learned to switzerland and over 10 years you pay for the privilege -- lend to switzerland over 10 yearsrivilege. the first victim it looks like our some of the big fx brokers. it will take a number of days and perhaps months to shake that move out of the market. >> still trying to count the losses. jonathan ferro with the latest. in 25 minutes "surveillance" with tom keene. what are you looking at? >> much will follow on to what jonathan ferro said. the markets are remarkable. when i emphasized is we will begin to only hear of the losses taken on what will take weeks to work out. brad will join us, legendary at sanford bernstein. now over at new york university. he will join us with the venture capitalist alan patrickicof. hans nichols will join us from zurich. robert albertson will join us from salmonella -- sandler o'neill. we will be monitoring the markets across equities, bonds currencies and commodities. looking at the -10 year yield in switzerland. >> thank you so much. "surveillance" is 25 minutes from now. >> the british prime minister david cameron is in washington d.c. to talk

to switzerland for a few years.fter receiving an education, they were supposed to return to tibet to serve their country. that was the dalai lama's idea when he organized the children's stay, and that is what the swiss government told his foster parents. >> back then, we all thought the war was going to end, that the chinese would leave, and the dalai lama would return to tibet . then the children could return home and maybe do something to help the tibetan people. >> what his foster parents did not knows that his biological parents never gave permission for their son to go to switzerland. they had left him in the care of a children's home in india and planned to take him back again once things improved, but when they returned, he was gone. >> i went to the dalai lama's sister and cried and begged. she said, "don't worry. you'll see him again in 3, 4 years." >> he regularly visits his mother in india. like most of the children sent to switzerland, he has decided to stay in europe, but he is saddened by the fact that

staying in switzerland.vision. ♪ >> live, from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> and avalanche and the swiss alps. switzerland swiss -- switzerland central-bank stuns the markets. >> leon black changing the rules. he could be facing billions in losses for his bad investment in caesar's. >> mary barra wants

staying in switzerland. stay with bloomberg television. ♪ >> live, from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> and avalanche and the swiss alps. switzerland swiss -- switzerland central-bank stuns the markets. >> leon black changing the rules. he could be facing billions in losses for his bad investment in caesar's. >> mary barra wants to shift -- great is it on the rearview mirror? you watching "market makers." >> we have breaking economic news. the fed index, scarlet fu has the headlines. we are going to cover it here. >> the philly fed index coming out at six points, way under expectations. it is the worst since march 2013. >> 2013? >> pardon me, march 2014. >> everyone is talking about how strong the u.s. economy is, how great we are doing across the board. this is a surprise. i did not expect this. >> horrific retail sales numbers yesterday for the month of december. two pieces of economic data about the pace of the u.s. economic recovery

switzerland, negative rates. the united states of america, deflation. 30 year bonds are at a record low in the united states. this is a whole new shifting gears for currency wars, thinking, and trading. >> the swiss are currently losing it. >> badly. >> badly. >> the russian money that is flowing out of that country. we have ryan chilcote in moscow this morning. he has been talking to the country's economy minister. let's have a listen to what the economy minister said about the recession that his country is going to face if oil stays at $45 per barrel. >> if we take the current situation something like $45 barrel, and we expect that to be all your long, in that case, the depreciation of gdp should be between 4% and 5%. this is one of the scenarios one of the possible scenarios. we think it will be higher than now. but in case it is $45 the decline would be 4% or 5% of gdp. the recession is very dependent on global markets. we are looking at positive gdp performance in 2016 or 2017. >> what if the price of oil st

the people that are the toughest hit have money coming into switzerland but sitting outside of switzerland versus who is here. it has to do with whether the ecb could be looking at quantitative easing as early as next week and the swiss were trying to get ahead of the curve with regards to that ecb move. i spoke to a fund manager wanting to remain anonymous this morning and the fundamentals are not as drastic as they may look on the outset here. there will be a calibration and you're likely to see an evening out of this massive increase that we have seen in the swiss franc immediately after this move. he said the swiss were clumsy in their communication but not stupid in their action. he goes back to talk about how there's been this overvaluation of the swiss franc. not as high as perceived by the market but the long-term fundamentals are not as terrible as it looks. the market reaction yesterday was violent but in reality because the measures the swiss national bank put in place to prevent the swiss franc from excelling but the same thing is taking place with the dollar above the euro giv

