in time. that's all for this edition of "dateline." i'm natalie morales. thank you for watching. [theme music] good morning welcome to "street signs." live from davos and london i'm joumanna bercetche these are your headlines ecb governing counsel member says there will be more 50 basis point hikes to come as price pressure still hasn't peaked >> we will have do what we have to do. core inflation has not yet turned the corner in the euro area that means the market developments that i've seen over the last two weeks or so are not

entirely welcome european commission vice president tells cnbc that discriminatory aspects of the u.s. inflation reduction act should be addressed urging further negotiations >> right now, we are focusing on a solution and looking also at the european economic response to our competitor issues we are facing high energy prices the ceo of novartis tells cnbc that high inflation is putting pressure on investment, but warns europe should not let itself fall behind in r&d >> european commission thinks it is not a given that the industries will reminain in eurp for the long run.

european equity sink oil and gas leading the losses. welcome to a special he -- edition of "street signs." norway central bank kept the policy unchanged the path will depend on economic development. the policy rate will likely be raised in march. the outlook is uncertain than fo normal the central bank says continued

pressure may continue to keep inflation elevated this could suggest raising the policy rate at this meeting. on the other hand, energy prices will be lower than expected which was suggested and early pressure appear to be easing this may suggest a gradual approach to policy setting one last line on inflation high inflation and higher interest rates on weakening household purchasing power many expect a fall in activity ahead. joumanna julianna, we have talked about the market expectation of what central banks will do this bank has gone for a pause maybe we are in for a slight central bank pivot that has been a question on investors minds as it pertains to the ecb as well on that topic, the ecb task says

the market is mispricing rates speaking to cnbc this morning, the recent pairing back in inflation is not enough to justify easing monetary policy >> this discussion in wins or loses. we will do what is necessary to achieve mandate. you mentioned that our president announced rates will have to rise significantly to levels sufficiently restrictive to ensure a timely return to inflation to 2%. the current situation is not satisfactory in that respect what we have seen thus far is data that is not encouraging from our end we have seen one more inflation reading where there was no signs of abating inflation pressure. we have to do what we have to

do core inflation has not yet turned the corner in the euro area that means the market development that i've seen over the last two weeks or so are not entirely welcome from my perspective. they are not compatible with a timely return of inflation toward 2%. >> in your opinion, there are investors out there who are playing on the motorway and taking their chances when perhaps they should be less complacent and bit more conservative that would be your message >> we have to do what we have to do our president announced most of the ground that we have to cover, we will cover at a constant pace of 50 basis point hikes. we can be as clear as we have to be on that and if i was a market participant, i would take it seriously. >> 50 in february and 50 in march? >> i mean, where the 50 basis

point hikes will end i cannot say before hand. it is very clear that the president has used the plural in her word it will not stop after a single 50 basis point hike. that's for sure. >> it is worth mentioning that the ecb is known to be the hawkish member of the committee. cleveland fed president loretta mester says it needs to go beyond 5.5% the st. louis fed james bullard says it needs to top 5% as well. he sees it going 5% by the end of the year. and harker and logan called for smaller moves. moving on to wholesale prices in the u.s. which have fallen faster than expected in december providing another sign

inflation is beginning to ease it declined 0 p.5%. for the year, headline ppi rose 2% that is the lowest annual level since march of 2021 and down from the 10% level hit in 2021 speaking to cnbc in davos, goldman sachs drceo david solom talked about the earnings miss >> i think the sentiment is softening a bit. the view of the softer landing is increasing. our economics team has been soft landing over the last six months i was in the position because i was talking to ceos that i was cautious that i was ununcertain. i see ceos softening they are not calling for recession in europe. improvement in energy situation

and reopening of china is seen positive energy security is a pressing issue for the eu and individual member states since the war in ukraine began finding alternative sources is set to remain a challenge in 2023 we spoke to a number of energy ceos in davos about the future supplies in europe >> i think i would have preferred to help the german with india in 6 to 12 months to put turbines up. i think if you start doing that, you also know that the decommissioning of those gold mines and others takes years i think we could have done alternatives >> government had to react on very short time and had basic very little reflection space if you look at the consistency

