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Here’s the latest from the World Economic Forum at Davos

Turkey sees EU relations overcoming rough patch, UBS chairman sees possible market correction and ‘the brain’ behind China’s overhaul.
German Chancellor Angela Merkel and French President Emmanuel Macron will be attending today's World Economic Forum meeting. Picture: Bloomberg

Billionaires, world leaders and investors are gathered in Davos, Switzerland, for the World Economic Forum’s annual meeting to hobnob and discuss topics ranging from the global economy and sexual harassment, to the risks and opportunities of artificial intelligence. Not to mention hear a speech by President Donald Trump.

Here are the latest developments, updated throughout the day. (Time-stamps are local time in Davos.)

France’s Macron calls on elite to share (2:52 pm)

French President Emmanuel Macron arrives in Davos with a new message for the global elite: invest, share and protect. He will tell business leaders it’s up to them to narrow the inequalities that have resulted from the excesses of global capitalism, an aide from the president’s office said. Macron is due to speak at 5.30 pm local time.

Morgan Stanley wary of market exuberance (2:51 pm)

It’s not the Federal Reserve that keeps James Gorman up at night. The chief executive officer of Morgan Stanley said he’s more worried that the stock market has reached record highs in recent months with technology stocks lat very high multiples. “You’ve got markets at record highs, and as we know, these things don’t go in a straight line,” Gorman said in an interview on Bloomberg Television. “Markets are expensive, but they’re not ridiculous.”

Aramco’s tax burden depends on oil prices (2:39 pm)

Saudi Arabia plans to link the most important tax paid by state-owned energy giant Aramco to the price of oil, a significant move ahead of the company’s initial public offering this year, Amin Nasser, chief executive officer of Saudi Arabian Oil Co, said in a Bloomberg Television interview. Adjusting the 20% royalty on oil revenue Aramco currently pays would help the kingdom to raise extra money if prices climb. While not unusual in commodities industries, the move may not prove popular with potential investors. It would protect them from downturns, but also reduce their gains at times of rising prices.

Moelis open to female successor (2:38 pm)

Ken Moelis said it’s possible that a woman can be the next leader of his namesake investment bank, Moelis & Co. “We do a great job of bringing women in,” Moelis, 59, said in a Bloomberg Television interview. “Our entering work force, I think, is somewhere right around 50-50. We don’t do as good of a job at retaining them through the life cycle of becoming a managing director.”

Italy lobbies for financial services in Brexit deal (1:45 pm)

Italian Prime Minister Paolo Gentiloni said that any accord reached between the UK and the European Union must include financial services, because excluding them “is totally unrealistic,” he said in an interview. Among the remaining EU states there was a “strongly prevailing position supporting the necessity of having a good deal with the UK.”

Lloyd’s CEO issues cyberattack warning (1:38 pm)

A major cyberattack could cause $53 billion worth of economic losses, more damage than Hurricane Sandy wrought in New York in 2012, according to Lloyd’s of London CEO Inga Beale. Insuring against cyberattacks remains immature as understanding and modeling the related risk is difficult, Beale said in an interview with Bloomberg Television.

Faster Fed tightening could create Trump tension (1:37 pm)

Stronger inflation that sparks more aggressive Federal Reserve tightening and rattles markets could be a source of tension between the US central bank and President Donald Trump, Harvard University professor Kenneth Rogoff said in an interview with Bloomberg Television’s Tom Keene. “There could be lot of tension between Donald Trump and the Fed if the stock market falls for some reason and they need to raise interest rates. We could suddenly see tweets about Jay Powell in the middle of the night.”

Bond market in bear phase, Dalio says (1:34 pm)

Billionaire hedge-fund manager Ray Dalio said the bond market has slipped into a bear phase and warned that a rise in yields could spark the biggest crisis for fixed-income investors in almost 40 years. “A 1 percent rise in bond yields will produce the largest bear market in bonds that we have seen since 1980 to 1981,” Bridgewater Associates founder Dalio said in an interview with Bloomberg Television.

‘Play own game’ on trade, Gentiloni urges (1:28 pm)

Italian Prime Minister Paolo Gentiloni said US President Donald Trump’s protectionist push threatens global growth, urging Europe to “play its own game” to fill any gap left by American businesses. Gentiloni said in an interview with Bloomberg Editor-in-Chief John Micklethwait that all leaders were allowed to protect their own workers. “But there is a limit and the limit is defending our free trade, defending the model which has brought us to this kind of growth,” he said.