big headline is switzerland. scrapping the cap on the swiss franc, the swiss franc surging, equity markets under pressure. smi down 3.5%, the dax doing nothing. caroline hyde? >> the pain, $2 billion wiped out of its market capitalization in two days. they are frantically trying to work out how this hit private banks in public banks in switzerland because of the sudden appreciation in the swiss franc. julius baer profits they say will slump, credit suisse will see its profits hit high 15%. so says barclays. julius baer really the worst performance because of the sudden appreciation, sudden end of the cap down 9%, as do most swiss stocks today. let's look at retail carrefour up, france's largest retailer is dominated in brazil, an international player, sales up 3%. this company is doing something right. minneapolis praising the management and the new format. the only issue is china. chinese sales have fallen. the company says clearly this is one to watch. meanwhile ,spectris, basically they test gear, whether ener

how much will stay in switzerland. it is hard to say that those deposits will move out. >> are they the cleanest in the world? >> probably not. that is a reason why they are probably in switzerland. how was the snb vp feeling today? that was two or three days ago. how does he feel, as this goes to the credibility question. reliability, credibility. the words that you associate. has damaged his reputation taken place? >> i would say, yes, because the market did not understand the policy. as a policy maker, you cannot preempt or signal. >> two days ago, the snb reaffirmed it was a pillar of policy. you would assume that it would stay for now. >> understand the point but again, as i was saying, when you change a currency from having a panic or a floor, if you revamp then you are signaling it will drop and you will have some much pressure on your currency that the cost of intervening will be much higher for you. it was the right thing for him to do. is it the right thing to signal to the markets? it would have probably bee

switzerland to take your money. oil cannot find a bit. we speak with michael leavy of foreign relations. well, it is a least liked idea in america. olivia is interested in, are we going to raise the gas tax? good morning, this is "bloomberg surveillance." a stunning thursday, january 15. here is our top headlines. >> a surprise move from the central bank in switzerland. unexpectedly gave up its minimum exchange rate for the swiss franc and lord its interest rate in deposits. the frank is searching up as much as 15% against the dollar and stocks are sinking. oreo draghi's predecessor at the european central bank has some advice, time to break out the qualitative easing. >> purchases of securities is clearly what is needed at the present move. that is clear. whether or not it will suffice to get inflation which would be satisfactory is another story. >> markets are betting that mario draghi will announce a bond buying program next week at the ecb meeting. >> another rally in oil and a did not last long. it rose on a 6% after relative streng

here we are in davos switzerland.hing that always perplexes me is why so many billionaires come here. i can understand why policymakers come here. why the billionaires -- they have it all already. when i sat down with michael dell took his company private a year ago. we had a conversation. i asked them, why do you come here? >> i like meeting with our customers. a lot of big companies around here we do business with. it's interesting to pick up on the feeling of europeans. >> what are you picking up? >> there always pretty fearful. you come away a bit pessimistic than you came because they tend to worry a lot. we see with the emerging markets and all the digital opportunity greater opportunity -- the u.s. is doing well. our own business is doing well so we are more optimistic. >> do these conversations you have influence what you do let dell -- what you do at dell? you think i will do something different? >> one of the things talked about here you can control. they give us helpful context. what is going on, what our c

votes, switzerland. this is "market makers" with erik schatzker in stephanie ruhle. >> we're live from the world economic forum in dabo swinney:. we need to take you back to new york for one moment. michael? >> for existing home sales, it is not bad. we were expecting that much. existing home sales have been a problem for the past year or so. we have not gotten what we want to see. we are seeing a much better than we expected number for the month. single-family homes posted a fairly strong gain. the supply of the market dropped significantly, of course this is wintertime, 24.1 months to 5.1. prices will continue to rise. we'll over the $5 million mark. that is good news as well. this will set the stage for reasonable 2015 if we continue. pending home sales have suggested we will. we start off with good news. >> michael mckee in new york city with the latest on u.s. economic data. more coming to you from switzerland. plus, a special guest. we'll be looking for that legacy of the late saudi king abdullah.

