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Speaker 1: Good morning. It's Wednesday, the seventeenth of January here in London.

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Speaker 1: This is the Bloomberg Daybreak you at podcast. I'm Caroline

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Speaker 1: Hipkint and.

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Speaker 2: I'm Stephen Carroll. Coming up today, business leaders talk up

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Speaker 2: the global economy as geopolitical tensions flair.

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Speaker 1: The deputy chairman of Rishi Sunak's party quits amid Tory

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Speaker 1: infighting over immigration policy.

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Speaker 2: And we have a special report on the Ukrainian president's

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Speaker 2: twenty four hour whirlwind effort to woo the Davos elite.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: The global economy is in surprisingly healthy place, according to

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Speaker 2: a raft of CEOs and economists who've spoken to Bloomberg

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Speaker 2: in Davos. From the International Monetary Fund officials and central

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Speaker 2: bankers emphasizing the probability of a soft landing, to financiers

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Speaker 2: and business leaders talking of resilience, the economic consensus has

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Speaker 2: been unexpectedly upbeat. Here's what the Deutsche Bank CFO James

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Speaker 2: von Moltke told us.

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Speaker 3: My view is it's a bit of a pinchmew moment

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Speaker 3: that we've been going through the resilience of not just

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Speaker 3: the economies but also financial markets, to the geopolitical crises

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Speaker 3: that are going on, to the rise in interest rates

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Speaker 3: in the fight against inflation has been remarkably strong. Whether

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Speaker 3: that continues, I think we're all hopeful.

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Speaker 2: As James von Alca points out, the upbeat sentiment comes

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Speaker 2: despite the prospect of elections for two fifths of the

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Speaker 2: global population, along with inflation, wars raging in Ukraine, in

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Speaker 2: the Middle East, and now tensions spreading to the Red Sea.

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Speaker 1: But even in the face of those challenges, the IMF

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Speaker 1: Managing Director Crystallina Georgieva told Bloomberg that there are reasons

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Speaker 1: to be optimistic. With a note of caution.

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Speaker 4: Let me say twenty three comes better than we expect

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Speaker 4: it by a small margin. There is some wind coming

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Speaker 4: from twenty three into twenty four. US poised for soft lending.

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Speaker 4: Interest rates are probably going to start going down, I

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Speaker 4: think late in the year, but definitely in twenty twenty four.

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Speaker 4: The only thing I want to say to everybody here

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Speaker 4: is expect the unexpected.

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Speaker 1: Those key quotes for our interview with Chris Alina Georgieva

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Speaker 1: reflect the feeling that while the outlook is currently positive,

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Speaker 1: it wouldn't take much for that to change. A concern

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Speaker 1: that was highlighted by the Harvard University professor Kenneth Rogoff.

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Speaker 5: The geopolitical situations like nothing I've seen in my professional lifetime.

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Speaker 5: I mean, we've gone exactly where we are in Cold

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Speaker 5: War two, but we're in Cold War two. Could get

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Speaker 5: to be a hotter Cold War two than it was,

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Speaker 5: and that's very destabilizing.

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Speaker 1: But despite Kenneth Rogoff's warning, the possibility that the global

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Speaker 1: economy could sail through a period of unprecedented tightening relatively

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Speaker 1: unscathed is offering Davos veterans increasing hope for twenty twenty

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Speaker 1: four well.

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Speaker 2: China's economy hit its official growth target for twenty twenty three,

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Speaker 2: with expanding by five point two percent, but the latest

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Speaker 2: data present a mixed picture of the world's second largest economy,

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Speaker 2: with a measure of broad price changes indicating deflation remains stubborn.

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Speaker 2: Twenty twenty three also saw the biggest drop in Chinese

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Speaker 2: house prices for nine years, as an extended property downturn continues.

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Speaker 2: The focus now shifting to how policymakers will step up

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Speaker 2: support this year.

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Speaker 1: Federal Reserve Governor Christopher Waller says that while he is

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Speaker 1: open to interest rate cuts, he sees no need to rush.

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Speaker 1: The policy maker attempted to draw a balance between ensuring

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Speaker 1: inflation reaches two percent without overly harming the US economy.

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Speaker 6: I am becoming more confident that we are within striking

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Speaker 6: distance of achieving a sustainable level of two percent pc inflation.

