guy: good morning. this is the european open. the first trade of the cash session coming up. matt miller. francine lacqua in davos. what are we watching? hike in of a fed rate may right. yellen economy close to the central banks goals but if the dollar falls well market be expecting more question i get a grip. thee dimon tells bloomberg

euro may not survive. can draghi continue to do whatever it takes? the ecb meets today. he deutsche bank is set to continue job reductions even after cutting bonuses for senior staff. francine: switzerland, theresa may mates anchors. her europeter speech. we will hear from her right here on bloomberg at 4:30 p.m. london time. a brexit exit is. it is preparing for the u.k. to leave the eu. we will be speaking to avoid like fine. the german reaction to the ecb finance minister, speaking to bloomberg following the central bank's decision.

welcome back. this is davos. it is a day earlier. aam delighted to kick off conversation on real estate. we just look to the u.k. chancellor, philip hammond. we were trying to figure out what brexit for job losses. one person who is watching this changing of the guard. cofounder of soho china. thank you for joining us. you have great global perspective and you give us a unique insight into the chinese market. how do you see real estate going around the world, are we going to pick up in u.s. real estate and the deafening in u.k. real estate? yes: i spent a few days in london trying to understand the brexit impact on u.k. real estate and trying to understand

what is the reduction for financial service companies in london? and then i can translate that into square footage. i'm hearing different numbers. some people talk about 80,000, 85,000, some people say 10%, 5%. it is a little unclear what it is for sure that everyone is thinking the number will go down. .o how and when down?ng: well property go >> you can count how many cranes in london in the city. you know how many square meters are coming on the market. you need to understand what the demand for that is, if it is an aggregate going down that is no good for leasing or for rent. francine: will donald trump be able to reflate and get back these animal spirits which may

give a boost to real estate? guest: real estate in the u.s. is the opposite. the mood in the u.s. is so upbeat. the stock market come best goes up and people seem to be happy. people are talking about the reduction of corporate tax, how does that translate into earnings and it should translate positively. therefore the stock market has gone up. it is a very different scenario, a different spirit in london and new york. me about thek to chinese property markets. there are concerns doubling in that market also linked to outflows. give us an update on what you are saying on the ground -- seeing on the ground. guest: china had another good year in real estate. relativeways you see price goes up and the government would come up with a strict control on the price. so no surprise much words the

end of last year, the government came out with very strict controls. this year we will continue to see this battling between the markets, the government is trying to control it by increasing the down payment of the property purchased. you continue to see this battle. in china. francine: will it be much more volatile than we will see fluctuations? guest: the volatility is not that strong. now we know that. it is already control. the market will continue to push. francine: talk to me about fundraising. facing aevelopers are dilemma on how to raise funds. how do you see it? guest: you probably saw that since january 1, china has a stronger control of capital outflow than in flow. because to stabilize the renminbi exchange.

that has put pressure on the companies that have crossed -- cross-border lending or borrowing. by a chinese company, if i the u.s. dollar offshore i need to think about how do i get my renminbi back to repay the loan. you have a control on the flow of the capital, it makes the conversion much more difficult. and therefore some of the lenders begin to worry that what does that mean, with a bit late -- be delayed, would there be default? ' balance the corporate sheets are strong. if anything it is the technical control of the capital flow, not so much the reflection of the corporate balance sheet. francine: your president was here giving the opening remarks. the first time we saw the chinese president show up at

davos. are they being a little bit protective and more protective and china feeling the world stage? yes: i have seen the biggest chinese delegation ever and i think that people, the chinese are very happy that the president came and gave a very pro-ive propyl fed -- localization speech and reaffirmed their commitment to globalization. no matter what and -- in spite andhe election results globalization will continue. where so much connected today. ist coming to davos reaffirming. francine: thank you for joining us. a quick reminder, we are speaking to a lot of ranking ceos and we will speak to would

and the u.k. prime minister, theresa may. interesting lineup. thanks for that. let's take a look at where european futures are pointing. ftse andins for the cap futures. it looks like markets are set ,or little change this morning at least right at the open as we await the ecb decision. the survey calls for no actual movement but bankers are watching, investors are waiting to see if we will get more of a mario draghiout of as the storage and seems to grow. janet yellen seemed more confident about the u.s. economy when she spoke in the u.s. last night. guy: let you take me to my gmm. ,he dollar is beginning to firm

mohamed el-erian thinks she was quite dovish. the dollar gaining a little more traction, that could account for why the european market is picking up a little bit. that probably is the takeaway. what you're seeing in the screen. the dollar index up by .2 of 1%. let's get the bloomberg first word news update. here's juliette saly. juliette: the chair of the u.s. federal reserve said the u.s. economy is close to the objectives of full employment and stable prices. speaking of a night in san francisco, janet yellen said she is confident it will continue to improve and it makes sense to reduce the level of monetary policy support. >> i and most of my colleagues as a last month feel the members of the fed board in washington and the president of the 12 regional federal reserve banks

were expecting to increase our federal funds rate target a few until by the end of 2019 it is close to our estimate of its longer run neutral rate of 3%. juliette: deutsche bank said that job cuts will continue even after it cut bonuses to senior staff according to a person with knowledge of the discussion. the person that another person said managers have been asked to identify the bottom tweet percent of performers in preparation for possible cuts. declined to comment on specific job reductions. goldman sachs may cut its london to 3000 workers while transferring some to other locations as it prepares for a germanccording to newspaper citing unidentified people in the financial industry. the report comes a day after