we're stashing abroad in switzerland. charles: i want to say to my russian and chinese viewers, if you can't get there, i'm here. already. today as we were talking about the swiss bank, they threw -- they threw in the towel in this artificial suppression of currency. it caught everyone off guard and sent the financial markets in a tizzy. yes, draghi will begin firing up that printing press. the thing for me is: i can't see where the money printing wen thing is good for the economy. 90% of the people say it's mainly the reason why the markets are up. that doesn't necessarily live up to the hype. japan has had a zero interest rate policy for almost forever. if it wasn't zero, it was an assortment of gimmicks. very close to zero. the economy in the tank. the stock market a million miles away from an all-time high. there was one winner from the swiss news. gold took off big time. look at that. don't need to be a chartist to see that is on the cusp of a major break up. it brings us to our next real, real deal. where do you sta

but those consumers don't drive switzerland's economy. exports do. food made by nestle and watches by swatch got a lot more expensive to buy around the world. demming prospects for the stocks. ceo nick hyayk said it was a tsunami for the swiss industry and for the tourist industry and the entire country. swiss banks a rocky road too. julius bear make a lot of money in u.s. dollars, british pounds and the euro. the swiss frank figured a rising dollar help them in 2015. it's still rising but they won't benefit as much as they hoped. why did this happen now? with the european central bank expected to announce a new round of stimulus or qe next week in hopes of jump starting its stalled economy, pressure would have built to uncap the swiss frank anyway. more euros in the system should lower their value. and swiss franks would look even more attractive. if their price was still capped. >> you cannot control your currency forever. the market is going to pressure you to where it wants to go. >> by making the move today, the swiss central bank avoided paying

it simply takes too long. >> accommodations in a resort town are not the rule in switzerland. marcel currently has a great deal of trouble finding adequate housing. he has had to place some asylum-seekers in this underground military facility. typically for switzerland, it is also pick and span here, but the refugees have nothing to do. the air is stifling and the atmosphere of oppressive. >> we have 100 places for asylum-seekers here as a temporary emergency measure because the other centers are full. there are simply too many people at the moment. >> those here are unlikely to learn german or find a job. these two were originally meant to go elsewhere, but the ski resort town went to the country's highest court to prevent the transit center, arguing that it would harm the community and lower the values of new luxury apartment buildings next door, but the town lost their case, and the hotel, currently empty, will soon be inhabited by 100 refugees, including some of those now living in the bunker. >> we are a tourist town, so it is not always easy. >> it is an issue, an unfort

it is davos switzerland.. ♪ >> middle class economics. >> middle class economics. >> that was president obama's best effort to coin a new phrase , middle class economics. joni ernst in her republican rebuttal said many families like they are learning -- working harder and harder with less to show for it. we see our neighbors agonize over stagnant wages and lost jobs. gary stagner, you know more about what americans think that americans themselves, this idea of americans worrying over stagnant wages is a new rebuttal right? >> the number of americans that rate the economy in good condition is a from 27% in the midterms to 41%, but that still says the majority says we are hurting. we are concerned about income and the ability to maintain a standard of living and the wage and income gap in this country. economic discontent does continue. it has lessons, and that is wind at the present sales, and it's still an issue -- and that is wind at the president's sales sails,. >> and what about her response? >> that there

