry. president trump is pleased with the way the trial is going. nations, china, and 15 are forming an alliance to resolve trade disputes. year, the trump administration precipitated paralysis and blocked all the nominees to the seven-member panel. the trump administration will crackdown on counterfeit products sold online. homeland security will release a report and will warrant internet platforms of tough penalties. australia mayin push global carbon dioxide levels to a record and may have

an influence on the weather patterns and ecosystems. they will release about 900 metric tons of co2, about the same as emitted by all commercial aircraft. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: this is what we do best, jon ferro and i have been having fun with this raging debate within finance and investment over the boom bust cycle. addingk all of you for to that conversation on twitter and linkedin, and jobs worldwide. what we are going to do is try to give you a recapitulation of the proper theory and foundation. joining us later, robert shiller , and joining us now, someone as acclaimed, jacob frenkel.

former governor of the bank of israel and chicago academic from a few years ago. the uproar here is the cyclicality of markets linked into your world of economics possibly is done, and there will be a more leaden, nonvolatile trend because central banks have dragged us down to the zero bound. i don't see this in the academic literature. is it an original idea that needs to be tested? jacob: to begin with, it is being tested and i think frankly the zero bound or driving down interest rates to zero was emphasized, heavily emphasized as the way in which the crisis that terminated 12 years ago came to the system, so-called unconventional policies. if we are talking now about a recovery, getting out of it, coming back to normalcy, the

has exhaustedrate its benefits and it is now time to think again. the level and which financial industry can perform well, because at the present time, pension systems, insurance, life insurance have to redesign their business models to accommodate zero interest rates, which makes no sense. this stage, we will need to bring back other policy instruments. the other policy instruments have to do with fiscal policy, structural policy. today, the greatest danger to the economy's growth comes from fragmentation. the world is global. policymaking is global. the pressure on policymakers comes from domestic pressures

and if you have great fragmentation, you will end up having also great fragmentation between economies, and the bridges that are so essential for the functioning of the global economy may be -- to: if we begin a path normalcy, do we sustain a leaded, nonvolatile state or maintain the normal, historic boom and bust cycle? is it a binomial, bipolar? which is it? jacob: it is not a law of nature that it will be either/or. let me give you an example. the recovery started and suddenly the trade war came in. the trade war means you break a bridge between important partners. this creates volatility. then there is a glimpse of hope that this trade deal may be settled as phase one and

suddenly the markets like it again. coming down to earth, we have volatility, but that volatility is a reflection of the signals that policymakers give to markets, and in a market in which financial markets are important, they are growing to be more important, that is the market in which expectations about the future are transmitting itself to current behaviors. let's be very careful. matter and things are not done, but expected to be done, volatility comes through. tom: two-year a claim on the bank of israel -- and let's make claim on theour a aim on the bank of israel, you had a toolkit then.

lagarde has written about this authority play -- authoritatively. what is in the toolkit? jacob: the toolkit today is much less posted -- potent. tom: which is bridgewater's point. jacob: but it is not a curse of nature. it is a policymaker making. what do i have in mind? the most important tool in the policy arsenal is interest rates. you can always speak about macro prudential policies, guidance, expectations, you can speak about many things, but interest rates the central bank is setting is the jewel in the crown of policymaking. if we see it as being stuck too close to zero, in addition to the damage to the financial industry, you can project my notes -- monetary authority can do less than the future.

another reason to wake up policy instruments. the only game in town syndrome in which central banks have become too central to the bank has to change. it is a dubious complement. tom: a spirited conversation with jacob frenkel on central bankers, particularly after a bang up successful 2019. we will continue with dr. fre nkel. we need to look in on a really important panel, a room full of central bankers. there is madame lagarde with francine earlier and the gentleman from japan and the gentleman from the united kingdom, ex-prime minister. >> uncertainty has abated a bit. brexit is a little less uncertain, but we still have inse possible cliff edge

december of 2020. we don't know what the trade relationships will be. ♪

♪ i like markets more for skilled labor for countries outside the community. this is a strategy which is dealing with the fact that there is still growth. tom: a widely anticipated panel, central bankers doing what they do best, talking to each other. it looks like a meeting of the bank of international settlements in switzerland. serious panel on the constraints of central banking in davos, and we will carry forward this conversation. overarching all of this is

trade. we have to welcome a new graft, -- just, francine lacqua -- st, francines lacqua. francine: she has never been here before. tom: one of the back stories, not on the radar this year like it was last year, except that is an even worse crisis, the plastic in the ocean. was panel that i could see a delicate panel of people stepping on this intractable issue. what is the solution? francine: it was a fun panel because you had al gore, a 19-year-old indonesian woman leader who has basically transformed what they do in bali. we need to measure how we recycle, how much is recycled, and some of the new products.