hsbc's ceo told bloomberg that trading operations generating 20% of revenue for its investment bank in london may move to paris. a spokeswoman for goldman sachs said it has not made any .ecisions two weeks into the first agreement to cut production in a decade, top officials say sentiment is so far, so good. to secretary general spoke bloomberg at the world economic forum in davos. >> we have seen demand rising steadily. efforts are being made by all the 24 participating countries in this new broad platform for producing countries that can that's making tremendous efforts to meet their commitment. europe needs to address agreements during the rise of nationalist leaders or they region strong economic ties

will break. jamie dimon was speaking to bloomberg at the world economic forum in doubt most -- davos. >> the eurozone may not survive. that is a very complex thing. it is a long-term pessimistic view. >> unless they change. >> unless they change. juliette: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy and matt. guy: thank you. we're back at the world economic forum at davos. the: we have jeff staley, ceo of barclays. good to see you in davos. primerld heard from minister theresa may. she will be here today. one of the things that you are telling clients is that you are committed to helping the prime

minister with the brexit, what exactly does that mean? the people of the united kingdom voted and i think the prime minister articulated very well in her speech what they are looking for. the laws are written to be executed within their british judicial system. the democracy of britain to be preserved by the parliament and with -- we have to respect that. barclays is a british bank. we have been in the country for 300 years. we are committed to doing our part to help the u.k. come out of the brexit decision as strong as it can be. k: how can you help? guest: barclays is a major institution and a major bank. plus -- close to [inaudible] ghost through the payment systems of barclays. they are committed to writing credit to british consumers, protecting the cyber security of

data across the financial system but also dealing with governments around the world, particularly the european union to keep london connected to europe. we are the largest underwriter of european sovereign debt. when the governments of france and germany and italy raise debt, the bank they turn to is our cleat. we want to continue to do that, to help the european banks manage their own debt, sovereign debt. we want to stay connected and in turn help the city of london and great britain. francine: you must be worried that inflation -- if inflation is too high, if businesses have extra tariffs, that hurts your quality of what you are lending to. ofst: the long-term impact is not my own view is it going to create an economic shock. whether we lose 10 or 15 basis points per annum for some time

is something that will have a price. but we hope like the prime minister does that the entire world right now is taking a new look, the you -- u.s. and u.k. to europe about trade agreements. the pacific trade agreement did not go through. we help like a lot of people that the world continues to be integrated as an economic matter. once the political rhetoric settles down the u.k. can negotiate trade arena -- arrangements that are beneficial for europe and the u.k.. francine: i had a lengthy interview with philip hammond and he was at pains to -- pains to reassure me they are a priority. do you think they will be in any negotiations? ministere prime mention the financial industry. i had a great opportunity to meet with the prime minister. they are committed to the city of london but more than that, it is difficult to move a financial

center like london to another location. corporations across europe, they have cash operations in france and germany and the u.k. they decide where they want to apply their cash and if they want to manage their interest rate risk, where do they want to do it? i do not think that governments are going to preclude a government company from managing its liquidity in the most beneficial place. right now that is most likely london. i do not see why that will change. erik: your schedule to meet with the prime minister, what is going to come out of that meeting? what is unclear from the speech that you need to take up? guest: this is going to take a fulllong time to get clarity that the banks and corporations and investors and people want to have.

erik: are you going to get reassurances from her? a two-yearle believe cliff is not helpful for anyone. you cannot function with contracts that go beyond two years if there is that cliff. talking about transitions and phase ins will be important. i think we cannot lose sight of finance isat important for everyone. issue betweencal the eu and the u.k., i do not believe ultimately that either fleet -- disrupt the free flow of finances in a way that jeopardizes their economies. francine: i see a problem of timeline. you start negotiating -- guest: she was talking about transitions and phase ins. this will take a long time. the transition could

take a long time. if you are a ceo you can need to make a decision now. you cannot tell people you are in a new bank in langford. guest: banks are beginning to take steps to have the option to move certain activities are certain booking locations if they need to to meet the new trade agreements tween the eu and the u.k.. subsidiaryull bank in ireland. right now we have a branch in frankfurt, it has salespeople, traders, it is staffed today, it was staff before brexit. the ranch in frankfurt is a branch of our bank in london. there is a possibility that we might have to move, that branches connection to london to that branch being our subsidiary in island -- ireland. same people, same traders, you have to book in ireland as opposed to london. that is not a wholesale move of our capability.

erik: if you could qualify it, how much of a disruption might it be to your business? meeting, if she is not as responsive to the concerns you are raising, how'd disruptive could this be to your business? guest: if rational minds prevail, and they will, we will get an agreement between the european union and the u.k. that will be no more disruptive than what barclays had to do in the united states, creating a bank holding company to exercise our business activities in the united states that we did last july. there is uncertainty which no one likes. but i do believe the system will come out more rational in that there will be some movements, we will have -- use our offices to book certain traits but it will not fundamentally challenge the importance of london as a financial system -- center for europe. francine: are you expecting more job cuts or more cost cuts in

the investment bank this year? guest: we embarked on a new strategy where we were going to restructure the bank, we have a core bank which is profitable and a non-core bank. we have now signed a definitive sale agreement on every entity within that non-core business that we want to close. we have made great progress in reducing the risk rated assets of the non-core bank. we will close non-core in 2017. where talking months and quarters, not years. once that non-core is done, we are done with massive layoffs. where the bank we want to be, we look forward to the future, we think our core bank did a good job in 2016, we feel we are well-positioned. francine: you could start hiring that -- this year in that unit to increase volumes? guest: we will manage our bank to generate the turn -- returns for our shareholders and what