about 12% of our costs in switzerland.a rapid appreciation of the swiss franc means that we've got to address our cost base particularly in swisserland. liz: but your stock did not react asker the write as -- asker the write as the credit suisses and. swatches of the world. >> if you were highly dependent on exports particularly into europe, you were probably more affected than not. so because of the fact that only about 2% of our sales come out of switzerland, that's probably why we were not. liz: i know you're about to report earnings, so you're in somewhat of a quiet period, but generally speaking, would you see this affecting your bottom line for 2015? >> actually, right after the swiss national bank took action, we released data that showed that about 12% of our cost base would be impacted by the activity, so we're going to have to talk some action to make sure that we adjust and we adjust the cost base, but we're planning for that. liz: can you describe define that action? is are you talking about layoffs? and if so,

i'm going to start with what's happening in switzerland. snb scrapping it's cap on the swiss franc. how are you digesting that news? is that going to change your views on equities or currencies going forward? >> well the swiss are defending their currency which is a good thing. i personally own several of the swiss blue chips and a coup of real estate holdings there. >> i hope you haven't hedged the currency in those equity holdings because you will be doing well net on them today. i just wanted to touch generally on what we have seen. this decision is a massive surprise to european markets but it hasn't just been the swiss dollar and swiss equity market that reacted. we've seen strong weakness accelerated in u.s. futures. does that surprise you some what? the contagion we've seen off the back of the decision. >> the world is so interconnected it's probably not that much of a surprise if you stand back. what it drives to is the fact that the europeans are now getting serious about fighting deflation and that could ultimately be a good thing

> switzerland is a problem.ro and lower oil prices is probably a strong benefit to the whole eurozone economy, including greece, and that is one of the few positives on europe at the moment. >> what will happen to the hedge fund community, to investors? >> i think there are probably some macro hedge funds that have suffered in the past few days. i do not have any data or anything like that. but i do not think -- i think there are hedge funds that were short a lot of swiss companies for particular reasons. i think the currency move was probably a lucky break for them because we have seen some big drops in swiss ventures and corporate, but it's nothing on a big scale for financials. not a really big event. >> you are in the business of looking for distressed debt opportunities. >> date currency adjustments like the ruble, swiss franc, even the euro, a significant move, extremely important because this can hurt company margins and a lot of companies have dollar or euro denominated debt. in russia, $120 billion in e

looks amazing. >> we are looking at switzerland, four basis points. germany, 37 basis points. >> you talked about discipline. when does discipline meet reality? when do central banks pivot not when the winds change, but when factors change. >> that is why everyone is so convinced that the federal reserve is still on schedule for a rate hike because the data on the job market is an clearly encouraging. >> what happens when the yield curve inverts. above where longer-term interest rates are -- people are wondering, are we heading back towards that? >> conditions are different because we have unprecedented -- conditions that no one is prepared for. >> were the conditions right for those central banks to start using this currency manipulation as a monetary policy tool? >> oppenheimer funds pointed out that central banks have done everything they can with regards to buying bonds and giving their conventional tools. everything they have -- all they have at this point is currency. >> this is certainly the element of surprise. yes, this might be a technical a

the biggest market was actually switzerland. switzerland is about 21%. france is 20. germany is 19. if you were an american shareholder you make more on the swiss francs then he lost on the swiss stocks. that attributes to the weakness. if you start making money, your reaction will be to go flat. >> a fascinating insight. coming up, we're going to talk about the fallout. details after the break. stay with us for that. >> welcome back. it's time to talk about the fallout after the swiss franc last week. the loss is becoming but it clear over the last couple days. here with more is caroline hyde. they are calling it francoge ddon. a number of companies get into trouble. >> if you were betting basically against the frist -- the swiss franc, you were going to be hurt. if you were thinking it would decline, you were smashed. they are closing the oldest and biggest main fund. we understand it is being closed because they were betting the swiss franc would decline. there is one hedge fund. who has really been hurt? we have the largest u.s. retail one now $300 million. they have been given

