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The rich and powerful are in Davos, Switzerland, for the World Economic Forum’s 50th annual meeting, and the gathering is being closely watched to see how the global elite aims to tackle problems they helped create, above all climate change.
Germany’s Angela Merkel called on world leaders to work together to fight global warming and take the views of concerned young people seriously, saying time is running out to protect the planet.
U.S. Treasury Secretary Steven Mnuchin, meanwhile, questioned whether Swedish activist Greta Thunberg is qualified to talk about economic issues linked to climate change and told 17-year-old to go and study the subject in college.
Thunberg has called a climate strike for Friday at 11 a.m. local time near the forum.
To get all the highlights delivered to your inbox, sign up for the Davos Diary newsletter. Here’s the latest (time-stamps are local time in Davos):
RBC Says Fossil Fuels Necessary in Green Shift (5 p.m.)
Royal Bank of Canada Chief Executive Officer David McKay said any shift to a more climate-friendly economy still depends on fossil fuels.
“We have a longer-term transition as we change the energy source, we move to a greener economy, but it is a transition,” McKay told Bloomberg TV. “You need fossil-based fuels to make that transition -- they’re not going away overnight.”
U.S. Has ‘Perfect’ Justification for Auto Tariffs: Ross (4:35 p.m.)
The U.S. wants to negotiate a trade deal with the European Union but will apply tariffs on car imports from Europe if deemed necessary, according to Commerce Secretary Wilbur Ross.
“We have a perfect justification to put tariffs on if we wish to,” Ross said in a Bloomberg TV interview. “The president had decided it was better to negotiate. We’ve had very constructive negotiations with the German car manufacturers, with the Koreans and with the Japanese.”
“If people do silly things, if they do protectionist and discriminatory things like the pillar one of the digital service tax, we’re obviously going to respond,” Ross said, referring to plans by France. “The clear intent was to be discriminatory. We have other laws that also enable us to retaliate against discriminatory behavior. If there is discriminatory behavior, we will fight back.”
Booms and Busts Are Not Dead: Solomon (3:25 p.m.)
David Solomon, the chief executive officer of Goldman Sachs Group Inc., said the U.S. economy is “in good shape” and Davos delegates he has spoken with are generally upbeat about the outlook for this year.
“I would say that there will be booms and busts again at some point, although I don’t see one anytime soon,” Solomon told Bloomberg TV.
“I’d say I see and I hear what I call kind of a confident, middle-of-the-road view of the current economic environment,” he added. “The overwhelming likely scenario is that the economy chugs along this year.”
Merkel Says Recession Danger Receding (3 p.m.)
The danger of Germany slipping into recession is receding thanks to an easing in tensions between major global trading partners, Merkel said.
“I think we should be happy that the first phase of a trade deal between the U.S. and China has been agreed,” she said during a Q&A session after her speech.
“With each step -- an orderly British exit from the European Union, with trade deals and no trade war, less protectionism -- we are reducing the danger of a recession,” Merkel added. “At a time when we have a lot of trade conflicts, you see that global economic growth slows.”
Europe can contribute to growth and stability and foster confidence in the euro by completing the integration of its banking system and capital markets, the German leader said.
Merkel Rejects Excluding Suppliers from 5G (2:55 p.m.)
Excluding individual suppliers, like China’s Huawei Technologies Co., from fifth-generation mobile networks would not necessarily make them more secure, Merkel said.
“I don’t think I make myself particularly secure if I shut out an entire supplier and don’t know how they are developing,” she said during a Q&A session.
“To be honest, we have already dealt with spying and industrial espionage in former times, and in that sense I wouldn’t change the equipment completely,” she added. “But we do have to be careful.”
NATO Chief Urges Europe, U.S. to Stick Together to Meet China Challenge (2:50 p.m.)
China’s rise makes it even more important that Europe and the U.S stay together, NATO Secretary General said in a Bloomberg TV interview, in a thinly-veiled plea for a de-escalation in the transatlantic trade spat. As long as Europe and the U.S. cooperate “then we are safe and secure” and can meet any potential challenge, Jens Stoltenberg said.