by 2050, if we don't stop single use plastic there will be more plastic in the ocean then fish. tom: this goes back to bloomberg green, our new project to measure what is out there. fixs measure the will to what is out there. butcine: the well is there, but you canhere, say you are going to the gym every day and stop eating chocolate, but will you? tom: listening in on my conversations. when i get back, i got to get cut and chiseled. francine: you are. tom: we will continue this discussion with someone that easily could be on that panel, jacob frenkel with us, chairman of j.p. morgan chase & co national. , there is thatcs thing on the backend, nx.

how are we doing on the trade war? way,: to begin with, in a what dominated the policy discussions in the last few months has been the greatest danger to the growth of the world economy. the skirmish between the two largest economies, u.s. and china, that skirmish had several dimensions, but the most important one is we are talking about a global economy in which the fragments of it are getting apart. what does it mean? the bridges that connect various parts of the economy are in danger. these that this affected expectations, mood, plans of plans of thetment, locations of companies because they know if they will produce

in one place and there will be tariffs, they should not. it is in this regard that the phase one agreement between china and the u.s. was greeted by measured relief, but also with a note that we still need to see phase two. political well is the key. francine: nothing was in phase no, in truth, except for further escalation. jacob: people understood even though we cannot deliver concrete measures, we know it is important and therefore we are not worrying it. -- burying it. now the political will comes into the game. who benefits apart from china and the u.s.? europe is ahat beneficiary but one if the u.s.

goes after europe? jacob: it is hard to say these guys are fighting and i get positive spillovers. at the end of the day, there is no way the world economy can recover in a sustainable way if the two largest economies are not in a sustainable way. it will be a great mistake to say let them fight and i will pick up the pieces and go on happily. tom: you have got real-world experience in this. exports, thes and dialogue in the u.s. is so much about china sending stuff to us when what i have learned is the export dynamics of the united states are really at risk. whichved this in israel became an export juggernaut. are we missing the message? it is not about the stuff coming in from china, it is we have at risk stuff going out. ,acob: the overall supply chain

when you are looking at the multilateral world through the lens of a bilateral relationship, you are bound to miss important matters. the world trade system will not be solved by a bilateral nexus and therefore, even looking at the data and saying let me look what the imports from the united versa, from china, vice this is a partial question. as long as the u.s. has shortage of savings relative to investment compared to china it will run a deficit. do not look at a bilateral relationship to determine your macro aggregate problem. francine: jacob frenkel joining us. we will have plenty more from davos with an important panel, governor kuroda talking about his growth outlook, madame lagarde on it, and also the german finance minister who has been aggressive about fiscal

policy. this is bloomberg. ♪

♪ , of course -- cheap money, of course --

tom: they say it is always a great panel on the last day at davos, and this is the central panel, widely anticipated, including mr. javid of the united kingdom. prime minister johnson did not attend? francine: he said he wants to be closer to the people. tom: it is closer to the people in davos. francine: the chancellor spoke to investors and tried to lay out the conservative government platform for the future. tom: this is a mix of central banks and the finance side including mr. mnuchin of treasury. so what, just a lot of people talking. out of this will come some interesting twists and perspective. what is the theme? , five,ey talk about qe4

and six? francine: i would expect a third of this would be about trade and how that dampens the animal spirits around the world. there will be a big discussion on negative rates and the third component is how geopolitics impacts growth around the world. tom: very good. zoom in on who is moderating the panel, francine with a recent discussion. a good voice to speak to on the overall developed world economies. francine: he can talk negative rates, growth, and trade, angel gurria, the oecd secretary-general. he will be joining us as we kick off our last day at davos 2020. ♪

♪

tom: good morning, everyone. from the meeting of the world economic forum, it is a friday, some say the best day in davos. a number of spirited conversations and debate engaged. we are seeing that right now with important panels going on this friday. francine lacqua and tom keene to drive forward the conversation. out of london, they said climate changes different this year. alsoine: christine lagarde talked about climate change but we had an interesting discussion spanning the ecb review. she told me markets need to do their homework. we are not on autopilot so we will look at the facts and change the review and look at monetary policy. tom: i cannot imagine the fed under review.