stay with us from davos switzerland, this is "bloomberg surveillance." ♪ >> it is davos switzerland.hat is the view of the gmc in davos. not much use for a big greg to get you through the snow. some years it is five feet deep. less so this year. there is davos, switzerland. we will give you full coverage on "bloomberg surveillance." on television and radio of this important day for mr. draghi and the ecb. right now manufacturing america and global manufacturing america, daniel ammann is president of general motors. there's all the distractions of rebate this in rebate that. let's talk of manufacturing discussion. dan, why are you in davos? >> we are a big global company, operating in every major market of the world. there's a lot going on in the world right now and also also volatility. we want to understand what is going on so we can adjust our business as needed. >> we talked to general electric the other day. there are many major players. it is a cutthroat business. what is the gm process distinction in asia, europe, or frontier markets? >> where we are taking the company now is r

we've seen this with switzerland. we saw how close denmark got to breaking something there. so worry about whether the system can support major moves in the currency market. that is the key. if it can, the ecb bought the equity market longer one way. if it can't, volatility will come back. >> for u.s. investors who may be holding bank stocks overseas or banks that have large currency operations and w other day to some of them when the swiss frank made its move should they lighten up on the holdings perhaps or avoid those type of stocks if the volatility is that? some call it a currency war. >> yeah if you're holding that sort of rotate into exporters. you heard about how exciting and should be. it's much more competitive than six months ago. so if you want exposure in europe focus on those companies that have large export activities. they are benefitting enormously from a dramatic move in the europe. >> thank you, mohammed el-erian with ai lienz. >>> defended its currency against the euro and china injected $5 billion into the nax's money markets today keeping commercial ban

coming up onm," the 1% have flocked to switzerland. ♪ >> welcome back.ephanie ruhle along with my main man erik schatzker. >> we are in switzerland. reporters looking for scoops. along with 2500 business people political leaders, and 100 billionaires. our man on the beat is matthew miller. what have you seen so far? >> we do need to be mindful last year, the three of us sat here talking about the topic of income inequality. when you put it against the backdrop of the fact that we are surrounded by over 100 billionaires, world leaders, one of the most exclusive ski resorts in the world. we were mocked incessantly. >> when you think about income inequality that is not a topic of conversation that comes up a lot with billionaires. they talk about terrorism russia and ukraine. the situation escalating. they talk about interest rates the price of oil, they do not talk about income inequality. so much ink is used to talk about income inequality. >> i put that weston to the founder of the economic forum, and he responded, i think billionaires care about inequal

minds because switzerland has played a big role historically. but this is something that i think is going to traumatize people and it is truly shakespeare. full of sound and fury signifying nothing. >> people argue this morning this was not well communicated at all. in fact, flies in the face of what they've said in the past few months. >> yes. >> we'll talk more about the swiss in a moment. >> inconsistent as best buy. >> breaking news regarding cuba today. michelle caruso-cabrera is in new york. >> we have been waiting for the actual regulations that were going to be put out by treasury when it comes to announcement by obama in december about re-establishment of relations because a lot of financial changes that were going to happen. they have come out this morning. they go into effect tomorrow. i believe that means tomorrow will be the first time since 2004 that cuban cigars will be permitted into the united states. only $100 worth, won't buy you many. significant changes, most what we saw before howeverer more explicit about the telecom equip

we're live from davos, switzerland, this morning.have a mission to create a generation of codars. the co-founder zach simms is back with us. you've got a beard. it's very nice. >> thank you. >> we've been talking community colleges in education, given the state of the union last night and what the president wants to do. one of the questions that occurred to me he wants to make community colleges free. some of your programs are free already. >> absolutely. >> is there any possibility, one of the biggest problems with community colleges these days people don't graduate 60% to 80% don't graduate. you can take some of had those people and teach them to code? >> absolutely. still retraining four things in technology and programming, i think that's also part of the education. >> how do you do it? one of the things we've talked about on the program, people that go to your site to learn to code are very ambitious. oftentimes very educated to begin with? >> we run online programs in five different cities detroit, miami, a couple others design