our customers want. we like where we are today. be -- to runce to the bank status quo for a while. counterpartss. have put up some pretty extraordinary numbers particularly when it comes to trading. what are conditions like for barclays, are you enjoying the same uplift that we have seen with jpmorgan, oldman, citigroup, they have had numbers 30% and upwards. thes: we cannot comment on quarter. we gained market share in the u.s., our volumes were up significantly. for the first three quarters of -- howr i like our in our investment bank performed. our revenues were up, our revenues to risk ratios were in good shape so i feel good how the bank is positioned. as the financial times said that

her look even smart. let's hope we stay lucky for a bit longer. francine: make me smarter about how you see the world economy and markets, are we going to see a lot more volatility, is it going to be binary markets as we figure out the reflation and america and what happens with brexit? guest: the general reasoning is most likely the new administration is going to adopt a fiscal stimulus package. i think there is a sense was the unemployment rate below 5% will asrt to get wage pressure yellen said yesterday, the fed probably will have to move more quickly in terms of raising rates. we will see that, i think that europe.ll over into there is a sense that right now,

the economies are beginning to slowly grind to a higher growth rate which will be better hopefully for all of us. including barclays, we want to be open for business and providing credit and hopefully twice 17 is a reasonably good market. -- 2017 is a reasonably good market. as iss important for us the rising rate environment in the u.k.. just a few months ago we were talking about banks having to live with zero interest rates. i had not heard zero interest rates mentioned once and davos. there has been a very significant shift in the outlook toward interest rates. if you look at 10 year gilts are or 10 year treasuries, getting the rates up is great for think profitability. francine: thank you for joining us. you, i will handed back to

in frankfurt. several interviews and theresa may. matt: thank you. will toss to juliette saly for business flash. juliette: according -- according south korea has turned down a arrest --s arrest to request to arrest jay y. lee. the allegations against the heir to the country's most powerful country linked to a corruption scandal. providedenied financial aid in return for any favors. nuts -- netflix jumped after it added a record number of subscribers. the world's largest paid video service signed up more than 7 million new customers in the

fourth quarter. topping expectations about domestic and international growth. 2016 as a whole, it added 19 million customers after expanding to 190 countries. deutsche bank told some employees that job cuts will continue even after it cut bonuses. some --er person said in some parts of the bank managers are asked to identify the bottom 20% of performers. declined to comment on specific job reductions. london sachs may cut its staff to 3000 workers while transferring some to other locations as it prepares for brexit. according to a german newspaper citing unidentified people in the financial industry. toldcomes after hsbc

bloomberg trading operations generating 20% of revenue for investment banks in london may move to paris. a spokeswoman for goldman sachs said it has not made any decisions. that is your bloomberg business flash. guy and matt. ministeru.k. prime will meet with financial industry leaders today and will take the stage at the world economic forum at 9:15 a.m. u.k. time. at 4:30 p.m. she will speak to us right here on bloomberg. --'s get back to dollars davos. to say wei am pleased are joined by the mayor of london. there seems to be a real push from the u.k. governments to explain to the people of britain but also to people here who are decision-makers what brexit will

mean. how can london defend itself from the excesses of brexit? guest: the important thing to impress to you, our government and business leaders and political leaders i made from across europe and the world is the british public did vote to leave the european union and did vote to leave the structures and what they did not do is to vote to make us poor. thing is, the promise it can listen to, job creators, banks, the financial iftor, political leaders, london was to become inward looking, if we failed to secure privileged access to a single market, if we fail to attract talent, these businesses would inevitably leave london.

paris,ll go to frankfurt, or berlin. lose and a lose for europe. francine: to protect london this is what you say you want privileged access to the eu single market. guest: london has been a city ,hich has attracted trade talent, and ideas for a thousand years. one of the joys and benefits is being a member of the single market. we will be leaving the single market. that will not necessarily mean we will have privileged access and it does not mean we will stop attracting talent. when it comes to negotiating we need to ensure we can secure privileged access to the single market and continue to attract talent. i am looking for business leaders across europe and the world to be my allies, to lobby their political leaders so when it comes to doing the deal with

the u.k., the terms are good for the u.k. in london but europe and the world. francine: that would mean that financial services are the top in terms of the list when the prime minister goes to brussels and negotiates. it was not the impression we got earlier. in the attempts to keep the party together that they do not cause damage to the country and rip up the kingdom. we understand the challenges of a -- the new leader has. the responsibility is to do right by the country in sin of the political party. the prime minister is here today, she could have chosen not to come. she is meeting business leaders and speaking to bloomberg later and she will be hopefully listening to the concerns of well-wishers them a the business leaders i meet who love london,

they have is this is in london, leaders who love her and london, they want to and thatto do business means securing privileged access, continuing to attract talent and i am lobbying my government and lobbying business leaders and leaders a crop -- across europe and the world. francine: they are waiting for the moment that they are ready to move out of francine: how can you as mayor of london stop the stem? >> london is open. we will continue to be a place which has a great pool of talent. we will continue to be the ,conomic capital of europe capital of the world, the tech capital of europe. what is important is to investmente have had

in london. google, apple, facebook, snapchat. they increased their presence in london not unreasonably. losel worried we may financial services. about noe worried transitional arrangements, you may choose to consider plans b, c, or d. ,usinesses are watching listening to what she is saying. it is good that she is here. it is important she engages. i wanted to continue to be a great city. francine: you have clashed with donald trump. can london actually win from a donald trump presidency by a attractinglent -- talent? christinia: -- >> the u.k. has a special relationship with united states of america. i'm looking forward to