are they reviewing towards a new mandate? will they all of a sudden go, dual mandate or will they stay on the germanic? francine: i tried to press president lagarde and she just kept saying we are reviewing. she is explaining, there is a to be and you do not want to know what b is before a. tom: we will have comments on francine's important interview with madame lagarde. we have to continue to look to china in this difficult crisis, into the weekend. a lot of mystery. selina wang joins us from beijing. selina: the developments keep coming. china announced the death toll is 25, more than 800 people

infected although some say it is in the thousands. it started with the travel ban, but now than 10 -- but more than 10 cities have curbed travel. china into asia and singapore, the united states, south korea. what is concerning as even though there is a nationwide meeting set up, some are not even showing a fever which is what people using -- governments are using as a screen for passages. this blocked out some 40 million people, which is a logistic challenge that may be coming late. health experts say this could only slow the spread but will not stop the spread, and will come at harm to local economies. francine: thank you for the update. we will have live updates throughout the day on this extremely worrying development.

let's get to the bloomberg first word news. viviana: donald trump's stonewalling puts richard nixon to shame, a quote from house democrats. impeachment managers went after the president's refusals to cooperate with congress and argue his actions are a clear violation of the cons duchenne. today, democrats wrap up their case. president trump plans to release his long-awaited middle east plan as israeli leaders visit the white house. plenty of hurdles remain, including how much of the west bank is under israeli control. palestinian leaders have refused to talk to the trump administration. -- lastns are forming year, the trump administration

precipitated paralysis and lost all nominees to the seven mental panel -- seven-member panel. wall street started allowing u.s. clients to buy research without paying for trade services. the implications are significant. if all they want is research, asset managers could decide they know want -- no longer want accounts with so many brokerages. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: christine lagarde says investors should not see the current monetary policy as on autopilot. she spoke to us. lagarde: they should not pay attention to the strategy review because we are conducting two exercises. we will have our monetary policy

assessment and review as usual, every six weeks. we all get together and look at the numbers and the markets and the views of the citizens in terms of inflation expectations, and decide whether things should vary one way or another. that exercise will be conducted irrespective of the strategy review. to those who say it will be completely static and stable for 12 months, things change and we might have different signals and we might reconsider. we might. i don't know at this point in time. all i know is it will be two different exercises and the strategy review will be a standalone basis and looking at what we do in the future, not next week or may or july. francine: is it a warning to the markets do not over interpret? rde: they always over

interpret. they will look at my face and say, is she hawkish, dovish? do not over interpret. some people are disappointed we have not said much more yesterday, but i strategy review starts here, finishes there, and you cannot say here what you are going to do there or else you do not do a strategy review. we need to do stock-taking, look at the effectiveness of what we have done, learn from other countries around the world. the fed is undergoing the same exercise, and we need to take time to reach out to the parliament, academics, those interested in these issues to hear the voices and understand the views. we will listen to the markets as well, but they are one of the voices. markets believe the ecb will be on autopilot. is that a mistake?

ms. lagarde: that is ridiculous. forward guidance is strong and setting a clear timetable. let's look at the facts. let's look at how the economy evolves. we need to be fact driven and clear on our communication, and we will be. do not assume it will be on autopilot. francine: yesterday you talked extensively about negative rates and said tiering is working well, but is there any time you need to scale back? will be looking at the side effects as part of the strategy review, no question about that. our first driver of concern and consideration, we will have to look at it. do not forget that we need to have a banking sector in the europe area that acts as a good channel of transmission. francine: that was the ecb

president christine lagarde speaking to us earlier on. joining us is simon kennedy. she was very careful and was saying, i just want to look at the facts and do not want to give my opinion. she did give a bit of a warning to the market saying we are not on autopilot. simon: she did not want to set a trend on the market. she wanted to provide maximum road for maneuver. if you look at the data and discussion around negative interest rate, from the banks here this week and policymakers, the ecb does not want to go much deeper into negative territory but will do what it has to do. it will not be on autopilot. it will take quite a bit for them to change. francine: what are they trying to achieve with this review? simon: bring relevance to that inflation. they tend to miss it.