they're much more systematic in switzerland. and we are picking up, we are trying to get in the swiss format of doing rescues. >> i'm doing further training for advanced training. i've not been doing the longline rescue here in nepal, so after i go for training in switzerland i will come here and do longline rescue. >> during the peak season for mountain climbing, surendra and his team take off on rescue operations five or six times a day. they reach altitudes of up to 5500 meters. today the men are going on a training flight to practise search and rescue. after 30 minutes in the air, surendra discovers the man they need to rescue. but he can't land the eurocopter here. the ground is too steep. 3 kilometers away they manage to land. the rescue rope is fastened to the helicopter and used to lower one of the mountain rescuers down to the casualty. >> you have a good chance to rescue him? >> yes, my concern is about the weather, as you can see now. the fog is moving so fast, so before that we need to grab him up from there. >> but

we might as well call it inflate gate in switzerland.tional bank formally run by thomas jordan eliminated the cap on the frank allowing it to zoom past the euro. that is what has everyone talking. this was national bank did not phone the runway or give anybody warning. citigroup lost $150 million. larry fink does not care about that. at least one of black rock's lost money. the real importance of this was national bank will not be known for a year or two. >> i would expect this was economy going into recession because it will have to take time to adapt to the new currency level. if it does not go into recession and the economy continues fairly nicely, what does it mean for another economy? should germany been out of the euro? >> think about that for a moment. if the revaluation of the swiss franc does not crash this was economy -- the swiss economy what is that going to maine? the germans will want to lead the euro. -- leave the euro. >> i will rip up the script he appeared we have a bunch of countries in europe, looks like a chess match

every year, 45 years straight, they come here to the davos, switzerland.y tuned because we know that you can't be here. it's too hard to get to. so we are going to bring the scene to you. i'm going to take you through the process. it's absolutely fascinating, how you get e credentials, how you get live on the fox business cameras in just a few minutes, so stay tuned. lori: i mean, this is fantastic, liz. top shelf guests and our top shelf anchor to bring it to us. thank you so much. see you soon. >>> okay. president obama is expected to unveil his proposals this year if his state of the union address tonight. we already know what some of those proposals will be, and the central theme, taxes. his plan includes $320 billion tax hike over ten years. peter barnes is at the white house with the details on the proposed tax hikes and what else the president will announce tonight in his sixth state of the union address. >> reporter: well, hey, lori. the president's press secretary says tonight's speech will be all about helping the middle class in this improving e

switzerland buy the ten-year and get paid four basis points.ous amount of buying in advance advance. once they sell and take in the new euros he will conjure up where do those go? where does that liquidity go? we think it's going back into european equities back into global equities, and hopefully liquefies the system and gives people a sense of, you know that there's way to combat deflation. the problem in europe not enough private sector or public sector investment in the economy. hundreds of billions of dollars of deficit in terms of what should be invested that's not happening and can't get the kind of growth they need and the kind of job growth they need until that occurs. they're between a rock and hard place and mario the last one out. a guy who can have a solution or at least a bridge to the private economy gets stronger. >> at least one asset that went up is gold. with currencies doing what they're doing, make it more attractive, have we hit a bottom finally on gold? >> yeah. >> i realize if the dollar continues stronger that's a whole

the country's central bank insists it won't follow switzerland in severing its ties to the single currency. welcome to pulse pulse live from bloomberg's european headquarters in london. i'm manus cranny. let's check in on equity marks in europe here. we are gaining for the fourth day in a row. we are extending equity highs. the i.m.f. cut its global outlook by the most in three years. the world economy will grow by 3 bonnie 5% in 2015 down from 3.8% projected in october. london up 1/3 of 1%. 6606. growth expectations. have diminished everywhere except if ever the u.s. that will offset the boost from lower oil prices. >> the weakness, many emerging market economies are revising their medium term prospects now. >> as the i.m.f. downgrades its forecast china's growth in 2014 beat estimates. g.d.p. expanded 7.4% in line with the government's growth target. it was, however, the slowest growth since 1990. we're joined by andrew davis in hong kong. i suppose if we want to sum this up, they avoided a hard landing. that was the market paranoia of 2014, wasn't it? >> yeah. i suspect that they haven'

