i hope they live a long, long life. welcome to "street signs" live from davos and london i'm karen tso. these are your headlines cnbc prepares to speak to the president of the ecb and governor of the bank of japan as business leaders hope for a short and shallow recession despite the policrisis >> we have to be careful and probably with a benefit of

insight of monetary policy japanese inflation surges to a 41-year high of 4% in december double the doj target as they stick to the ultra easing policy. and the dutch prime minister doesn't believe the inflation reduction act is meant to hurt europe >> closing the gap on paris. we have always asked for that. it could be an unintended consequence for european businesses those have to be addressed i'm arabile gumede in london netflix smashing subscriber numbers as well adding 7 million new users while the company's co-founder reid hastings steps down >> they are ready.

that's driving the timing. i could not be happier hello. welcome to the special coverage. it has been a huge week from the world economic forum so many topics from cybersecurity and what we are seeing on the economy. we cycled right back to the economics to close out the week. japanese core consumer inflation rose to a surge in december. that exceeded the target rate of 2% it could trigger the boj to lift rates from negative territory. there are fears wages may not rise enough after the prices rose 0.8%. goods prices jumped more than 7% we will continue the conversation on this as we cap off the week of coverage this morning. geoff is moderating a panel on

the economic outlook with the imf leader and ecb leader and bank of japan governor and the french finance minister and larry summers. that is coming your way at 11:00 cet. steve spoke to the dutch prime minister and asked where he thinks the eu and u.s. relationship stands after the trip to see president biden this week. >> we see the transatlantic country in the eu as the uk left eu and overstepping that position until 2020. the discussions focus on ukraine. the russian aggression is awful. we have to do everything to help ukraine. we are spending another $2.5 billion this year. the u.s. is doing their part and

others in europe are doing their part that is the prime reason to be there and debate how to do that and how to hold them accountable. we discuss this inflation reduction act which is about basically closing the gap on the paris agreement. it is positive in itself it might have unintended consequences for europe to maintain the level playing field and treat like mexico or canada. i think we can do that we can get there the u.s. really believe is not there to hurt europe obviously, buy american. we all campaign on buying our own stuff. >> a lot to unpack there we will talk about the restrictions on the chinese ability to get a hold of dutch technology let's start with ukraine i know the netherlands is offering more military equipment to mr. volodymyr zelenskyy to ukraine. the war is getting better and it

is getting worse and worse patriot missiles may strike down russian missiles, but not take the fight. do you think the u.s. and eu needs to step up the offenseive capabilities for mr. volodymyr zelenskyy? >> yes we see other countries and now the debate about tanks which is sensitive. i think we do that together with other countries and that debail is ongoing everything you say on the program is bringing the debate to conclusion. i'm optimistic this could get to the landing spot. >> they are given the go ahead why are the germans dragging their feet on military support >> i don't agree about the assessment about the germans they decided to ramp up defense spending immediately agreeing

that german gear could be shipped to ukraine they were the ones to open up with the dutch and others. they have done what is necessary and whatever is needed to be done there's not just one or two. it is about other systems. this is a sensitive position i agree there is an argument to send to ukraine. there is an argument to take that position with others and including our friends in the u.s. >> the cost of the war in europe is huge. if anyone had to bear the brunt is the europeans is the appetite still there as the broad eu level >> yes do you know why? feel and this is about invading one country. all of the footage where children and women and men and families completely not involved

in war were hit by rocket fire from russia. it is also about our collective safety we have seen this in munich in '38 and other spots in history if an aggressor is not challenged and it won't end with ukraine. then the whole west is sentenced. >> joumanna has joined us. she peeled herself away from the monetary policy forum. >> i thought the context is interesting to the discussion. kar karen, if we had been sitting here a year ago about monetary policy, we would have priced in 75 basis points of lihikes. they hiked more than that. my highlight from the panel is all of the panelists were hawkish about the future the expectation that inflation will fold.