fostering that. i hope we do not govern as we campaign. i'm hoping that the rich history of the u.s. has been a beacon for pluralism and welcoming other cultures and backgrounds. you can be successful in america if you are muslim, christian, and your values are ones that are in the around the world. i'm looking for that to continue under donald trump. are tax cuts part of the thing that would help them? things i have done as mayor is to surround myself with the business advisory board who gives me wide counsel about the challenges facing the city and the opportunity going forward as well. the number one concern they have is the risk of brexit. also, there are opportunities for london. we are a city where people want

to comment the phil their potential. we are the tech capital of europe and had and neck with san francisco. -and-neck with san francisco. hamilton is coming. they doe of the trade overseas, but also they have a huge presence in london and they give me advice in relation to the talent pipeline and how we invest in infrastructure and how we get the best terms when it comes to brexit negotiations. alls not there political patroness, but expertise. francine: the mayor of london, sadiq khan. we have an exclusive interview coming up with the german finance minister as well. matt: looking forward to later.g shor thank you very much. we will be back to her in just a

moment. let us look at the european market open. we do see markets opening down in england up across the continent so the cap up -- ca up .2%. i think, guy, what you're seeing across the continent is banks opening up stronger today. i know you have hsbc, barclays, gaining their. banks are opening stronger across the continent and you are seeing oil companies lower. as some ofwn as well the mine stocks like anglo and rio. guy: some of the corporate updates as well. let me take you to the function. a friend of yours, we have got our trading higher. update numbers look better there. they are not as bad as some may have priced in. royal mail in the u.k. lower this morning. i think there again, it is the update story that seems to be

doing it. letter volumes probably a little bit of a furor there. the update may be softer than anticipated as a result of which royal mail is trading a little bit lower. let me play the game you like to play which is to turn this into index points and see what is moving things around in terms of what is actually having an effect on the market. tale, followed by compass group. and helpingg higher out. let us get back to francine. francine: are very pleased to be joined by the ceo of orange. thank you for braving the cold. did you come here to do business? >> more or less. a millioni have questions. i want to talk to you about about consolidations.

orange is looking to launch a bank unit during the first half of 2017. are you on track for that? >> yes. we are ready to launch the rockets. do is capitalize in the middle east with mobile banking. stephane: in france, what we want to do is launch real bank. 100% mobile, digital, in the pocket bank, but that would be shops, inable in the 140 shops, so it is a very exciting project and what we want to do is really to bring something fresh and new in the banking business. francine: this is for the millennials? stephane: yes, but also for be can thinkmay that the total banking service is not satisfactory in terms of

simplicity of digital, you know, teachers, in terms of -- features, in terms of price. francine: how many customers? is this your advertising arm or d you want to make revenue and profit from it? how many customers are you expecting to have two years from now? stephane: this is a new business, not only something on the side. of course we are going to work energies and revenue synergies we can find out of the two businesses, but it is a new business. the plan that we have is to get 2 million customers of the bank of time, year period so we are definitely ambitious. it is more than the largest online bank in france today, but we think -- francine: do you think the more traditional banks will try to compete with you or do you almost have first mover advantage because you are fresh and new? stephane: we are going to

compete with the traditional banks. some of them have online bank today, some not, so and then, yes, i think we have not exactly a first mover, but we are orange. with somenown brand trust around the brand, which is very important. i think we have everything to be successful. francine: the french government still owns 23% of orange. do you think they will start selling some of that sta ke? stephane: i see that at least in one part of the landscape, the right part, there are some projects to sell, so it is something we must take into account even though we have no short-term agenda. francine: are you concerned about political turmoil stemming from the french elections and directly hurting your business because people will -- i don't

know if it is a panic -- but will feel less rosy about the future? stephane: we are currently in an electoral time in the campaign, so of course, this is something we have to take into account for the business, but at the same time, i think things have changed in france. are within though we the presidential election, we still have project and business, you can do things, and the economic life is going on. francine: depending on who comes to power, they can facilitate talks for carriers for consolidation. stephane: yes, but if you take this example, you have guys on both sides of the landscape that are in favor of consolidation. on the left side, he was very strongly in favor of consolidation. and probably on the right side, we can find some pragmatic people regarding business and economy that would be also in favor. francine: talked to me a little little bit.to me a

what is the most exciting piece of technology or the way we consume our technology in telecoms? is there going to be a massive shift in the next two years? i can hardly believe what we were doing five years ago. it feels like a century ago. stephane: connected objects. you're going to have connected objects everywhere. homes,e knows cars, our but you will have business of connected objects requiring new networks and the 5g, which will be one of the main expeditions of 5g to connect the billions of connected objects. you will have a revolution around artificial intelligence, machine learning, and you will have bots everywhere in the service industry, in the bank, for instance, in a few years time, and of course, everything around data. what used to be called big data

is now smart data. big new they are the projects of the future. francine: carriers have been under zone much pressure to offer a good price because it makes such a difference to the consumer. stephane: that will not change. as we are entering into the digital world, the connectivity needs are huge and it becomes every day more vital to have this conductivity everywhere, so it is so important that the pressure on the technology of -- technological availability of the price -- francine: given all of this, what is your biggest risk for 2017? stephane: my biggest risk is to miss something, of course, to missed something -- miss