“There are opportunities, but also some challenges, because China is now the second largest defense spender in the world and they are investing heavily in new very advanced weapon systems,” Stoltenberg added.
NATO’s chief stopped short of calling China a strategic adversary or calling for an outright ban of Chinese companies from the procurement of 5G network equipment. He did, however, warn that a cyber attack against an ally could trigger NATO’s collective defense clause, which obliges all member states to respond to the attacker.
Standard Chartered Says Anxiety “Very High” Over China Virus (2:50 p.m.)
Standard Chartered Plc is taking extra precautions to protect Chinese staff from an outbreak of the SARS-like coronavirus, according to Chief Executive Officer Bill Winters, who had intended to travel next week to Wuhan, a city that has been locked down by authorities trying to halt the spread.
“When someone gets a cold now, question is whether it’s something much worse,” he said in a Bloomberg TV interview. “We are staying close to our clients and helping them understand exposures.”
The bank is “identifying working capital needs if things progress as they have done over the past 24 hours,” given that “tourism and transportation industries are at some risk coming into Chinese new year”
Tackling Climate Change ‘Matter of Survival’: Merkel (2:45 p.m.)
German Chancellor Merkel said meeting emissions-reduction goals could be a “matter of survival” for Europe and young activists pushing for change should be taken seriously.
“The question of achieving the Paris Agreement goals could be a matter of survival for the whole continent and that is why there is pressure to act,” Merkel said in a speech. “Time is pressing, and we must be careful as the older members of society that we treat the impatience of youth in a positive and constructive way.”
The German leader said she was concerned about the conflict between campaigners for a cleaner planet and those who don’t believe in global warming. She said the scientific evidence is clear, and emotions should not be confused with facts.
Mitsotakis Says Turkey-Libya Deal Unacceptable (2:34 p.m.)
Turkey’s maritime border agreement with Libya is unacceptable and illegal, Greek Prime Minister Kyriakos Mitsotakis said, amid growing tension in the eastern Mediterranean.
“Turkey has been difficult to deal with,” Mitsotakis said in a Bloomberg interview. “There’s a constant state of provocation, which leads Turkey nowhere.”
“We don’t need Turkey’s permission” to supply Europe with Cypriot, Israeli or potential Greek gas, Mitsotakis said earlier in Davos. The pact signed by Libya and Turkey has an impact for the planned EastMed pipeline project, he said.
Time is ‘Worry’ in EU, U.K. Trade Talks: Dutch PM (1:45 p.m.)
The clock is ticking for the EU and the U.K. to hammer out a trade deal by the end of the year, according to Dutch Prime Minister Mark Rutte.To agree on a trade deal “we need to agree on level playing field and all the other issues,” the Dutch leader said in a Bloomberg TV interview. “It’s an awfully short amount of time so I hope that coming next summer, June, July, that Boris Johnson will at least contemplate extending, if necessary, this transition phase.”
Coming to an arrangement is “very difficult and there is still the risk that you will have a cliff edge scenario’ like we had experienced last year.”
U.S., China Must Adjust for Stable World: Singapore PM (1:30 p.m.)
Both the U.S. and China must make adjustments if they are going to reach a lasting phase-two trade deal that benefits the rest of the world, according to Singapore Prime Minister Lee Hsien Loong.
The U.S. must decide whether to create rules that allow “the best man” to win or only let America come out on top, Lee said in an interview with Bloomberg’s Editor-in-Chief John Micklethwait.
“America First means you do the best for the United States,” Lee added. “So do you do the best by prospering in the world, and there are other countries who are doing well, or do your best by being a big country in a troubled world? And I’m not sure that the second is a very good answer.”
Maersk Sees Flat Global Trade Growth in 2020 (1:24 p.m.)
Global trade will likely expand in line with 2019’s growth of “slightly less than 2%,” A.P. Moeller-Maersk A/S Chief Executive Officer Soren Skou said in a Bloomberg TV interview.