Qatar dismissive of embargo impact (1:25 pm)

Qatar’s economy performed better than expected last year and required “minimal” government support to blunt the effects of a trade and diplomatic embargo, Sheikh Ahmed Bin Jassim Bin Mohammed Al Thani, Qatar’s minister of economy and commerce, said in an interview with Bloomberg Television. “From an economic point of view we can live forever without those countries,” Sheikh Ahmed said, in reference to the boycott by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.

Alibaba scared of weaponized trade (12:46 pm)

It’s easy to launch a trade war but difficult to prevent the disastrous fallout, Alibaba’s Executive Chairman Jack Ma said during a panel discussion. “I am scared. I am concerned. Don’t use trade as a weapon.”

Trump team sharpens trade war talk (12:35 pm)

President Donald Trump’s top economic advisers set the stage for the rollout of his “America First” manifesto on the world stage. A day before Trump’s scheduled arrival, Treasury Secretary Steven Mnuchin endorsed the dollar’s decline as a benefit to the American economy and Commerce Secretary Wilbur Ross said the US would fight harder to protect its exporters.

Italy says populist push needs to be countered (12:10 pm)

Leaders must not let populists “exploit” frustration about issues like migration and income inequalities, Italian Prime Minister Paolo Gentiloni said in an interview with Bloomberg’s Editor-in-Chief John Micklethwait. “It is a mistake to underestimate the real reasons of this populist push.”

Spain pushes for EU reforms (12:10 pm)

The EU must “reinvent itself,” Spain’s King Felipe said. The bloc’s leaders need to embark on an ambitious and far-reaching round of integration, highlighting monetary union and defense policy as priority areas.

China vows surprise reforms (12:05 pm)

China will introduce more reform measures to open up its economy this year, according to Liu He, the top financial and economic adviser to President Xi Jinping. “Some measures will exceed the expectations of the international community,” Liu said. “Opening up is not only important for China, but also for the whole world.”

Currency war would be ‘devastating’ (11:35 am)

Jacob Frenkel, chairman of JPMorgan Chase International, said a currency war must be prevented at all costs, as the consequences would be “devastating” for the global economy. “A currency war in the monetary sphere is the mirror image of protectionism in the real sphere,” he said in an interview with Bloomberg Television, adding that “we should prevent it at all costs.”

Italy defends free trade (11:23 am)

National governments have a duty to protect their citizens and markets, but the principles of free trade must not be called into question, Italian Prime Minister Paolo Gentiloni said. Italian policymakers must continue with economic reforms after the March 4 election, he added.

Brazil makes its investment pitch (10:54 am)

Brazil is back, President Michel Temer says at address in Davos, adding that economy is growing, inflation and interest rates are falling. There’s no alternative to reforms, with Temer saying “We are reducing bureaucracy in Brazil to facilitate import, exports.”

Gradual zloty gains good for Poland (10:52 am)

Poland is cutting red tape for businesses and believes a slowly strengthening zloty is good for the economy, Prime Minister Mateusz Morawiecki said. “If it is going too quickly, too strong, I would start to be slightly concerned with this, but today everything is okay,” Morawiecki said in an interview with Bloomberg Television.

US readies its troops for a trade war (10:48 am)

Ahead of President Donald Trump’s speech later this week, US administration official laid the ground work by signaling a toughening stance on trade. “A trade war has been in place for quite a little while, the difference is the US troops are now coming to the rampart,” Commerce Secretary Wilbur Ross said. Breaking with traditional US policy of support for a strong currency, Treasury Secretary Steven Mnuchin endorsed the dollar’s decline as a benefit to the US economy.

Riksbank should beat ECB with rate hikes (10:30 am)

Given that inflation is at target, it makes sense for the Riksbank to begin tightening monetary policy a bit earlier than the European Central Bank, deputy governor Cecilia Skingsley said. The Riksbank’s forecast sees room for normalization and risks are balanced, Skingsley said in an interview with Bloomberg Television.