that existed with the previous policy, the union decided to we weaponize the economy. this is now an acceleration in the direction rather than anything else. if you need to survive, you put it out for a couple of years which is really not the point. >> i'm happy to bring in my first guest. the ceo of hedro interesting we had the central bank in norway announce they will not continue lifting rates. there is a bit of caution of the economic environment how would you describe how challenging the operating environment has been for you over the last year >> obviously the geopolitical situation with the war in ukraine has really influenced us as companies and human beings. for hydro being in the global energy company, we have seen the

innovation of ukraine and unprecedented gas prices or energy prices and inflation rates going up and interest rate which has influenced the demand forego energy in the short-term. people see the energy bill interest rate and they question if they should buy the new car or build the new building. let's say demand has been interrupted by the political situation. >> one issue was dumping of russian aluminum that put pressure on the market. do you expect this to persist as people shy away from russian products >> there are people who are shying away. we don't want to buy or contribute to the invasion of

ukraine. we have also seen the metal is in the market. >> you were vocal about the fact that the eu needs to start putting and imposing sanctions on russian aluminum. do you still think that is something the eu should do and why? >> we took a position that is to raise our voice in terms of the terrible war that is ongoing in russia we need to sanction that kind of activity which we have to curtail due to the nation or industry they are 50% of aluminum production in europe curtailed with the high energy prices caused by the war. we feel we are positioned that

the russians can capitalize. >> are policymakers listening to you? >> not so far. we felt it was important for us to have the voice. >> okay. so one thing i want to ask about and we touched about this on the global environment i know some of your customers, autos, have been pulling back on orders in 2022, we saw turmoil in the auto industry because of the general demand situation and also because of supply chain bott bottlenecks. what is the outlook? >> the auto segment is holding up well compared to some of the other segments like building and construction we see that despite the fact we see reduced demand short-term for aluminum due to the situation. the fact that aluminum is in the

green shift where aluminum is driving the need of the transport sector now low carbon aluminum. when we see the general demand for aluminum in the range of 2% to 3% per year and we see the demand of low carbon aluminum is 20%. we see now that automakers, when they define their commitment to decarbonization with the material they buy, they like to team up with hydro for example, in december, i was in stuttgart signing a deal with mercedes in that sense, it is good news. >> let me ask about china. is that good news? the reopening of the economy

>> absolutely. china being such a big influence of the world economy the fact that china has opened up and we see that gives some relief on the gloomy picture as we have seen. >> does it impact your business directly or indirectly >> i think the activity level in china has influence for the world economy and whole sentiment about continuing to grow and not fearing recession as we talked about months ago. >> i'll ask you where you see the price of aluminum going if possible in 2023 if you don't want to give me a number, how you think china's role you will influence the price of commodities >> the demand for aluminum is healthy. aluminum with the characteristics being lightweight and transformable and recycled keeps up the demand for aluminum

and the supply is still in question we curtailed europe now. it is really about how the supply will look like going forward if we are able to solve the energy criesis. >> if the russia prices are taken off the market, it may be a mismatch >> i see the prospect forward. >> that's a great place to leave it a pleasure to speak to you enjoy your time in davos the ceo of hydro. still normore to come do not miss hadley's form up today. dealing with the energy transition at 1400 cet just ahead, the assistant secretary-general sandra ojiambo

will join us we'll be right back.

welcome back energy transition remains essential topic here at davos as countries focus on securing energy supplies and bringing down prices. we spoke to policymakers and asked them to share thoughts on the green transition take a listen. >> we learned last week that certainly food producers were aware in the '70s that their products were baking the planet. just like the tobacco industry, they rode roughshod over their science. >> we need to see the support from the policymakers and the capital markets at same time capital markets putting pressure on the countries where it is making it too difficult for them

to make investment and get the right funding and capital. >> the station in europe and all european countries had a clear path for decarbonization and clean energy we have to look for what measures we can take there was overreliance in europe on russian energy which was a mistake. that is another story all together how to compensate russian energy you don't have many choices. >> the term poly-crisis has been used here at davos as business leaders try to move through a number of issues through inflation and climate change this organization is working to drive change and corporate sustainability and integrate business strategies around the world.