they don't feel they have done enough yet there is still a little bit more to go in the tightening cycle which is the key take away. >> i'm not surprised i was spending time with the boss at bank of america with brian monynahan the thing people are missing is interest rates will stay higher for longer it doesn't matter where we get everybody is fixated on the terminal rate. with the bump in the consumption in the u.s. going into the year, the china reopening theme -- >> it adds another tailwind. you will see the pressures aside, the key is able to get it back to 2% in a way that keeps inflation expectation anchored that is a challenge for central bankers. >> we spoke about the inflation reduction act.

most people say what does that do to the stimulus story this is infrastructure this is longer-term spending when this impact kicks in next year, then it makes it interesting if we are not back to the 2% target and not there by the final quarter, what are the challenges on the stimulus >> this is a question i posed to larry summers. in the meantime, i want to turn to uk the uk may have turned the corner in the fight against inflation. that is something that, of course, the bank of england has been focused on. according to the governor andrew bailey who told welsh media, inflation is likely to fall rapidly this year. he reaffirmed the call that britain will have a long and shallow recession. the northern ireland protocol has taken on importance after the exit from the eu we talked to british business

secretary to check the pulse on the dispute. >> really a willingness to get on with thing. they realize it was a long time ago to leave now it is practicality things are the response which the uk acknowledged led to the ukraine crisis and shown we work better together. >> i think there is a concerted effort on all sides to create the right conditions and right environment in which an agreement can be made. it should never been about winners and losers, but an outcome that works for people and businesses in northern ireland. one thing i should say is we shouldn't forget the objective of the propprotocol brexit with the eu and disrupted relations on ireland

it was about making sure that the integrity of the market was protected in the house and the northern ireland economy is out performing the uk at the moment. >> the fed vice chair lael brainard says the chances of a soft landing is rising and without hitting employment >> it is possible that it continued moderation and output continued easing in the labor market and reduction inflation without a significant loss of employment policy will need to remain sufficiently restrictive for some time to make sure it gets down to 3% on the same basis >> morgan sstanley ceo doesn't see the fed cuts rates any time soon >> we were on the 75 basis tract.

we quickly moved to 50 february 1st is 25 i could see them doing 25 followed by 25 followed by more. i don't see cutting. that is playing with fire to do what we have done with rates and then turn that quickly to a cut. you have to let this settle. >> to round out the top voices on the mountain, jamie dimon told us he sees rates continuing on the path higher and is ready for recession. >> the way we run the company is serve clients day in and day out. i know there will be recessions. i don't spend time worrying about it i worry about public policy and not about what the weather is like i don't want a recession it hurts average americans i'm not for it i have to prepare for it i think rates will go higher than 5%.

there is a lot of inflation that won't go away so quickly. >> karen, i came off the panel and the future of monetary policy the question in the room is what happens this year. one question is if it is time to reevaluate the 2% mandate. maybe it is time to reassess and move higher. maybe we are moving into the new paradigm that was one of the questions i posed to the former u.s. treasury secureuretary larry summers. let's listen to what he has to say. >> i think it would be a grave error for central banks to revise 2% inflation targets upwards at this point. i say that as someone who was negative on the idea that the united states should put in place a specific numerical

target it seems to me that having failed to attain the 2% inflation target and having reemphasized repeatedly the absolute commitment to the 2% inflation target and to then p abandon the 2% inflation target would do very substantial damage to credibility >> i also asked chairman thomas jordan if the world will ever go back to negative interest rates. >> it was absolutely essential to serve negative interest r rates. we are happy we are out and in positive territory we can use this instrument in case it is necessary when you go back into negative

inflation, we will not hesitate to use it again. it is much better not to use it. it is also proof we can maintain a low inflation goal and price stability and having instruments in order to achieve price stability and negative interest is an important element and instrument it is much better today when you are back in positive territory there are certain distortions where it is better not to have negative interest rates in switzerland, the period of eight years is much better than expected >> let's start on the conversation about resetting the goals here 2% whether that is the right target i think as we change the rules, people say is that just to make the set up easier for central bankers as they hit 3% target. i think it undermines the confidence