The reason why freight rates have “gone up quite substantially” since October is mainly the introduction of new more environmentally friendly fuel. “Many of our customers recognize that it’s good for everybody that we go to a cleaner fuel,” Skou said.
Trump Policies Good for Business, Moelis Says (1:21 p.m.)
U.S. President Donald Trump’s policies and deregulation moves have been good for business and generated “substantial rewards,” Moelis & Co. founder Ken Moelis said in a Bloomberg TV interview.
Trump has done a good job of telling the story of how the U.S. economy is booming, with low unemployment, Moelis said, adding that despite “a lot of hand-wringing” in the U.S., the country remains a “tremendous place” with great laws, great capital markets and innovation.
Men’s Hiring Bias Slammed by Finnish PM (1:04 p.m.)
Finnish Prime Minister Sanna Marin said it’s now clear that women need laws to protect them from discrimination in the work place and the issue can’t be left in the hands of the private sector.
“You need laws and structures that lead the way to gender equality,” 34-year-old Marin said during a panel debate. “It doesn’t just happen by itself.” The concern is that an unconscious bias kicks in, steering men in a position to hire toward “similar-minded and similar-looking people” who are deemed to be “more qualified.”
Dutch Finance Minister Says Brexit Risks EU Power (1 p.m.)
After Brexit, the EU risks becoming a weak player in global politics, because the U.K.’s departure offsets the bloc’s balance, according to Dutch Finance Minister Wopke Hoekstra.
“When there is a balance between France, Germany, and the U.K., we in the Netherlands are at ease,” Hoekstra said in a Bloomberg TV interview. “That balance is now gone, and for the European Union, both in economic terms, but also in geopolitical terms, Brexit is very bad news.”
Saudi Arabia Must Act on Emissions: Minister (12:30 p.m.)
Saudi Arabia must advocate for solutions to tackle climate change as one of the world’s largest energy producers, according to Energy Minister Abdulaziz Bin Salman.
“We cannot sit on our hands as a producer without advocating for something that brings a solution to the emissions issue,” he said during a panel discussion. “We can’t see all components of sustainability and market stability without also being involved in the other debate which has to do with climate change.”
Facebook Says Bezos Hack May Highlight Phone Vulnerabilities (12:13 p.m.)
The hack of Amazon.com Inc. billionaire Jeff Bezos’s phone, allegedly via a WhatsApp message, brings to light potential security weaknesses in smartphone operating systems, according to Facebook Inc. Vice President Nicola Mendelsohn.
The company would take allegations that its service was used in a hack very seriously and would look into it, Mendelsohn, who helps run Facebook’s Europe, Middle East and Africa business, said in a Bloomberg TV interview.
The Idea of a Waste-Free Global Economy Is Catching On (11:50 a.m.)
When British yachtswoman Ellen MacArthur was promoting the idea of the circular economy on the sidelines of Davos in 2012, the big attraction was curiosity about what she was up to after her sailing career.
Eight years on, firms such as Adidas AG, Unilever NV, and BlackRock Inc. are embracing MacArthur’s vision. Her foundation is pushing an economic system where product lifespans are extended and components used repeatedly. The idea is to replace the “linear” model of growth -- extraction, production and disposal -- and reduce the strain on the planet’s limited resources.
“We had our own event in one of the hotels, and to be honest most people came because they were intrigued about what I might be doing,” said MacArthur, who once held the world record for the fastest solo circumnavigation of the globe. “Things have changed enormously since then.”
Deutsche Bank Expects ECB Review to Be ‘Constructive’ (11:07 a.m.)
Deutsche Bank AG Chief Executive Officer Christian Sewing is “hopeful” that the planned strategy review by the European Central Bank will lead to change.
The ECB’s decision to cut interest rates below zero was right at the time, but “we missed the exit,” he said on a panel. Negative rates are leading to a widening gap between winners and losers as only a small share of the population benefits, Sewing said, adding that monetary policy is “reaching its limits.”