-- germanicc inflation table, and they will try and change that to a more symmetrical time which will allow them to shoot it -- overshoot it until inflation goes up. the price stability mandate that the ecb is following, if you listen to christine lagarde, perhaps move the ecb to the forefront of the climate change debate. they have been crisis fighting for a while and then had a slow economy, and her arrival gives them space to find other issues. tom: charles hamlin, warren harding, daniel chris injure, and warren young, that is the equivalent of trichet, draghi, and now lagarde. institution young

or to a grizzled pro like you, are they getting ancient history and critical mass? simon: it is a fairly young institution. the hero is still an infant currency to some extent. -- hero is still an infant currency to some extent. -- euro is still an infant currency to some extent. whostine lagarde is someone and she may try to do so with the ecb. whether she can do so will be reliant on other things. tom: what are the germans saying? what is the backstory? weidmann hads and

some public differences with sayo draghi, and some would he had to lead it. you saw that with whatever it takes, but there are some hawkish moments with the ecb thesel who may use this at arrival of a new president, and say we want a bigger role than perhaps we were allowed under mario draghi to sometimes front run the council. maybeill use this review to put their two cents into the mix. be right lagarde will to say she will not try to prejudge that. the review will just be throwing a grenade into that debate. francine: simon kennedy, thank you so much. he even has tom under control. coming up next, angel gurria, secretary general of the oecd.

andill talk tariffs, taxes, politics. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance," tom and francine from the world economic forum. u.k.,ime minister of the -- hejohnson, is giving is saying he will sign the brexit agreement later on friday. expected, confirming they will leave january 31, and mr. davies is saying there are

no confirmed cases of coronavirus across the u.k. we were just getting briefed by selina wang, things escalating quickly and china. there were concerns of cases in stock -- in scotland and the u.k. is saying there are no confirmed cases. tom: it is a very interesting story, and i'm trying to get my time straight. we are 6:00 p.m. in asia roughly so they are moving into the night and saturday. on a friday in davos, it is a look back. continue, a very important panel this morning on central banking and on treasury as well. what i like about this panel, it is a mixture of bankers and finance officials together and it led to a spirited conversation about the mystery. we can summarize that and do

better than five or six people talking to singularly talk to the gentleman, angel gurria. secretary-general, -- he is the secretary-general of the oecd. with lawrence boone and the other analysts, he can synthesize a lot for us. he took his sunglasses off so we can do tv. i wore my sunglasses once on tv and said, do not ever do that again. qere is qed, boom or bust -- , boom or bust. to research, what is it? sec. gurria: we have to get back to productivity and skills. we basically have to find a way to lower the trade tensions. they have already cost us more than 1% of the world's gdp

growth. the rate of growth of trade went from 5.5% to practically flat. the rate of growth of enforcement went from 5%, 6% -- to thed you voice this president of the united states? this is the way it is for the oecd and your america. sec. gurria: we have written it, said it in so many ways, published it, and said the trade tensions are causing disruption because they are causing uncertainty. uncertainty kills investment. investment is the seed of the growth of tomorrow, so by creating the trade tensions, you kill the investment and the growth. francine: how much of a headache is it? does the u.s. administration think tariffs work and will they use them against europe? sec. gurria: first of all, i hope they don't use them against europe.

when there is a will, there is a way, and yesterday we found a way. the french agreed to defer the action on their digital taxation law and the americans agreed to 301, the actions on their potentially the sanctions, because it was not just a question against french champagne or wine. it was a european against the united states issue eventually. they both agreed to give multilateral solutions a chance. to the oecd, the mandate to work on a final decision. francine: europe cannot come together, so how can the oecd? 130 gurria: because we have seven countries working on the solution, not just europe. francine: sounds like a nightmare. sec. gurria: we have strong support from practically every european country and the u.s.