i'm happy to say sandra ojiambo of the u.n. global compact joins me on set. i went on the web site yesterday. i'll read the definition of what you do a call to companies to align operations with ten principles in human rights and labor rights and anti-corruption. given we are living in a poly-crisis world, what is the biggest challenge? >> i think the biggest challenge and this is a reflection of the studies we did and released here at davos that in spite of the principles, business leaders say the challenge comes from everything external. rises inequity and inflation and cost of living geopolitics. our principles help businesses make themselves more sustainable and resilient and what business

leaders are finding a new type of crisis they deal with >> one thing which is interesting and this came up in the global forum risk report the top four concerns were climate related. the number one concern was cost of living in the two-year report is there some sort of contradiction or compromise in the near term because this is overemphasized at the expense? >> for me, it all goes together. i don't think there is a framework we should analyze eac one. you need to look at the entirety with the progress you want to see for business nor long time, it has been a focus because it is validated. you can measure and with terminology which is more

commonly used. the esg framework needs to be in con context. you talk about the energy and energy transition. no matter how scientific is, if you don't take the transition which is equitaequitable, then have not achieved energy transition. >> one push back i get from people and this is a farm and we are having discussions and one discussion is it is really easy to set targets of the we can say we cut emissions by x by 2050. wonderful, that's great. how do you get there how can an institution like yours ensure companies are sticking >> that is a big one credibility. not enough to make a target. it has to be science based there is a science based target initiative for helping companies

make science based transitions those have to be measurable and trackable. >> can you give me an example? >> look at a company and say this is my operation you could be a chemical company. you first have analysis of the foot footprint. if you want to make reductions, this is the area to make reductions in the scope, eternity of business and through electricity and supply chain you can draw ai path and say i'l be net zero by 2030. >> are we on the right track >> no, by and large. that is the central message. the crisis of the last few years have set us off track. the form u -- forum like this wl provide the opportunity to

restart. i do want to position, i think, what the halftime issue should look like. we had the saying in davos where all matches are won in the second half. as we approach the second half of the term, let's look at optimism and reenergize efforts to hit goals >> and we are going on the right path not as quick or clear cut as people would like it to be we are moving in the right direction. there has been a bit of backlash against the term esg i think the u.n. global compact came up with the term in 2005. it has been around over 15 years now. it has become political in the u.s. a negative view that there is so many other pressing issues with the cost of living and conflicts and inflation and companies that are too much focused on esg

credentials are missing the point of what is important and drive financial performance. how do you respond >> i am glad you contextualize it it is particularly in the u.s. >> specific in the u.s. >> that's what i hear the most i hear tied into political leaning. companies that do and history has shown that companies that do well and perform well from the esg perspective do well on the longer term. that is what esg is for. it is the framework for continues business improvement, but signal to investors and customers to help build brand and put you in good stead for the longer term. there is a diverging opinions the point be is businesses that do good also care about society issues i don't really see the point

that if a business focuses too much on esg and it doesn't do the other stuff. if anything, all of the business leaders we talked to recognize that the business leader in the world today has to do more than simply worry about the p&l they need to take a stand in society. >> i love to chat to you good luck with the work. sandra ojiambo, assistant general counsel of the u.n. global compact. coming up, we will speak with frank tang. the founder of fountainvest. we'll be right back.