U.S.-Europe Risk Trade Flare-Up Over Cars, Digital Tax (10:43 a.m.)
The U.S. and Europe looked set for a renewed clash over everything from car tariffs to digital taxes in a sign that a new American focus was emerging following President Donald Trump’s trade truce with China.
Commerce Secretary Ross said the U.S. was still considering slapping levies on European auto imports even as it hopes for a “peaceful resolution” of differences. Mnuchin declined to say if he was still pushing for an optional digital tax after an agreement for a global framework was reached with France on Wednesday.
Mnuchin Tells Thunberg to Go to School (10:35 a.m.)
Mnuchin questioned whether Thunberg is qualified to talk about economic issues linked to global warming.
Asked at a press conference to comment on the debate over the economics of climate change spurred by the teenager, Mnuchin quipped: “Is she the chief economist?” He then said: “After she goes and studies economics in college, she can go back and explain that to us.”
Mnuchin has repeatedly clarified the U.S.’s climate stance after Trump took a swipe at environmental “alarmists” in his speech Tuesday. “There’s a misinterpretation as to what our view is,” Mnuchin said. “The U.S. administration very clearly believes in clean air and clean water.”
Canada in Strong Fiscal Position: Morneau (10:30 a.m.)
Canadian Finance Minister Bill Morneau said low interest rates mean central banks have less room to maneuver and suggested fiscal policy needs to play a greater role in addressing economic challenges.
“I think we have to be realistic” about expectations of central banks, Morneau said in an interview with Bloomberg TV. “Their ability to be effective in the case of challenges is different than it was in the last real challenge.”
Canada is managing its “fiscal framework very well,” which makes it “resilient in the face of challenges,” Morneau added.
“What we see is that Canada has taken a very responsible approach,” he added. “Whether you’re a rating agency or someone looking at our ability to deal with financial issues or concerns, we’re in a particularly strong position. Probably the strongest position among G-7 countries because of our very strong balance sheet to start with.”
Allow Venezuela to Unleash Its Potential: Guaido (10 a.m.)
Juan Guaido, Venezuela’s opposition leader, called for a return to democracy in the South American nation so that it can fully exploit its oil reserves and “unleash” its potential.
“What we want is a free Venezuela, a democratic Venezuela which respects human rights, where you can invest, where we can also make the most of our oil reserves and so that we can really unleash the potential that we have,” Guaido said in a speech. “We want to mobilize people despite the terror unleashed by the dictatorship.”
Nigeria Says OPEC Ready to Cut Further (9:49 a.m.)
OPEC’s production cuts are enough for now to avoid an oversupply, but ministers will convene again in March and will be ready to make further cuts if necessary, Nigerian Minister of State for Petroleum Resources Timipre Sylva said in a Bloomberg TV interview, adding that the country would like to see oil prices between $60 and $70 a barrel.
“We see a lot of optimism in the market” amid easing of trade tensions between U.S. and China,” Sylva said. “If the U.S. and China are able to consummate a good deal at the end of the day, we expect that there’ll be demand growth.”
Cantor’s Jain Concerned by Negative Rates (9:38 a.m.)
Cantor Fitzgerald LP President Anshu Jain said there are long-term adverse consequences linked to investing in trillions of dollars of negative yielding debt.
“If you wind up investing at negative yields in effect locking in a loss, that will have repercussions,” Jain said in an interview. “Of greater concern for me is repercussions for insurers and pension funds, and these will be felt for years to come.”
Italian Coalition is Stable, Gualtieri Says (9:20 a.m.)
The stability of Italy’s ruling coalition will not be affected by Foreign Minister Luigi Di Maio stepping down as head of his party, according to Finance Minister Roberto Gualtieri.
“Di Maio will remain the foreign affairs minister and the parties have said they are strongly committed to the stability of the government. So nothing will change,” Gualtieri told Bloomberg TV.