has been participating pretty enthusiastically. there are a number of elements of the package we are proposing on digital taxation that are akin to the tax reform that was done in the united states a couple of years ago. francine: you think you will be able to broker a deal in the time? sec. gurria: francine, think of the option. instead of a multilateral solution, which everybody will embrace, and they are all willing to sunset their domestic laws and come to a multilateral solution, imagine 45, 50 different legislations with different types of taxes. -- oner, europe is not taxes, it is not brussels. it is every country on its own. disruptivetive is so that they will all be trying

very hard to get a deal. tom: within the bureaucracy of the oecd, do you have a mercantile division? are we back to american television? sec. gurria: we have a trade division, trade directorate, and a directorate that deals with enterprise and financial affairs , so yes, the answer is yes. tom: you taught at monterey years ago. this is important. not multilateral, bilateral, trilateral, mercantilistic, every nation for themselves? that is what i heard from the president? . sec. gurria: how are we going to deal with trade if not multilaterally? how do you deal with migration flows if not multilaterally? tom: are you predicting the president of the united states'

policies will impinge on investment? will he limit johnson & johnson abroad? sec. gurria: it is already having an impact, lowering the rate of growth in the united states just like it is having an effect on china. we know the cost of these trade tensions. and createe directly uncertainty. they create lower growth. they create lower jobs. if we know the consequences, and we know there were better options, let's go in that direction. peakine: have we reached multilateralism or does it just go down? sec. gurria: you never reach peak multilateralism. today, we have to defend multilateralism and proof that this is the way, because otherwise, there is going to be a lot of pressure against multilateralism. there already is, and we are

trying to push it back. francine: angel gurria, the oecd secretary-general. more ofhave a number important conversations focusing on tariffs and the effects on growth worldwide. we have a stellar panel with the imf managing director and the ecb. this is bloomberg. ♪

♪ given what i think is changes in technology and everything

along the way. what we can say is there are things we can do that can move towards cleaner energy and create better environmental issues over the next 10 years. that is something we have a lot of visibility. we cani don't think that create this level of certainty over the next 30 years what the risks are -- tom: that is a point of tension. i am glad we got lucky. this is a huge issue, countries that are way out front on cleaner air. the president and the secretary of treasury say, we have cleaner air, what about others? a raging debate between dally and los angeles. i and los angeles. ♪

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friday is a really interesting day. laureate robert schiller to join us later. here is viviana hurtado. viviana: china trying to stop the spread of the deadly virus by locking down 40 million people, restricting movement in people living in 10 cities and limiting package tours for the new year lunar holiday. the virus is blamed for 26 deaths. house democrats will conclude their impeachment case against donald trump. prosecutors say he should be removed from office for withholding military aid to ukraine and blocking a congressional inquiry. president trump pleased with the way the trial is going. trump administration reportedly will crackdown on counterfeit products sold online. homeland security will release a report.

they will warn internet platforms and warehouse operators of tough penalties. the bushfires in australia may push global carbon dioxide levels to a record. that may have an influence on the weather patterns and ecosystems. estimates are the fires will release 900 metric tons of co2 into the atmosphere. that is about the same as emitted by all commercial aircraft. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thanks so much. viviana's report folds into our new bloomberg green. it will be data driven analysis of the dynamics of climate change and of course, sustainability as well. right now, we need to consider

china. we all know the slower economic growth of the pacific rim, but inside the pacific rim, and we are learning where wuhan is on the map and central china, an expert who was on china watch joining us from his office in washington, tom orlik. wrongs the media getting about this horrific crisis and on china?ate impact world: we are still in a of uncertainty about the dynamics and potential region impact of this virus. , the heard on that update latest news is troubling, with more cases, more deaths, more reports from around china and other countries around the world.

it is time to start thinking about the potential economic impact. the lens we used to do that is what happened in the chinese economy in 2003 with the outbreak of sars, and what we saw was a marked, brief impact. , china's economy grew 11.1%. slumped to 9.1 percent, a two percentage point drop in growth. a moderate rebound followed as the disease came under control. francine: explain to us exactly how that would impact. said they have operations where it was first seen. does it impact travel? do people stay indoors? tom o.: there is a couple of points. the timing for china could not

be worse. this is the start of the chinese new year. it is like christmas, thanksgiving, and easter all rolled into one. there is 175 million migrant workers in china and this is the time of year they go home and celebrate with their families. that travel raises the risk of the disease spreading, and precautionary measures at this time of the year will have a particularly marked impact on the services sector. the additional point i want to make, when we look back at sars in 2003, it was the services sector which really suffered the brunt of the impact. in a disease, people do not want to eat and restaurants or go to the shops or the cinema. years, a big7 success of the government has been the expansion of services but in the face of this