>> i think the word undermine is what larry summers was getting at as he didn't use the word the central bank community has insisted on getting back to the 2% price stability target. this is what they have told us they spelled out how they will get back to the 2% if they move the goal post, that will raise the serious issue of credibility. this isn't the time for central banks to put in position where investors have another reason to question credibility i felt that was a strong line from summers. >> and the average inflation target in the united states. some rules have changed where you can get slightly over and the average roughly at 2%. >> larry summers gave the example in the panel he said when inflation is 7% no one suggests it needs to go to minus 5% to compensate 7%

that targeting works when inflation is one percentage point. it doesn't work in the high regime i thought very interesting that the 2% mandate is something he thinks needs to stay the other thing i thought stuck out, you know, we, for years have been talking about the negative interest rate policy in europe >> nice way to sum it up. >> and for a while, we were never going to get out of it central banks expanding balance sheet, et cetera, et cetera. in a way, this shock was a reason and catalyst for manyof the central banks to move away from negative interest rates and zero interest rates. i asked the chairman thomas jordan if we can return to that. i thought he was going to say no he said it is a possibility it is a tool we have in the tool

box. >> think how quickly we moved away from that in terms of the tightening this sis a dramatic change i was speaking with brian moynahan about in. you think about the history of monetary policy. investors were meant to get a steady journey we have seen a rapid u-turn because there have been stunning events unfolding this is not how central bankers want to run policy they want it to be a steady pathway. the idea we start to get to pivot and come back the other way is not how central banking is conducted >> absolutely. on that topic of negative interest rates, we spoke about stagnation with larry summers.

some elements are still there. inflation reduction act is a long-term stimulus growth plan that will boost the u.s. economy. >> which takes us to the heart of what is in it for europe and where do they get stimulus down the track and puts pressure on policymakers to come up with their reaction. we will press on and talk about energy security. energy firms will continue to through people under the bus by with investing in fossil fuels that was the warning from greta tuenberg we will have more after the break.

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welcome back we will continue our davos coverage out in switzerland on the last day of the world economic forum before we get to that, the u.s. defense secretary is speaking in germany. lloyd austin is convening another meeting of the ukraine defense contact group at the

ramstein air base. the eighth in the series to discuss future efforts to provide support to ukraine let's listen in. >> last month, the united states announced that we will provide a patriot air defense munitions. we included bradley infantry fighting vehicles and other vehicles in the major package of assistance today, i'm pleased to announce another round of u.s. security assistance that helps to meet ukraine's urgent battle field needs. this security assistance package is worth up to $2.5 billion. it brings total u.s. security assistance to ukraine to more than $26.7 billion since

russia's unprovoked invasion last february. the new package provides more air defense capabilities to help ukraine defend its cities and skies. lack of trust in the systems are boosting calls for global taxation i moderated a panel in how countries with distribute tax revenues i spoke to the director of the tax observatory and ecb general. >> to curb the rise of income and wealth inequality. it will involve tax income in particular that needs to involve substantially higher income tax rates. i don't see a future where corporate tax rates remain 15% or less than that.

we can tax hike on others at higher rates i think the race is to see the continuation of the rise of inequality we have seen in decades. >> what we are trying to address with the global tax deal is tax shifting from country to country. the issues that you raise can be addressed now by individual jurisdictions. the global tax is inclusive and does not prevent countries from improving higher corporate tax it is a minimum global tax it does not prevent countries from addressing the risk you describe of incorporating yourself to avoid higher progressive personal income taxes. these are all things that individual jurisdictions can address for themselves subject to the democratic process. the reason why there is a need

for international agreement to address what we are seeking to address is the capacity for multinational business to shift affairs and structure to essentially pick the jurisdiction to give them the best deal. also provide pressure on some countries to offer deals that frankly are tax wiseful. this is not on the title that would prevent individual countries from doing if that is what they choose. >> respectfully, i disagree with that it doesn't limit to tax compet competition. it is hard for your country to increase the income tax rate if the firms can move headquarters and factories and employment to low tax countries where they will be subject to tax rates below 15%. i'm sorry, but diagreement does'