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makes me feel like a complete queen. so powerful. i feel sexy! the elite box by adore me. get styled for only $10 at adoreme.com. welcome back to "street signs. i'm joumanna bercetche these are your headlines ecb governing council member tells cnbc there will be 50 basis point hikes to come as price pressure have not peaked >> we have to do what we have to do core inflation has not yet turned the corner in the euro

area and that means that the market developments that i have seen in the last two weeks are not entirely welcome. european commission vice president tells cnbc that the discriminatory aspects of the u.s. inflation reduction act should be addressed urging further negotiations. >> it is not about it right now. we are focusing on a solution and looking at the broader economic response to our competitor issues because we are facing high energy prices. the ceo of novartis tells cnbc high inflation is putting pressure on investment, but warns europe should not fall behind in rr&d. >> i think the european commission is falling behind it is not

innovation industries will remain in europe for long run. and investment sentiment sinks and oil and gas leading the losses let's get a check on markets. we have the u.s. indicating a negative start to trade. continuation of the risk-on sentiment from yesterday yesterday was the biggest risk-on day this year. retail sales driving recession fears and making the likelihood of the soft landing from the fed less likely. dow jones industrial average looking to lose 150 points yesterday it dropped 600 points. really a steep selloff that negative momentum is continuing in europe spilling over. the losses had been contained

than wall street it is red across the board the dcac 40 is down. similar laosses for the ftse 100 we are seeing more demand for defensive sectors like health care this morning. an overweight position in the swiss market. turning to currency markets. interesting move in the yen today. we had the bank of japan delivering no change now yen is strengthening against the dollar 128 level. we are seeing sterling trade lower against the dollar euro is higher up .25% to 108.17. joumanna. thank you. u.s. treasury secretary janet

yellen agreed to advance cooperation. the leaders met in person for the first time in switzerland for the american tech policy to china. yellen said it was constructive and li sadde added he is ready further exchanges. xi jinping sees light ahead and worries about the spread of covid with the lunar new year. xi's comments are the most direct acknowledgment of the crisis since reversing the policy last month. china reopening has been another one of the key themes at the world economic forum in davos. we asked people across business landscape what they see coming next from the second largest

economy. >> chinese production hasn't faltered as much as the lockdowns. supply is still quite strong that could have a position back on the world because they are producing goods. what creates the impact is chinese demand increases good news overall reopening, but potentially the inflation impact could be a problem >> i think china will not only have, in my fview, a good year, but surprise on the upside it is not just reopening from covid which will happen fast given the significant way in china with the herd immunity which is difficult, but the good news is it may be over soon. >> we learned the hard way these viruses will move regardless

they don't pay attention to national borders it is probably a reaction if there was a rare variant that emerged, you wouldn't want that to be spread too quickly i continue to believe open borders and economies is the right solution >> joining me now is frank tang. founder of fountainvest. asian private equity firm with the focus on china you have unique perspective of what is going on in china. first of all, describe how challenging it was to operate over the course of 2022 and your expectations for 2023. >> thank you, joumanna, for inviting me it is good to be back in davos absent for three years in january of 2020, we entered into covid in the last three years, china had no pandemic other than a

brief intense pandemic in wuhan in january and february three years ago. there are zero covid restrictions which has been making the companies operating in a difficult environment we have been looking to conserve cash and try to be resilient from the balance sheet point of view in order to, you know, conserve cash and remain competitive after the recovery so, so far so good right now, we are seeing the covid restriction policies move away and we're feeling positive about going forward. >> i have to push back a little bit when you see there was no pandemic in china. the pandemic is there now. you continue to see cases rising and fatalities rising. how do you see that affecting the operating environment? of course, the chinese

government wants to open up, but there is still a healthcare situation. >> i was going to say the pandemic officially started a month or a month and a half ago when the policy restricts were removed. we are watching the health of employees and the families and making sure that people got adequate support they are going through the rapid infection period and infection rate is very high and fast you know, i think it is going to be chaotic the next one-to-two months you also reported the chinese new year will start in a few days and a lot of people going back home and after chinese new year coming back to work that stir frying, if you will, of the population will probably