something, a business option that might be relevant for orange, some consolidation or expansion, or to miss something in the range of what he market is really expecting from us in terms of marketing, in terms of technology, and my biggest risk maybe is not to be successful in the bank, but it will not happen. rincine: stephane chard, thank you so much. matt: the world and national news with sebastian salek. sebastian: the chair of the u.s. federal reserve has said they are close to the objectives of full employment and stable prices. janet yellen said she is confident it will continue to improve and it makes sense to gradually reduce monetary policy support. >> as of last month, i and most of my colleagues, the other members of the board in

washington and the presidents of the 12 regional federal reserve banks were expecting to increase our federal funds rate target a few times a year until by the end of 2019 it is close to our estimates of its longer run neutral rate of 3%. sebastian: deutsche bank told some employees that job cuts will continue even after it slashed bonuses. another person said, in some parts of the investment bank, managers have been asked to identify the bottom 20% of performers. a spokesman for germany's largest lender declined to comment on specific job reductions. goldman sachs may cut its london staff in half to 3000 workers while putting others in other locations. the report comes just one day after hsbc's ceo told bloomberg

that generating 20% of revenue may move to paris. a spokesman for goldman sachs said it had not made any decisions. thise needs to address agreement spurring the rise of nationalist leaders. that is according to jamie dimon, speaking to bloomberg at the world economic forum in davos. >> if you have a le pen presidency, the eurozone may not survive. >> that is a pessimistic view of europe. >> long-term pessimism, yes. unless they change. >> global news, 24 hours a day. sebastian: this is bloomberg. guy. thank you very much indeed, sebastian. let us get back to davos with francine lacqua. francine: i'm looking forward to this interview, joe kaiser.

you have many times cautioned about the rise of caution and the impact this could have a lot of companies because this linked to how people consume and behave. are you concerned that 2017, first of all, you see the fruition of populist votes, that the weight will continue? josef: we have already been learning about the geopolitical tension. it really does not catch us by surprise. it is about the rise of populism, but if you look at it, what i see will be the challenge of going forward. it is, i believe, nothing but the fallout from the divide between the rich and the poor. the second topic is the global migration, which has just been starting. the third topic is climate change, whether you like it or

not. the fourth will take us a lot to think about, the fourth industrial revolution. number five is the short-term lesson, which is creeping up and does not help sustainable long-term -- francine: so you have politicians and maybe businesses , so that ispopulism almost the quick fix? josef: the good news is -- we talked to our customers, what the needs are. you can also talk to political leaders about what they are actually up to, and how they can work together with us, and how we can help them to overcome this divide between the rich and the poor. it has got to be inclusive. it is very important. maybe we need to go after the last percentage point of margin, rather than including our the fourth say --

industrial revolution, which does not have a lot of changes. i think we need to rethink the way we are going after profits, the way we are going after the last penny to meet on wall street. maybe we are better off to include the societal elements and provide more stable platform going forward. francine: how much will brexit hurt german exports? germani do know that the -- not know how to translate that to english. you need to go look and separate the noise from the signal. the british people talked about on the 23rd of june, two weeks later, i took my managing board and went to the ukraine. i was seeing our customers, our

employees, we are going to support you. i spoke at the house of commons and i said we respect everything the british people have been voting for, but what we do need about how yourity plan to do this. and then we can make our decision and allocate our resources. francine: the problem is for the negotiations. in a negotiation, almost nothing can be planned. do you see more investment coming into the u.k. because of the week pounds or -- weak pound or out because of uncertainty? josef: the world looks a bit different today. there's domestic supply and demand. everyone who serves domestic demand, you are devised to have localization and local resources. that is the one thing. the global world today works that there is a sharing of tasks. you produce some parts in the

u.k., you produce the other party denmark, and then you exchange the parts so that is how you foster productivity, and that is how i believe the country and the economies need to serve and salt. countries and the economies need to serve and to solve. francine: are you looking to sell that stake? josef: we believe they are better off to go it alone because it is a very specific business. they have to do a lot of restructuring. we always said we are going to be there as a protecting parents as long as we are in this repositioning and re-calibration . your companies are established in the world. our customers like them. they provide solutions. they are involved in the way of energy-saving, so i think the child has grown up. francine: that means you are

ready to sell? josef: all i'm saying is the child has grown up. 1 francine: i'm a mother. that means you are ready to sell, joe. josef: would you sell your children? [laughter] francine: this is the health unit you want to list. when will that happen? josef: as soon as we are ready to convey to the public that you are among the first want to know. obviously, this is a real business with real customers, with suppliers, shareholders, and our employees. they want to know what is going on, and the reason why i said we are going to list -- it is not because of the capital markets because the capital markets were -- how much, when, why? we are not ready for this. we planned that. i wanted to convey a message to our customers, say don't worry about that. we are going to strengthen the health care business.

the employees don't worry because we know what we are was the message. predictability, reliability, we do what we say. francine: apologies. this year or depending on conditions? josef: it depends on market conditions. we need to figure out what the listing sector will look like because it involves a spinoff, like what you do with osram, so we are not in a hurry. we are very successful and i'm sure you will like the numbers. we are very well-positioned. we are very relaxed, we work hard, intelligently, and we do one step at a time. francine: you have said some very -- set some very aggressive target margins for your underperforming business for fiscal 2017. what is it looking like at the moment?

ontrack? josef: it is looking good. 14 billion euros worth of businesses which did not make any money. that is not the way it should work. itneed to do something about by 2017, and we will be about 6% margins. not that much. much better than it used to be. we are well on track. francine: for all of your divisions? josef: 3% margin last year for 2017. 85% of the total businesses will meet that target margin. last time, that cycle issues, so we will do that in 2018. the machine works and i'm very satisfied and very proud of my team because i did a lot of work at the same time. siemens has been stronger than ever. 30% up last year. number one in the space.