frightening to a lot of people in europe, particularly in switzerland.y strong franc is a menace to the entire swiss system. starting tomorrow we'll talk about that right here 4:00 p.m. eastern time on "after the bell." this is interesting. we have a rare interview, especially rare with all western sanctions against russia. russian banker, his name is andre kosten this is russia's second largest bank. he already has sanctions. he says the sanctions are really affecting his company. he absolutely already need ad bailout from the russian government. we hope to have a very frank conversation with andrey kosten and prime minister of finland, european member. the ecb is going to meet. is he approving the stimulus? does he agree with the expected size of that, how is finland's economy doing? right here "after the bell," we kick off the big production from davos switzerland. david, back to you. david: gerri: stunning settings. david: it is weird. 11:00 at night and still light out there. i can't figure that out. paul vina, "wall street journal" money beat repor

. >>> tracking the story out of switzerland finance minister insists the economy can width stand the shock decision to scrap the national cap against the frank. a number is of international firms are reeling from the s&p sudden move over the weekend there were reporting suggesting that u.s.-based 830 million global fund was closed due to bad bets. the company declined to comment so far. ever rest still runs a number of other funds. taking a look at other companies that have been impacted. they said it's considering all options including a sale of the group due to the exceptional volatility and extreme lack of liquidity caused by the s&p's unexpected move. it insists it is has not yet entered a formal insole vent si process. it's suggested that fxcm could be a potential buyer. it was forced to skufr a $3 had 00 million to secure losses suffered by clients sending the share price sharply lower last week. you can see down about 15%. the new zealand dollar hit record highs against the euro after the s&p surprised policy move and amid expectations they will unveil a bond buying program th

the government and central bank might follow switzerland and severing currency ties.happened is the central bank surprised the markets by cutting its deposit rate to -.2%, matching a record low last held during the darkest hours of the euro debt crisis of 2012. the danes lowered rates after interventions in the market proved insufficient ahead of the ecb announcement on thursday. money was plainly moving into denmark. denmark should address that. ahead of its traditional time to make announcements, which is usually the same time the ecb meets. it has decided to make the announcement, cut interest rates, take interest rates negative and restated will not loosen the euros paid -- the danish krone are's -- the danish paidpeg. it's not the sexiest currency. it shows we live in nerve-racking times. >> we do. the currencies of these satellite economies, it seems this is just the start of the process. when we look at qe, it hasn't really died. it is simply resting. japan is even accelerating. satellite economies are now having to pull the rug from their own currencies. we're

switzerland has been in deflation before.we fall in much deeper deflation that what we are currently contemplating in the eurozone. this could lead to a situation where household would delay. you have obvious impact on growth because some the -- some sectors are very export dependent. you have the risk that might crystallize over the next days or weeks that not only are some of these smaller and important operators but maybe some international institutions on the wrong side of a bad year on the currency and there might be financial instability coming from that and. -- end. certainly the snb was aware of it. they had to be puzzled for some time why the swiss franc was not weakening against the euro because there was the perception the eurozone was over, which is a position we never took tom and now it is quite clear it is not over. there was -- we never took, and now it is clear it is not over. they would have to intervene further and further. the balance sheet was 80% of swiss gdp, which is a multiple by more than three of th

davos switzerland.ys, we will be in conversation will the leaders of economics and government. olivia in davos. -- olivia, in davos, they are ripping up the script. >> we start with the state of the union. president obama said the economy has healed. he told the republican-controlled congress that the evidence was in that his economic policies are working. >> at every step, we were told our goals were misguided, too ambitious that we would crush jobs, explode deficits. instead, we have seen the fast