be making covid spread quite fast and hopefully it will be over soon. hospitals are very crowded, but we hope that china can get through the period very fast and with minimal damage. >> of course, also, worth pointing out, china has been leaning on its own local vaccines to inoculate the population i don't want to spend too much time speaking of the healthcare situation. i want to ask about the economy. the vice premier gave a speech a couple of days ago here at davos. the focus going forward is pushing the economy and reinvigorating the economy and loosening restrictions in the property sector. what steps are you expecting them to take >> yes, i think overall it has been pro business which is

encouraging. right now, we are otbserving mor government actions with monetary policies and various measures with more than investment as well china can become more open and the private sector has been somewhat low in the last two or three years. i think there is various policies to encourage private sector growth and continued investment that will be key to drive the economic growth and jobs >> i have to ask being a pe firm focused in china -- have you found it difficult to exit with the geopolitical tensions? >> we have been focused on consumer and sector as one of the key focuses that is less sens sensitive. there will be a rebound in the last couple years. obviously the capital markets

have not been industry strong for chinese stocks for various reasons. i think there will be good capitalists this year for the public market to rebound and that will bode well for our exit as well. we don't rely necessarily just on ipo we look at trade sales once the overall business sentiment will increase, there will be more mergers and acquisitions as well we are optimistic for later half of the year. >> there was a drive from the chinese authorities to push for the so-called common prosperity. i think it was interesting in the vice premier's speech where he said it is still a goal, but become a long-term goal. is that an indirect way of saying that the crackdown on some of the tech companies is going to subside for the time being? >> the simple answer is yes. i want to distinguish between

the economic influence and in other countries to help the poor versus the nti-trust regulatin bigger tech platforms. those are separate issues. i think proper regulation is good and transparency will be good we like to see, you know, clearer regulation >> absolutely. frank, i'll leave it there thank you for joining me fascinating to hear your perspectives on what is happening back in china. frank tang the founder and ceo of fountainvest global arecession risk amid the reopening of the second largest economy is dominating conversation the ceo of novartis said they need more government backing.

>> it is preparing for a risk o something that may or may not happen having governments understand that pandemic markets are a market failure without government supporting it we don't know if there will be a market at the end if we prepare for all of the years you need governments to step in. you have all of the fiscal t strain, there is health on investment you see the return on inv investment. >> the governments don't want to support you. make it easier to do business and give you some form of scheme where you can actually invest in research and development and do it yourselves. i presume europe is moving ahead and helping you to do this >> i would not say that is the case at the moment moving beyond the pandemic, i think with respect to europe, we

have to create a much stronger ecosystem. i think right now when you look at the global places around the world where we can invest and put our infrastructure dollars we want to be in places where i.p. is protected and regulated environment and markets will pay for the premium for innovation europe is falling behind it is not given that high innovation industries will remain in europe for the long run. stay with us also coming up, we are joined by mairead mcguinness european commission financial services commissioner. we'll be right back. yourself. with shopify, you

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welcome back the risk of recession in europe has been at the top of the agenda in davos this week. we have asked policymakers and business leaders from across the continent about the outlook.

>> whether we have recession is too close to call. it could be a recession. it could not be a recession. i think the relevant factor is we are looking into the year of slow growth. we are looking into the year of slow growth because there will be very little room for policy support. >> we need to find the right balance. as i was saying part of the response is going to be also some adjustments to our state aid framework. we are talking about adjustments and not complete overhaul because of the issue of preserving the level playing field in the eu is important >> despite the fact that unfortunately uk had led, europe is stronger than ever. uk is missing and that is clear. 27 countries decided to make important changes. solidarity with ukraine.