outbreak, the services sector increases economic vulnerability. tom: a lot of us talk about that and very few do it as tom orlik has done. my idea of dining in china is picking one of four restaurants at a hotel. outbreak, onel -- what aboutnts, restaurants, grocery stores, cooking on the streets, what changes? tom o.: we come back to the point of the chinese new year celebration. this is the time of peak consumption in china, the time when everyone gets on a bus or train or airplane, when everyone goes to the shops to get the ingredients for their new year family banquet, the time when everyone splashes out on a big trip to the restaurant with their grandparents and aunts and

uncles and cousins. if that does not happen, it is not going to be something which hits 2020 gdp probably, but certainly when we start looking at january, february, march numbers, we will see an impact. tom: maybe an unfair question but i will ask anyway. how did sars and? -- end? how do these viral outbreaks end for china? tom o.: the speed and decisiveness of the chinese response, back in 2003, china was fiercely criticized for being slow, for not being transparent, for not cooperating with the world health organization and others. in 2020, it looks different. there is much more information in the public and we see from the corentin of 10 cities -- corentin of 10 cities --

of 10 --quarantine cities that there is action. all of those suggest a higher chance that this will come under control more quickly. francine: thank you so much, tom orlik, in charge of bloomberg economics, joining us from washington. here are some global leaders in davos weighing in on the coronavirus. chinesenk the government are taking serious measures now and very quickly. >> i think hospitals and communities are much better prepared compared to sars. >> this is a challenge that we have been aware, we have put measures. >> obviously it is a challenge, but if there is any country in the world that can deal with this kind of challenge well, it must be china. >> it can be really devastating,

but this is early days. >> whatever impact it will have on the economy will be limited. >> this is why countries need to work together. >> hong kong has already put in place a highly vigilant system. >> we think it is going to be handled very well. >> you may wish to be d globalized but the virus will not be d globalized -- deglobalized. ♪

♪ marketsiggest risk for are two types of things, u.s. domestic politics and black swan effects that can happen. >> it would not be a surprise if

he saw markets that box through 2020 -- setbacks through 2020. >> transition risk, where is a country has company on transition? >> what could derail the markets as a radical change in monetary policy on the back of inflation or an external event. >> if credit is not available that you can borrow for 100 years or 2%, people may get overextended. is there a shock to interest rates? that could be a correction. >> there will be booms and busts again. >> it does not feel like the place -- pieces are in place for a substantial market correction unless there is something different in the geopolitical picture. points --are the high

one of the high points at the world economic forum, truly extremity -- extraordinary dynamics. points to the nuances of a noncrisis year. markets are not following out of bed like last year and it is a matter of dynamics and the view forward. francine: i was speaking to the ecb president this morning and bloombergud she chose to give her first and only interview. she was saying the tiering system worked and i said, why not tier more? she said the balance is perfect but she does not want to front run it because that would defeat the exercise. let's get the bloomberg business flash. viviana: oil is poised for its longest losing streak since may.

prices are set for their third weekly loss in a row. concerns the virus in china will hurt it. dimon, aion for jamie big payday after the bank posted record profits for the second year in a row. $25 million is in restricted ties to performance. he is the last of the ceos to steer banks through the global financial crisis. goldman sachs taking a stand against all white, all male boards. they will refuse ipo's unless a least oneboard has at person who is not white, male, or heterosexual. goldman is the biggest underwriter of ipos in the u.s. francine: thank you so much.

following up, let's get to carolina casey -- carolina businessesing to get to commit to business inclusion. congratulations and thank you for joining us. we were hearing from the goldman initiative but they want to do a new business with boards -- will not do business with boards that do not put diversity at the front. are they making a difference? carolina: first, thank you for having me. 90% of our companies or brands say they are passionate about diversity but only 4% consider disability. the valuable 500 last year -- that was this iconic mission to

get 500 of the world's most influential brands and leaders to sign on disability. can i say, we have come back and announced on our press conference it was part of 242 represents $4that trillion in revenue, 10 million employees, and we are holding them to account. this is action, collective action. the cynics, and i'm open to the challenge, how we know we are going to do this and hold the feet to the fire is media, and these employees will hold their companies accountable. tom: the math is real. we know that disability premiums are so much higher because obviously, there is a lot of disability out there. what is the immediacy of this? five a wonderful idea,

hundred companies, richard branson and bloomberg on board. it would seem to me company to company, every company is touched by this. caroline: thank you. 1.3 billion people in the world have lived with the disability. every one of us is going to touch it. tom: i want to be selfish because with the bloomberg terminal worldwide, it is a hugely tactile thing and we are working with carnegie mellon of pittsburgh, pennsylvania, on how intoing disabled people the machine, and it is selfish. caroline: it is not selfish in a business sense. when we talk about disability inclusion, it is about customers, suppliers, talent, next-generation accountability with disabilities. this population is growing with an aging population.