no one else had that appreciation. the team is doing really well, so i'm almost -- i feel obsolete because they are working so well. francine: joe kaeser, ceo of siemens. an exclusive interview from davos, coming up a little bit later on. matt: thanks very much for that. we are looking at markets that are firming up a little bit, maybe taking shape is probably a better term. if you look at the ftse, it is down just a bit, although moving down a little bit more than it was earlier. .1% as miners weigh on the index. if you look at the continental indexes, the dax and the cac are but gaining. bank stocks continue to gain ground and lift up those indexes. we are taking shape here, but not a lot of movement considering all the news we have

got out today, yesterday, the day before, and as he pointed out this morning, that tug-of-war going on between donald trump and janet yellen around the dollar. guy: let us talk about what is happening below the surface, some of the corporate news happening today. one stock story stands out and that is what is happening with the zodiac. what does zodiac to? ofmakes the interiors airplanes, the bits you sent an, the stuff that effectively the passenger interfaces with. the problem is, zodiac has been having a few problems, particularly when it comes to the a350 program for airbus. as a result of which, and i am making a connection which may not be there, but i feel the hand of airbus because he has been having those problems with zodiac, with this program, the fran, which

s will be buying zodiac. a 25% premium is being paid. in some ways, you could end up in a situation where this really makes sense for airbus. in many ways, it could make sense with airbus. i wonder if this was being engineered out of to loose -- to ulouse. let us help about what is going on within the ecb. many people including mario draghi hoped that 2017 would be a dull year for central banking. i wonder if that will turn out to be the case. i'm not sure this meeting will be as dull as everyone is predicting. matt: although we do have analysts, bank of america analysts, saying they think asghi these to make today

boring as possible. he could strike them are hawkish -- strike a more hawkish tone because of janet yellen seeming growth in confidence, or confidence of growth. all of the other people i have read have said that they think janet yellen is getting a little bit more hawkish and expense that she could raise rates three times this year. on the other hand, our survey shows that analysts and economists are not expecting the ecb to change its stance until september, so he is probably going to want to leave his message from the last meeting because of that and try to be as dull as possible today. guy: i just wonder whether the inflation story that is coming in germany, and the u.s. will meet its inflation target, you could almost argue exactly the same thing for germany right now on whether or not monetary policy as a result it's the bill. one isis that has a very view on that. will he give it to us later on? the german finance minister will be talking to us after that ecb meeting. what exactly will he have to say

on what is going on in frankfurt? i think that will be one of the big conversations of today in davos. this is bloomberg.

>> if it is ugly, it is damaging for both sides and i think we need to find a way, it has to be balanced. it will not be easy, but it is absolutely -- >> there is that certainty, -- uncertainty, which no one might, but i think the system will come up more rational in that there will be some movements. we will book certain trade. i do not believe it is fundamentally going to challenge the importance of london as a financial center for europe. matt: those were just some of our guests talking brexit today.

speaking of brexit, we are going to be talking to you keep prime minister theresa may at 4:30 p.m. u.k. time today. that is an interview you do not want to miss. you can see it on bloomberg tv and on the web at bloomberg.com. take a look at how markets are shaping up this morning. we are seeing gains in ove what, gains you are seeing the banks gaining. orchard bank rising here. you have barclays -- deutsche barclays.g here and across all three markets, banks are raising. it is not enough to hold the ftse up. some of the miners come down. guy: take a look at the index points and you can see that quite clearly. let me take you to the mov function. you can see the index points. let me show you what is happening on the mrr this morning. matt has already talked about the banks and what is happening

with the mining and commodities sector. that me talk about what is going on in the aerospace sector. staff ran -- let me talk about what is going on in the aerospace sector. n buying zodiac. zodiac has been struggling to make this program work for airbus. this is the a350 and it has been doing the interiors on that. they have been late and having problems. i feel the hand of the operational chief at airbus. he has been talking about zodiac for a long time. safran will be buying zodiac. zodiac is up by 21.41%. back to davos and francine lacqua. are joined by the chairman. thank you so much for joining us. pharmaceuticals are really front and center of what we will see in 2017, thanks in part, or

because of import the u.s. administration. donald trump will be inaugurated tomorrow. give me a sense of how you see obamacare being repealed. what comes next and what it means for the industry? >> first of all, i think it is important to mention what it means for patients. access tohas provided a substantial additional part of the u.s. population and there .as been a need to make changes now there is the intention to repeal obamacare so the questionnaires is, what is replacing obamacare? i cannot imagine all the patients who have coverage right now will not have coverage in the future, and listening to president-elect trump, he is willing to provide new coverage and a different way to provide access to those who need it, and this is, i think, good news for the patients at the end of the day and good news for the

pharmaceutical industry because inventing innovation is one thing, but providing access to patients is as important. lobbying what is roche in washington at the moment and as it put a spanner in the works for m&a or consolidation in the industry? christoph: at this moment, it is wise to see who is going to be in charge in the future for the next years to come. obviously, the trump administration is making up their mind, what is our policy, what are we doing, what is the replacement of obamacare, how are we going to finance this? at the end of the day, i'm sure ande pressure will prevail, we'll will see our share in this most likely, but i'm not very much concerned because in the u.s., there are two driving forces for the promise of a coal