“What we can have is a continuation of this alliance or a strengthening of this alliance, these are the only two options,” he added. “We have very strong numbers in the parliament in both chambers and the government will continue until the end of the legislative term.”
Kaeser’s Wish for Trump: Listen to the Kids (8:45 a.m.)
At a Tuesday dinner that Donald Trump held with business executives, Siemens AG Chief Executive Officer Joe Kaeser said he told the U.S. president he had three things to say: a compliment, a request, and a wish.
The compliment was on how Trump has spurred U.S. Economic growth. The request was for Siemens to be treated like a U.S. company on government projects because of its 50,000 American workers. His request was to urge the president to listen to young people’s demand to protect the climate.
“They may not be able to help us. They’re young people -- they have a problem and they don’t know how to solve it, but shouldn’t we bring them to the table,” Kaeser said he told Trump, adding that his daughter Ivanka Trump responded that it was something that they might look into.
Merkel Succession Team to Be Decided This Year (8:42 a.m.)
Germany’s Christian Democrats want to assemble their team to succeed Chancellor Merkel by the end of this year, the party’s chairwoman said in a Bloomberg TV interview.
Annegret Kramp-Karrenbauer, who is also Merkel’s defense minister, said that now isn’t the time for a cabinet reshuffle as proposed by a party ally earlier in the month.
“For 2021, the CDU needs a new team for the future, with new faces, and we’ll put that in place this year. For me, that’s a more important perspective than a short-term change,” she said.
Debt Buildup Reaching Danger Point: Georgieva (8:40 a.m.)
IMF Managing Director Kristalina Georgieva warned that debt in some countries is at dangerous levels.
“The buildup of debt is reaching a point where for some borrowers it’s a present danger -- for example poorer countries,” Georgieva told Bloomberg TV. “43% of low income countries are already at or close to debt distress.”
Low interest rates “means high, high appetite for yield,” Georgieva said, adding that “high appetite for yield means high appetite for risk.”
The global economy is in a better place than in October, when the IMF published its latest forecasts, and central banks have done what they can to support growth so it’s up to governments to step up, Georgieva said.
Germany Must Spend Cash More Quickly: AKK (8 a.m.)
Germany needs to speed up the process of spending government funds, and surplus cash should be invested “sensibly” in infrastructure and the military, according to German Defense Minister Kramp-Karrenbauer.
“If we look at our budget and our investment right now, then we see that we have no problem with money, we have enough money,” Kramp-Karrenbauer, who is also the head of Chancellor Merkel’s party, said in an interview with Bloomberg TV.
“The problem is that we are too slow and too complicated in the process. Not enough is invested as a result and this is the construction site we need to work on,” she said.
Merkel’s government agrees that surpluses “shouldn’t be tucked away for a rainy day” but instead directed toward “investment in technologies of the future, in our infrastructure,” Kramp-Karrenbauer added.
Coronavirus Only ‘Real Threat’ to Markets: Prince Max (7:45 a.m.)
There is nothing “really threatening” on the horizon for markets, with the possible exception of the coronavirus, according to Prince Max von und zu Liechtenstein, chief executive officer of LGT Group Foundation.
“I think there is a little bit more downside risk than upside chances,” Prince Max said in an interview with Bloomberg TV. “But the market has been resistant so hopefully we will enjoy a good market for a little bit longer.”
LGT is hoping for the long-term trend of negative rates to eventually reverse, Prince Max added. “But realistically our expectations for this year for a significant rate change is not there,” he said. “So we are not too optimistic on that front.”
--With assistance from John Follain, Birgit Jennen, Craig Stirling, Cagan Koc, Yuliya Fedorinova, Javier Blas, Fergal O'Brien, Oliver Sachgau, Patrick Donahue, Jenny Leonard, Saleha Mohsin, Viren Vaghela, Haslinda Amin, Francine Lacqua, William Horobin, Reema Alothman, Matthew Martin, Philip J. Heijmans, Sotiris Nikas, Nikos Chrysoloras and Doug Alexander.
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