EU doesn’t want a trade war with the US (10:24 am)

A more robust European single market rather than a trade war will be the “ right answer” to challenges presented by protectionist policies such as the tariffs imposed by US President Donald Trump, according to Portuguese Finance Minister Mario Centeno. “We are always worried about protectionist policies, which I really don’t think is the way to lead our economies,” said Centeno, who on Monday had his debut presiding over the gatherings of euro-area finance ministers. “But we have to be ready and prepared to respond to that with the highest levels of competitiveness from our side.”

Kostin decries ‘economic war’ against Russia (10:11 am)

The US Treasury Department’s compilation of its first official list of “oligarchs” close to President Vladimir Putin constitutes “economic war,” VTB Group CEO Andrey Kostin said. “I’m not so much concerned about personal sanctions, which would be the least evil, but of course any further sanctions on Russian financial institutions would substantially undermine our relationship with America,” Kostin said in an interview with Bloomberg Television.

Intesa considering China alliance, CEO says (10:03 am)

Intesa Sanpaolo is not looking at mergers and acquisitions and would look at a strategic alliance in China, where it already owns a stake in a local bank, CEO Carlo Messina said. “We are in a very good position” in terms of stability currently in Italy, Messina said in an interview with Bloomberg Television.

Europe faces lost generation (10:00 am)

Europe’s youth risk being left behind unless the European Union takes steps to address the growing income divide across generations, IMF managing director Christine Lagarde said. “Working-age people, and especially the young, are falling behind,” she said. “Without action, a generation may never be able to recover.”

US cheers weak dollar (9:48 am)

US Treasury Secretary  Steven Mnuchin said he is not concerned about the dollar exchange rate in the short term and the currency’s relative weakness is a boon for exports. “A weaker dollar is good for us as it relates to trade and opportunities,” he said.

US warns of more trade measures (9:47 am)

There will be more measures coming, US Commerce Secretary Wilbur Ross said when asked about President Donald Trump’s decision to impose tariffs on solar panels and washing machines. “What has provoked a lot of the trade actions is inappropriate behavior on the part of our counterparties,” Ross said.

Corruption will soon be history in South Africa (9:44 am)

South Africa is in a much better place now than when previous credit-rating actions took place, according to Reserve Bank governor Lesetja Kganyago. “We have got a good case to make” to ratings companies and “corruption and misrule will soon be history,” Kganyago said in an interview with Bloomberg Television.

Adidas CEO upbeat on growth (9:39 am)

Adidas CEO Kasper Rorsted said there are “very few things” that currently worry him and the outlook for the global economy is “very strong,” powered by the US and China. In an interview with Bloomberg Television, Rorsted added that he expects the US tax reform to be good for Adidas as it will boost consumer spending.

Euro strength not a problem, Centeno says (9:33 am)

Exporters are doing well, and the relative strength of the euro is no reason for nations in the single currency area to be concerned, said Mario Centeno, the president of the Eurogroup of finance ministers. “Things are looking good, and I think they will continue like that,” Centeno said in an interview with Bloomberg Television. “We have been able to show a lot of resilience to external shocks.”

Generali expects to meet turnaroud goals (9:29 am)

Italian insurer Assicurazioni Generali expects to meet its turnaround targets this year and set out a new plan for a “growth phase” for the company, chief executive officer Philippe Donnet said in a Bloomberg TV interview.

VW Trucks stands by global expansion (9:01 am)

“We are well on our way” to forging a global truck champion with industry-leading margins and exploring new markets, Andreas Renschler, head of the VW Truck & Bus unit, said in a Bloomberg Television interview. Demand is seen for electric trucks in urban areas for “last mile” shipments, but purely battery-powered vehicles won’t be an option for long-haul transport or moving heavy goods anytime soon

Bitcoin risks ‘massive’ drop (8:56 am)

UBS Group chairman Axel Weber said the Swiss bank won’t trade bitcoin or offer it to retail clients as increased regulation could lead to a “massive” drop in value. “This is something where the price is really unclear,” Weber said in an interview Wednesday with Bloomberg TV. “We fear that in the future if these investments implode and the market corrects, then investors will be looking at who sold us this.”

Irish investors bracing for worst-case Brexit (8:33 am)

Companies are still waiting to see what they will need to move from the UK, with some looking at Ireland, Martin Shanahan, head of Irish agency charged with attracting investment, says in an interview. US tax reform may affect companies location moves when decisions are close, he said.