industry is the willingness to provide innovation, and also reward innovation, and the second thing is innovation should be brought to patients very fast. francine: donald trump said the u.s. is paying too much for drugs and he actually wants to renegotiate, right? so this is different. this is a new phase in america. what does it mean for roche? christoph: we will have to wait and see what this really means. there is an established system in the united states and we will have to see what is really going to change in this existing system. what is most important as i mentioned is that we will be able to also be rewarded if we are capable of bringing new innovative medicines to the that it, and i'm sure will also be beneficial for the u.s. if every u.s. citizen would have access to these innovations as fast as possible. francine: i spoke to a leading

pr man, advisor, and he was giving me tips on how a ceo could protect him saw herself from a trumped week. do you worry about this -- trump tweet? do you worry about this? um, i think we have to do things between what has and moves in the markets. we are continuing to focus on developing new medicines. has been so, roche amongst the companies looking to export value-based pricing, especially in europe. what does that exactly lenient for -- exactly mean for consumers, customers, and the industry? christoph: i think we have an interest to contribute, to maintain cost of health care, and traditionally, pharma products have been paid in a

dollar per gram scheme, and we feel that in the future, value-based pricing could be a sensible alternative, basically being rewarded only when our medicines work. francine: what policy changes would you need to do in the u.s. to be able to implement that in the united states? christoph: i think it is less a question of policy changes on a national basis, but more a question on how to interact with the insurance companies, pharma benefits providers. if they would be ready to engage with us in this kind of scheme, we are very happy also to pilate lot thisferent -- pi different pricing in -- francine: the person at the top of their game and in charge of a business, pro trade, against regulation and for globalization, is it under attack? do you worry about tariffs?

that globalization will change? you will be one of the most impacted in terms of industries. christoph: i hope that the benefit of globalization can be maintained also in the future. i think we have to defend our case of the benefits of globalization, and we have to address concerns in certain parts of the population with certain political stakeholders more proactively. there is a good case and we have to bring forward this case and at the end of the day, i cannot imagine that the movement of globalization will totally deviate. we have always had some phases where everyone was proactively speeding up, taking down terrace, and people -- tariffs, and people were concerned, and there were political measures

implemented to raise tariffs, whatever, so i think we from the business perspective have been proactive and engaged ourselves. francine: does it have an impact on m&a, pharma and biotech for this year? it would be even bigger trade barriers came up. christoph: i don't see that this has such kind of a short-term impact and at the end of the day, at least from a pharmaceutical perspective, this is an industry which is regulated globally and on a national basis. each country feels health care so close to my heart, i have to regulated on my own, in my own way, and we will deal with this kind of multi-regulatory environments. francine: have you spoken to the company about them selling their stake in roche? topicoph: no, but on this

, obviously, i will not comment on it, but i regularly talk to my colleagues. francine: thank you so much. very diplomatic answer. the chairman of roche holdings, christoph franz. we have great interviews coming from the world economic forum. guy: he did not look very wrapped up warm, francine. good job. did make some very nice flea medicine which could come useful shortly. hammond with philip earlier this morning and asked him about the possible deals the nation could get with the european union. >> what the prime minister talked about on tuesday is the need to move forward quickly after we served the notice to scope out what the end state is going to look like, get agreement on a practical ofution for the end state the relationship between britain

and the rest of the european union, but recognizing that that will then take some time to implement. do we get into the detailed talks? we have to be pragmatic about this. there will be systems put in place. businesses will need time to make the transition. the clear message we are giving, and i think this works for britain and europe, no cliff edges, no sudden change for business. plenty of time to adjust. >> business is that we speak to at davos tried to figure out what the ideal solution would be. the prime minister was saying she wants a better deal. what does that look like? >> we have to recognize that on both sides, there are political imperatives, from the u.k. side, we can no longer accept freedom of movement. that is clear. from the european side, they have a position about the indivisibility of the four freedoms in the internal market. that is clear as well. we have to work within the parameters defined by the

reality of politics, to find a a securityationship, relationship, cooperation in a broad range of areas, that allows the patterns of business that we already have, the supply chains that operate across europe. that is good for britain and for our european union partners. francine: negotiations could be short if you have two sides with opposite views and nobody is ready to give in, then they could be done within six months. >> negotiations could be very short, but i suspect they will not be. we should be able to agree i think weight easily on the principles, but working through the detail will take longer. and i hope that we will be able to get between britain and the european union quite early on in this process, a sense of where we are going. i hope we will be able to communicate that to the wider world because the whole process has created uncertainty. that uncertainty has not been in

anyone's interest. businesses,ve consumers, a bit more certainty, the better it will be for the european economy as a whole, including britain. matt: that was philip hammond, just moments ago with francine lacqua in davos. let us get back to her because she has another guest with her now. francine. francine: think you so much. i'm joined right now by ignacio galan. you always have given me spirited conversation. youour acquisition targets, have always said you have been interested in the u.s.. are you any closer to getting something? ignacio: i think you know, we just made a merger. our company is listed in new york. this company has already market cap on the rate, -- it is performing very well.

we are for the time being satisfied, happy. francine: if the u.s. does better than we thought 12 months ago or even five months ago because of donald trump relating the economy, there will be more demand for your industries. would you think of acquiring something else or is it completely off the table for now? ignacio: for the time being, 70% of our business, infrastructure, is distribution, the state of new york, maine, connecticut, parts of massachusetts, so we have planned to invest. i think, if the new administration is encouraging new infrastructure, we would be delighted so we can make more. you may be acquiring new jersey resources. that is a people are saying, yes or no? ignacio: very many noises about very many things. nothing concrete in these respects.