help the income tax rate. >> that is the same problem. shifting paper profits across countries for profit shifting. i agree with you it will be substantially reduced and i started my remarks by saying it is important progress. it is worth celebrating progress where it happens pure profit shifting and booking billions in profits in territories where there is no activity and this will come to an end those profits will be at 15% that's a very good development however, what is not going to change and what will not change is remaining incentives for firms not to move paper profits, but factories and workers and headquarters and real activity to low tax countries

including zero tax countries that is a bigger problem cooperation with the private and public sectors is crucial for financial inclusion according to the queen of the netherlands who is also a u.n. secretary-general advocate she spoke to our colleague tania in davos about the financial sector >> it is not only collaboration with the public and private sector, but the private and the private sector we actually have seen the pandemic and a lot of governments for payments far away and they used mobile money. they used private sector and they work well together. that is an important issue at the same time, the private sector needs a couple of things from the public sector likegoods. what do i mean every country should have a digital i.d.

that is the only way to open an account. at the same time, we need availability we need a good set of regulations. we need basically cyber protection that's a very important thing otherwise we will lose trust in two seconds if cybersecurity breach happens there is a corporation between the public and private sector which is very important. national fund of agriculture development warned the forum that the food crisis will not improve in 2023. tania spoke with the goodwill ambassadors about the work to highlight food security issues. >> it is unfortunate that the food crisis has been around as long as it has on the back of trendiness, let's

implement change through the work with ifad, we have seen governments step up. >> there is a general awareness now with the pandemic which put us all in perspective that when there are food shortages around the world, it can end up in your town when you saw pictures of people with long lines of food banks in l.a., you said we do need to pay attention to this. it is a shame that we are raising awareness because of the crisis, but we are at the table talking about it the hopeful thing is and ifad does well is educate ourselves to avoid it next time as opposed to dealing with it in crisis mode and greta thunberg told panelists that government

leaders are still not doing enough to combat climate change. she was detained in germany for prot protesting she told steve she was upset over inaction. >> we are in davos where the people who will fuelling the destruction of the planet and the people at the core of the crisis and these are the people that we seem to rely on solving our problems where they have proven time and time again they are not prioritizing that. they are prioritizing self greed and corporate greed and short-term economic profits above people and planet. >> steve also asked whether she felt it was more impactful being part of the program at the likes of davos and copp or if her

voice was stronger outside of the events >> again, i think right now the changes that we need are not very likely to come from the infi in inside i believe they come from the bottom up, so to speak without public pressure, we have public pressure from the outside, at least in my experience, and these people will go as far as they possibly can as long as they can get away with it. they will continue p tto innves fossil fuels i believe the changes we need right now needs to happen. we need to build a critical mass of people who demand change and jus justice. of course, we could do that also from the inside. quickly, i wanted to note

other news happening around the world. we have russia president vladimir putin who had been discussing energy on a call with the kazakhstan president that is a note coming from the kremlin. very important to note that putin or the kremlin said western tanks for ukraine will change nothing and won't stop russia achieving its goal. this does p cocome amid the situation in ukraine which continues to be at play. we are, of course, also having at the same time the meeting convening with the secretary of defense speaking about the support for ukraine currently happening as well out in germany right now. the kremlin saying that ukraine conflict is spiraling upward saying we see indirect and direct nato involvement. kremlin saying that the international community will regret the delusion that ukraine can succeed on the battle field. trying to alleviate any

positives that may have come out thus far in the ukraine side krem kremlin also saying to avoid furthest can legescalation, u.s are at historic low at the biden term kremlin sees no hope of improvement in the ties with the united states. very interesting to note words coming from the kremlin. sternrefaffirming the stance from ukraine. tanks from the west to ukraine will change nothing. joumanna, that is some of the things we are facing over to you. karen will be leaving us now. >> a lot of good-byes going on here most of us are heading back down the mountain >> it has been amazing

>> and what arabile has been talking about is the corridors redrawn and new alliances and trading partners as a result of russia pushed out of the equation and concerns with china and the dominance in its part of the world. a huge theme in the back channels here. >> that and how the economy will play out for 2023. thanks for keeping the seat warm for me >> nice to be back. >> we are going to take a quick break. when we come back, we will talk about netflix. stay tuned we'll be back in a couple of minutes.