>> no how many different economies over there are like switzerland. different situation and economy and you can see the stress of it using that currency. what about portugal and spain and all of these places. >> don't have the political tie in so you can't say these things are going to be uniform. >> but how do we know that by using the euro that these other currency situations aren't stressed? to keep that swiss franc with that relationship euro and look what happened. it moved 30%. how can greece and germany have the same currency. >> in this case the central bank made the decision to do what it's doing. these other countries, government has to do it and it's much more comply katd. >> covers up some inherent differences between these economies. >> huge differences. people say you have 50 states over there and you all use the dollar. it's not the same thing. >> we have a federal government that sets federal laws. >> that apply to everyone. but anyway after it's all said and done let's sue how europe setting itself up andrew. setting itself up. there

here's the down side she's six or 7000 miles away from frustrates in switzerland. be easy to hear each other. there may be a a little delay. i don't speak any italian. she has a thick italian accent. >> but for her we will try. >> shall we try it. >> i say we do it. >> okay. she's within of the most beautiful women to ever grace the big screen. >> who could forget the the amazing so for a loren in el s id. >> would you take me. >> i have no where to take you. >> look at this. >> isn't she beautiful. >> well, what about when the a academy award winning actress starred in grum py old men. >> do i remember this. >> she is an international star. we are so delighted that she's joining us this morning. even if it is live from switzerland. >> geneva, one of the prettiest towns in the world. sophia welcome to philadelphia pennsylvania. >> thank you, so much for inviting me, thank you. >> i can understand you really well but you have asked to us speak slowly. so for all of the young people that i'm sitting here with, please explain the movie el c id, that was made in 1961,

they're trying to assure they are not about to copy switzerland.ss bank says it has the necessary tools to defend the euro peg. a strong offensive being put up by the danes. >> you cannot find anyone in the research or analyst community or hedge fund community who thinks they are not serious about defending the peg. that makes me nervous. a one-way bet like that you if the market smells like, a can remain solvent longer than you can remain rational or irrational. i think the danger is coming out so quickly -- i think they are right to come out so quickly to get ahead of the curve but i would be terrified. >> not even any hedge fund is saying they would be prepared to test the result. you might think that is where the test will come from. >> a lot of people were bit by what happened with the central bank and there is a definite air of nervousness. if you got whacked by what happened with the swiss franc your appetite or trading is going to be limited and so the problem there is you have less liquidity and an even bigger shock if something does snap.

this is switzerland's central bank has ditched its effort to limit the rise of the swiss franc. the euro is losing 30% also in just minutes. it is the one of the most genetic moves we have seen in currency markets in decades. the swiss national bank has kept the euro from trading below one francs 20. the measure was aimed at in swiss exports to the eurozone as the european union is switzerland's main trading partner. i spoke to the senior currency strategist about the story earlier and asked her why the swiss national bank is moving now. >> i think over the last few weeks, it was very clear that the euro has accelerated its down trend. there has been some very aggressive commentary. the market is anticipating that we will have plenty from the ecb which could pressure the euro more. that might make it more difficult for the smb to protect that. since the start of the year, we have seen market indices down across the board. we have had safe haven demand. more demand for safe haven. a long-standing safe haven. more movement into the swiss franc. that makes it difficult to protect w

you said 82% of your costs are outside switzerland. that leaves you with 80 -- 18% in switzerland.view what level of business you do in switzerland? >> we constantly work on our productivity. as we've always done in the past, not too long ago, the swiss franc was at 1.60. it came down to 1.20 now. we have another strength to parity against the euro. this is an ongoing effort and we continue to work on our productivity. >> obviously, you are referring to parity there. can you give me a swiss franc impact on 2015? is that your base case? are you doing more hedging? how much hedging are you doing, and the impact on 2015 numbers? >> we look at the underlying currency. that's what we are planning for. we are optimistic for the future. we expect sales to grow low to mid single digits as we go forward. it is very difficult to predict where the currencies would end. but it is very important in our context that the u.s. dollar plays a much bigger role than the euro. in fact, as far as the u.s. dollar is concerned, it appreciated quite a big against the euro. u.s. dollar -- we are today wher

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