news and news and news, but nothing is real in this particular time. francine: 17% of your revenue comes from the u.k., and how much do you worry about prices? ignacio: more than that. francine: it's more? practically wondered about business is going to come from the united states, so we have over $30 billion invested in the united dates, and i think -- united states. i think that is more or less what we are expecting from the arizona company which will be on the range from 700 to $100 million. francine: how do you prepare for brexit? ignacio: sorry? we are doing the same thing as well. in britain, we have more business there. it is mostly regulated business, renewables. our business is in pounds. all of the business is absolutely clear and defined up

2023 in the regulatory framework, which is clear and defined. we see the pound moving on for the consolidation, but like i said, economically, things are going well. francine: i'm going around the world. let us move on to brazil. are you prepared for a harsher economic system in brazil because of what donald trump policies are? ignacio: in brazil, it is not a country that is that bad. a great country, big country, with a lot of opportunities. we have been there the last 20 years and we have the distribution. reasonablygoing well. not as good as we were expecting, but -- francine: what about mexico? mexico could be the real losers when donald trump becomes president. in mexico, we are the second largest producer of electricity.

mexico is going to go ahead. we are announcing today a new power plant. we are going to build anyone already in north of mexico. $600 million is the new one. altogether, i think we have around 10,000, 10% more power in the country. francine: is that because the peso has actually -- ignacio: the demand continues growing, the spectator requires more electricity. the mexicanhind demand for electricity, there we go. we trust it will continue. francine: was this decision taken before donald trump was so harsh on mexico? ignacio: i think it is demonstrating the economy of mexico will continue going well in the future, so in that way, the mexican demand for electricity is going to continue growing, and i think we have to supply this, and that is a good

announce that.s francine: talk to me a little bit about spain. you are always providing great insight into the on employment figures, exactly what the situation is like on the ground. are you surprised by the pace of acceleration actually? ignacio: i'm very pleased because you have to remember i had already a few years ago an interview in which i was telling you about the spaniards. we are not -- we are black-and-white. we are never gray. we will pass from the very bad situation to very good situation. we start doing the things well, things going well. we are in the country with the highest growth in europe. it has been generating more jobs than anyone in europe and the economy at this moment is healthy. they will transform the -- the internal demand is booming. francine: will brexit jarell that -- derail that?

you are the fastest growth economy. actually, brexit means there is such lack of confidence in the e.u. got back growth is not sustainable and goes down quite rapidly. ignacio: it diversifies tremendously the countries where we have put in our goods and we will continue supporting. in terms of tourism, we beat a record last year. 75 million tourists. i think the british are continuing coming to spain and we have not seen they will change that because they have the houses they are in the south of the country. francine: if i were to write a report card on the world economy, where are we right now? grades. the economy isk in a better position than they were a few years ago globally. now, the concerned are more political concerns,

uncertainties, but i think globally, i have seen the new digital world, and the trends are becoming already something that is in the mind of everybody and those things are positive. it is more positive globally. francine: it seems we may get -- i'm using a euphemism -- we may get less commitment to climate change and cleaner energy from the u.s.. what does that mean for the bush which is i know very close to your heart? ignacio: i have been attending all the climate summits for many years. ago -- the months commencement of this word and this moment, it was related with climate change, global warming, etc., it is absolutely spectacular. i'm not saying that is going to change. the carbonization will be a factor. we have seen them attending the

last three years, we have beaten the record high temperatures worldwide. it will continue like that so we are going to be in trouble. countries, politicians, especially civil society, are more concerned. that is why. 195 countries have already signed the agreement. that is positive. the world is going to become more -- the economy is going to become more dependent on electricity. that means depending on renewable sources and that requires more networks, more digital networks, more storage, precisely this is what companies like mine, we are already involved. we have the cleanest of the cleanest in europe. francine: ignacio, thank you so -- ignacioio got

galan. guy: an interview with the british administered theresa may, coming up a little bit later on. she will speak to the delegates in davos and then comments and speak with us. this is bloomberg. ♪

matt: welcome back to bloomberg

markets. this is the european market open. slight gains on the continent as banks gain ground. so much news to talk about this morning, starting with deutsche bank here in frankfurt where i am for the ecb meeting today. they are going to fire more people according to a number of sources at the bank. they will cut bonuses as well for the second year in a row. senior managers will not get bonuses, and they agreed a couple of days ago with the department of justice to settle on the mortgage lending issue. we have an agreement from credit suisse for almost $6 billion on the mortgage lending issue with the doj, so another settlement there. goldman sachs handled -- they are going to cut or move half of its jobs, fully 50% of its staff out of london, back on to the continental ground or completely out of the job. it seems to me a gigantic day for bank news. guy: gigantic day in the

aerospace sector as well. the engine maker safran buying 8.55ac, a .5 5 billion -- billion. this has been orchestrated by airbus. zodiac supplies some of the fixtures and fittings for the a350 program. that has resulted in delays and issues. is going to buy zodiac for consolidation within the supply chain. --s feels very much like handiwork. he wants this to work and compete effectively against the dream line. we will have more on that tori, a big contributor to the story in the stoxx 600 at the moment. coming up, plenty more from dallas, and our interview with theresa may. that is coming up very shortly,

9:15 u.k. time. will have that on bloomberg television and bloomberg dab digital radio. this is bloomberg. ♪

♪ francine: the odds of a fed rate hike in may rise on hawkish comments from janet yellen. the trump inauguration is tomorrow. the dollar is in focus. the u.k. chancellor tells bloomberg the nitty-gritty of brexit talks will take some time. >> negotiations could be very short, but i expect they won't be. we should be able to agree quite easily on principles, but working through the detail will take longer. francine: and we hear from prime minister theresa may. she speaks to bloomberg this