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sexy! the elite box by adore me. get styled for only $10 at adoreme.com. welcome back to "street signs" live from davos and london i'm joumanna bercetche these are the headlines. cnbc prepares to speak to the head of the ecb and governor of bank of japan as they voice hopes for a short and shallow recession despite the crisis >> the expansion in monetary policy can create inflation and we have to be careful and probably with the benefit of the

monetary policy will lead to expansion. japanese inflation surging to the 40-year high. double the target as the central bank sticks to the policy. dutch prime minister rutte doesn't believe the inflation reduction act was meant to hurt europe >> it is possible that u.s. is closing the gap on paris we have always asked for that. there could be an unintended consequence for european business i'm arabile gumede in london netflix smashing subscriber estimate adding 7 million users while the company's co-founder reid hastings steps down. >> they are ready. that is driving the time going i could not be happier

now the risk of recession in europe is on top of the agenda here in davos. we have the outlook from the block. >> it is not about sabrerattling right now. we are looking at the european policy response to our competitor issues. we are facing high energy prices >> there are differences between europe and the u.s what happened in the u.s. with the inflation reduction act. we were having conversations anyway it is exaccelerating what happes in the u.s. can negligence toughly impact europe. we are investing in sustainable

future we have to make sure we don't lose out >> there is dialogue with the u.s. with the exemptions >> no trade. no one is missing the point. we are doing a lot we are at a par when you compare the size of the packages that have been chosen before. within europe, we could do more to be more competitive the energy landscape is changing with the climate crisis and russian invasion of ukraine. hadley sat down with leaders to discuss global energy security >> what we need is a strategy for renewables that binds together the challenge of high bills and energy security so we are not so exposed globally to putin or whatever.

the next generation of jobs will come as we rush toward renewables our obligations are to the climate crisis >> you have to have carbon pricing and carbon tax i said are you people crazy? you think i'm going to add to inflation by adding more cost? what we did was do incentives for investment we are getting people to the united states to reduce the amount of risk and use new tech technology. >> in that is the demand side of the technology which is absent from the debate. i think it is really what matters to people. >> who cares if you are producing with this or that technology this is debate what is the purpose? why are we using energy? why are we lacking it? >> the chairman of royal

phillips told cnbc as countries invest in green energy infrastructure, they must focus on future proving companies to maintain competitive advantage >> china gets credit the biggest windmill parks are in china they are doing a lot on changing its energy infrastructure. at the same moment, they are still building coal power plants be careful of committing reductions on the other hand, for 2,000 companies, mainly energy related, there is a carbon pricing in china of $5 or $6 in the united states, there is no carbon pricing. only in some states. i would like to be careful to say china is holding back and

doing nothing. i think they heare on a dual track. they are preparing for a low carbon future. one day they will arrive there i expect china to say everybody should have low carbon economy when they have it. when they still do not have it, they will be nuanced in the message. i think the whole debate is how do we align and that is the issue now in united states and europe and china here, the private sector can play a role. we feel from the investors behind us that the pressure to future proof our companies investors think long term. they feel the world will change whether you like it or not we investors and that was clear in the meeting with the big companies that we want you to future proof we want you to be careful with the investment that is a good driving force for

businesses >> do you think there is a geopolitical advantage to being ahead in this clean transition >> what do you mean? >> in terms of china and ambitions to eventually fully decarbonize? >> absolutely. we see european green deal if you look why europe wants the european green deal, it wants to be net zero or low carbon economy, et cetera it is good for the environment the clearly other reason for europe to do this is to develop the technologies needed and have competitive advantage at the certain moment knowing the world will change. it is inevitable then those countries will have technologies and those countries who have companies fully future proof have competitive advantage. it is difficult to assess

exactly if it is 5, 10, 15 years. for people who think longer term, this will happen anyway. moving on to cryptocurrency. genesis has filed for bankruptcy listing over 100,000 creditors the company is the latest in the fallout caused by ftx collapse says the range is between $1.2 billion and $11 billion. the filing comes days after the u.s. securities and exchange commission charged both genesis and gemini with selling unregistered securities. ftx's new ceo is looking to restarting the bankrupt crypto exchange he said reviving the exchange could allow the company to recover more assets and return more money to customers than if it was liquidated. sam bankman-fried was in favor