raising the investment on finance. solving the problem of energy together all of this is very good sign that europe is getting together. >> joining me now is mairead mcguinness, commissioner of the european commission on financial services great to have you with us. i want to start with the economic climate i get the sense from the people we spoke to that although things are bad, it is not as bad as people anticipated going into 2023 i'm curious to see how that effects what you do and i wonder given the fact there is an energy crisis in europe, whether some other priorities have moved down lower on the list >> that is not the case. we still have agenda we have priorities with the green deal and climate

neutrality i think you are right. the assessment we made last year looking forward to 2023 were less pessimistic things are not as bad as anticipated. that did not happen by accident. the work we did around energy was important to be ready for a difficult winter which we managed well we are not complacent for the next winter. so somebody was saying does not bad mean good? i think what it means is our concerns are this year how evolves, 2023, is less pessimistic, but not out of the woods. i suppose we still have a hangover from covid and supply chain issues as well as the war in ukraine which is weighing heavily in the eu. our support is strong for ukraine. it is extraordinary that we are coming up on the first anniversary on the war and it is

not abating any time soon and we with still have ann energy crisis when you say my work, hugely involves sustainable finance how do we get renewables and other projects we are exaccelerating that acro the union. >> i want to pick up on that point. because of the crises you mentioned, europe had to go through soul searching and we think energy security to climate goals to their industrial strategy and tech strategy as well one of the big things in the last week is trans atlantic and inflation reduction act in the u.s. and europe had to be forced to respond there is an issue with the europeans are too heavy happened -- heavy handed >> let me pick up on that

question i think we have to be honest with ourselves in europe we are vulnerable because we were rely aiant and growth with fossil fuels and fossil fuels from russia. the days of naive is over. we are working toward green investment on the issue of regulation, i had conversations already here it is what i would expect. let's be frank we are not get ting the change e need from capital flow into the corporate world and we have to accelerate that. i have to listen to those concerns and say we have targets with climate and bio-diversity and other environmental topics many we are trying to fa scilitate that companies will be more sustainable. there are differences between u.s. and europe. what happened with the inflation

reduction act, we had the conver conversations. what happens in the u.s. can impact negatively in europe. we really applaud for the u.s. and what it is doing it is investing in the sustainable future we have to make sure we don't lose out in the pivot that is happening in the u.s. and companies get support where it is necessary so we stay in the game >> should state aid rules be watered down >> i think we don't look at how much you water down, but look at what we have in terms of the state aid framework and make it fit for the purpose today. do that on the temporary basis one of the things and you heard from other colleagues, level playing field. not all member states have the same deep pockets as others. how do we balance this requirement for more capital investment if we get more state aid? how do we then help those member states who don't have the capacity to invest from the state coffers? we are aware of these things it is true to say that since

covid and, indeed, with the invasion by russia in ukraine, we had to assess many things including vulnerabilities and we want to make sure the clean tech sector which we lead in stays in europe >> can i ask how closely you are watching your other neighbor there has been a drive to deregula deregulator loosen the regulation in that space >> i'm a big believer in come pet petition it is healthy. i'm sure they are watching none of us would want to do anything in the financial system to create instability. our objectives are not far apart. they may be tweaking over regulation if i look at the insurance framework, we are trying to free up capital for the reasons of

getting capital toward sustainable investment i think the uk is looking at that as well we will watch closely as we should our objectives are the same because financial instability is what we want to avoid. particularly with the energy crisis. >> final question before we head out. the decision to move clearing away from lse back to europe was that politically >> decisions are made by business on the broad prospect, my role is to build up framework within the eu we have to do it in finance and in other sectors so europe is robust and face nos into an uncertain future this is uncertain with stronger systems in place to build capital markets. we have work to do >> absolutely. i'm sure we will be talking about that in the future commissioner, thank you so much for joining me that was mairead mcguinness.

financial services commission commissioner we have so many interviews and we have been doing so here in davos talking about thethemes and drive for digitalization and investment in green projects and the outlook on the global economy and china reopening. some of the big things coming up panels lined up for you. that is it for "street signs" today. stay with cnbc for more from davos. let's put up a quick shot of how u.s. futures are trading before we leave

it is 5:00 a.m. at cnbc global headquarters. here is your top "five@5." a sentiment shift after wall street's worst day since december futures, bythe way, lower agai today. could the recent selloff be short lived? new record on the dry powder on the investment sideline a new debt ceiling showdown as the u.s. hits $31.5 trillion borrowing cap. a live report from d.c