you want to have differentiation with your consumers. this is an opportunity for growth and innovation for business. francine: how do you hold leaders to account? caroline: you do. francine: there is no transparency. caroline: there is transparency. the valuable 500 is on our website. their employees will hold them to account and the media will hold them to account. this is the first commitment of this kind. they will hold each other to account. tom: the stereotype we are battling against, disability must mean that person is inferior and dumb. have we gotten beyond that? i remember that from my childhood. caroline: you are so right. disability has been perceived -- tom: that was the stereotype for 400 years. caroline: the traditional model, week, damaged.

the social model is taking over. i am registered blind. society disabled me and business changes that through valuing people with disabilities. when we value, we do not exclude and we empower. founder ofne casey, the valuable 500. caroline casey, founder of the valuable 500. tom: let's listen to a few speakers. >> the climate and environment is a hot topic right now, and a lot thanks to young people pushing, but if you see it from another perspective pretty much nothing has been done. >> we do need real breakthroughs. >> no one company will do this. >> we need to change the demand patterns of the market. >> pushing our industry to be more responsible, it is working.

>> we want to invest in clean technology and green new procedures. >> i am a supporter of a carbon tax but i don't think i am naive about it. it is one of many policy options that need to be used. >> climate change will not be fixed by a central bank. it will be fixed by accommodation, public and private. >> we need to embrace we have a climate change problem and we need to get to a carbon neutral world. >> to embrace the possibilities of tomorrow, we must reject the perennial prophets of doom and their predictions of the apocalypse. ♪

♪ we have probably seen the end of the boom bust cycle. >> people have been saying that for a century. >> you would have to kill fear and greed. >> cycles and growth are caused by the boom and bust in credit. >> we have had cycles for thousands of years, largely driven by changes in monetary policy. period butn a benign

the fed is in a box. >> they cannot tighten or ease. >> where do you go from here? >> it will not look like it has. >> the fed is bringing things back in line. >> relatively speak -- sweet spot. >> we never leave the boom bust cycle. >> the cycle is not done. tom: the video cycle from davos, i assure you, you will see that sequence on and on. it created a sensation on global media, our question from jonathan ferro on boom bust. you heard the reaction from a lot of people. there is no other talk on global wall street other than what you witnessed. boom and bust means what? ,arkets up or the economy up bank revenues up? sonali: what scares me more than

that, the lack of boom bust means these guys are not prepared for the bust. i have been asking, what are you doing to prepare? there were no answers. -- it does not seem like james gorman believes in it and he is running one of the major banks in the u.s. tom: it is an act of god to watch her report and get conversation, great. bust a 2008 collapse or lethargy? sonali: the big fear here, u.s. central bankers, whether there is enough juice in the machine to fix a problem should it happen again. christine lagarde contends they have enough creativity, but people are thinking the next downturn will be long and bloody.

here.elieve it is already tom: there is different opinions along the way. thesere these leaders of too big to fail banks, aren't they never looking at bust because they are investing forward with cost control? aren't they just moving forward to get to the next quarterly call or in the case of mr. solomon, the next investment day? sonali: they sure have to. it is a rat race on wall street. m is inort-term-is place. about: what he is worried is if people start to sell, they will be selling hard because they have so many illiquid assets they need to sell to liquid. tom: we are going back tonight and you are going for a week in san moretz. what are you going to look at on goldman sachs investment day?

what will they be listening for? sonali: all of their competitors are here and given the timeline -- tom: on retail or everything? you want toargets, build a wealth management that is bigger, a consumer division, but how fast will he get there? tom: our chief correspondent sonali basak looking forward to that. up,ave much coming including one of our key interviews of the week, the deputy prime minister of canada. fromt schiller to join us yale university, scheduled to join jon ferro. ♪

♪ ,onathan: from davos switzerland, good afternoon. this is "bloomberg surveillance" on the final day of the world a comic forum. alongside -- world economic forum. alongside tom keene, i'm jonathan ferro. tom: it's a real shift from 15 years ago. with so many other conferences around the world, the pressures of global corporate activity, people are here for two or three days. lagarde slipping in after that important ecb meeting yeste