of the news. sam bankman-fried is under house arrest in california awaiting trial on fraud charges tech leaders gathered here in davos amid the tu mmultuous time after the job cuts announced this week. tania spoke with business week and asked about the restructuring means for the company. >> that's not an easy thing for any company to go through. especially a company p with hyper growth that is a difficult thing on a personal basis when i look at the company and all of the reasons i'm sharing with you, we are underestimated. we see the growth we talked about for the last earnings with people p we see the extraordinary innovation more than that, when i talk to advertisers and business owners

this week, focus is very much on making sure they get the best return on investment talking to us and the performance that we can get, that is something we want to happen i think we are in the best place to do that and continue to make sure we put that out there >> let's hand it back to london. arabile, how are the markets doing? joumanna, let's get into that we look to be having a recovery in the market after the fall yesterday. particularly in europe gaining despite some wall street weakness that we did see yesterday. the u.s. did come out with a few results we saw with netflix missing estimates for quarterly earnings jpmorgan chase winning regulatory approval to expand in china. interesting news from the united states like i said, european markets moving higher. partial recovery from the thursday selloff the mining stocks up more than

1% telecom leading the losses down marginally today yesterday, the big issue was global market sentiment. fears in the increase in interest rates seems to be a doubling down and more needs to be done with inflation. let's look at what the u.s. market could look like today it does look to be a sort of rec recovery we will see it is above the flat line for most of the markets in the united states. i mentioned netflix. the company surged in the extended trade after beating expectations for fourth quarter growth 7.7 million new subscriber additions. that is above 4.5 million. this marks the first quarter that the ad supported service was included in the earnings the company, however, disappointed on earnings per

share. revenue was in line with analyst expectation. netflix also announced that reid hastings will step down as ceo and become the group executive chairman his partner ted sarantos will take over at the helm. very interesting news p ccoming from the united states, joumanna a lot happening out where you are, too >> thank you for that. just ahead, strikes causing chaos across the country we will have the details coming up next.

welcome back to the show unions have called for more strikes after millions marched against emmanuel macron and pension reform he said they need to raise the retirement age by two years. the protests disrupted train

service and curb power generation and closed schools on thursday union leaders are planning for another day of protests on january 31st as well the u.s. has hit its debt ceiling reaching the national borrowing limit of $31.4 trillion on thursday treasury secretary janet yellen said her department is using tha extraordinary measures to fund the government kevin mccarthy has until june to strike a deal with democrats over raising the debt limit again. >> in a new letter to congress, janet yellen said the deadline for raising the debt limit is aing moving target the period of time that extraordinary measures may last is subject to uncertainty. including the challenges of forecasting the payments and receipts months into the future.

yellen said the treasury could pay the bills through early june in the new letter, she did not give a timeframe democrats and republicans continue to point fingers at each other scott perry said enough is enough we must use the opportunity to rein in the spending in kentucky, senate republican mitch mcconnell tried to turn down the predicted lawmakers will reach a deal >> america must never default on its debt it never has it never will. we'll end up in some negotiation with the administration over what the circumstances or conditions under which the debt willi be raised >> we hear different comments from the house and senate which suggests there is a long way to go before compromise i'm ylan mui in washington

just wrapping up my personal last couple minutes here from davos. what a week it has been. we interviewed so many people and so many discussions about the monetary policy and direction of the economic growth and the panels that me and geoff and karen have conducted there is one more panel coming up in moments. geoff's panel has the imf and ecb and head of the bank of japan and the ifrench finance minister and larry summers that's all ahead stick with cnbc. i love adore me. especially for valentine's day. they always have a different style and color. the details are amazing, i always find the perfect fit. valentine's day special - get your first set for just $24.95.

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it is 5:00 a.m. at cnbc global headquarters. here is your top "five@5." wall street trying to end on a high note despite calls from fed officials of higher for longer is here to stay. call it a streaming success as netflix user growth blows by estimates. that stock surging pre-market. plus a big change in the c-suite. crypto crisis casualty as

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