Simsek sees better Turkey-EU relations (8:31 am)

Turkey’s relations with European Union nations are improving after a rough patch last year, according to Deputy Prime Minister Mehmet Simsek. Turkey has begun a “good dialogue” with Germany and improvement is expected in ties with Austria and the Netherlands, Simsek said in an interview with BloombergHT.

Weber sees possible market correction (8:00 am)

UBS chairman Axel Weber said some markets, including real estate, may see a correction due to the “huge increase” in credit. “There are a lot of risks out there but none of them have materialised,” Weber said in an interview with Bloomberg Television. “Real estate is, after the crisis, really pricing very, very highly.” He expects the ECB to be “very gentle” in changing its outlook on the economy.

‘The brain’ behind China’s overhaul (7:46 am)

When Liu He takes to the lectern in Davos later, the Harvard-educated technocrat will move further into the spotlight that’s been aimed at him since his elevation to China’s top political body last year. “Liu will be like a Chinese version combining both Larry Summers and Ben Bernanke, plus the chairman of the president’s economic council,” according to Shen Jianguang, chief Asia economist at Mizuho Securities Asia in Hong Kong.

ENEL eyeing network acquisitions (7:20 am)

Francesco Starace, the CEO of ENEL, said the Italian utility is looking at mid-sized acquisitions in networks. In an interview with Bloomberg Television, Starace added it was too early to talk about complacency in the financial markets. “The biggest challenge for ENEL, and in general for utilities, is how well the countries we are in are working,” Starace said. “We are intimately linked to the well-being and the economy of the societies we live in.”

Davos crowd warms to Trumponomics (7:00 am)

Have criticisms of Donald Trump’s economic policy gone too far? Whisper it quietly, but 12 months after the beginning of the Trump presidency, several economists and business leaders appear willing to give Trump and his tax reform a chance, Bloomberg View’s Ferdinando Giugliano writes.

Another day, Another Davos (7:00 am)

The second full day of talks will get underway shortly. Among those attending are German Chancellor Angela Merkel, French President Emmanuel Macron and US Treasury Secretary Steven Mnuchin.

A takeaway from Tuesday was that many of the executives are admitting Trump hasn’t been bad for business. The question they have is whether the good times can last and some of the bankers already see signs of complacency in financial markets. For the politicians attending, most are doubling down on globalization as Trump imposes tariffs and prepares to join them in the Alps.

Wednesday’s highlights:

  • German Chancellor Angela Merkel speech
  • French President Emmanuel Macron speech
  • Discussion with Liu He, China’s top economic adviser
  • Brazilian President Michel Temer speech
  • Italian Prime Minister Paolo Gentiloni speech
  • Discussion with Google CEO Sundar Pichai
  • Panel on Russia’s strategic outlook with Eni chairman Emma Marcegaglia, moderated by Bloomberg’s John Fraher

Here’s what happened on Tuesday:

  • Global finance executives warned of parallels between today’s soaring stock markets and the pre-crisis years as complacent investors risk being wrong-footed by central banks raising interest rates.
  • From the US to the UK, an unusual number of Western leaders are arriving in the Swiss Alps with their influence on the wane, with countries like China and India keen to fill the void.
  • Indian Prime Minister Narendra Modi said Asia’s third largest economy is “removing the red tape and laying out the red carpet” as he attempts to attract foreign investment and kick start sclerotic growth.
  • Canadian Prime Minister Justin Trudeau confirmed a Pacific trade pact without the US.
  • Europe’s revival drew widespread praise, putting the region in position to be a counterpoint to Trump’s protectionist policies.
  • Trump’s tax cuts got mixed reviews with some lauding the boon to corporate budgets, while others questioning the long-term impact. US officials said he will meet with executives at a reception during his time in Davos.
  • Mexico’s Economy Minister Ildefonso Guajardo signaled that the country is willing to negotiate a reworking of Nafta all through the run-up to July’s presidential election.
  • Uber CEO Dara Khosrowshahi is setting his sights on making the embattled company profitable within three years, he said in an interview with Bloomberg editor-in-chief John Micklethwait.

© 2018 Bloomberg


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