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Speaker 6: As long as inflation doesn't rebound and stay elevated, I

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Speaker 6: believe the FMC will be able to lower the target

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Speaker 6: range for the federal funds rate this year.

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Speaker 1: Treasure yields jumped in the wake of Waller's comments. Some

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Speaker 1: bond traders were moving even before then, with last Friday

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Speaker 1: seeing a surge in options bets against coming interest rate cuts.

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Speaker 2: Here in the UK, two of Richie Sinak's top team

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Speaker 2: have resigned. Just one day after the Conservatives election strategists

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Speaker 2: urged the party to avoid division. Lee Anderson and Brendan

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Speaker 2: Clark Smith have both quit being Deputy Chairman of the

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Speaker 2: Conservative Party so they can campaign for tougher immigration rules.

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Speaker 2: Tory MP Mark Francois says they're rebellion alongside fifty eight

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Speaker 2: other MPs last night means the Prime Minister is on

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Speaker 2: course for a defeat over his flagship Ruwanda bill.

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Speaker 7: The numbers speak for themselves and we very much hope

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Speaker 7: that the Prime Minister will listen and that there will

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Speaker 7: be a concession.

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Speaker 2: Fontois comments highlight the dilemma for Richie Sunak. Moderate conservatives

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Speaker 2: like Damian Green say they will vote down the bill

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Speaker 2: if changes are made.

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Speaker 7: There are plenty of bills that pass this place where

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Speaker 7: people will reservations but will think this is eighty or

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Speaker 7: ninety percent of what I want to see, and rational

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Speaker 7: people in those circumstances vote for that rather than get

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Speaker 7: nothing at all.

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Speaker 2: Both factions will be challenging the Prime Minister at PMQ's

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Speaker 2: and then voting later today.

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Speaker 1: The French president has announced the host of new policies

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Speaker 1: aimed at reviving support for his government ahead of the

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Speaker 1: European elections in June. Immanuel Macaun's promises included boosting security,

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Speaker 1: increasing civics lessons in schools, and a new six month

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Speaker 1: birthlea for both parents of a new child. The policies

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Speaker 1: and language used by Macron are seen as a more

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Speaker 1: conservative stance in a bid to counter support for the

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Speaker 1: far right. According to recent polls, Macron's party is trailing

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Speaker 1: Marine Lepenz by nine points.

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Speaker 2: And some insurers are starting to avoid covering certain ships

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Speaker 2: traveling to the Red Sea against war risks. Underwriters are

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Speaker 2: seeking exclusions for vessel with links to the US, UK

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Speaker 2: and Israel when issuing insurance for trips through the area.

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Speaker 2: Western naval forces have worn the passages unsafe, but Bloomberg's

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Speaker 2: Paul Wallace says cruis are still taking their chances in

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Speaker 2: the region.

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Speaker 8: The other thing to note is that there are still

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Speaker 8: a lot of ships, whether it's bulk carriers energy tankers

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Speaker 8: going through that route. Yes, the traffic's drop, but Bloomberg

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Speaker 8: analysis has shown that even since Friday, when the US

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Speaker 8: and the UK struck Yemen with missiles, there are still

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Speaker 8: ships doing it. So some companies clearly feel that it's

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Speaker 8: safe enough to continue with that journey.

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Speaker 2: Our Middle East economy and government as are Paul Wallace.

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Speaker 2: There the insurance restrictions run the risk of causing problems

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Speaker 2: because of their broad scope. War risk rates have gone

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Speaker 2: into a frenzy in recent days following the US and

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Speaker 2: UK strikes, with cover surge into one percent of a

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Speaker 2: ship's value from about a tenth of that a few

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Speaker 2: weeks earlier. In a moment we're bringing you the latest

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Speaker 2: in the World Economic Forum in Davos and inside a

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Speaker 2: whirlwind twenty four hours for Ukraine President at the event.

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Speaker 2: But another story that caught our eye this morning, this

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Speaker 2: is how the financial sector in Japan is preparing for

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Speaker 2: an end to negative rates. So as we know, this

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Speaker 2: has been a big expectation in the markets, but back

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Speaker 2: of Japan survey actually pointing to the country having a

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Speaker 2: shortage of bond traders who are used to positive rates

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Speaker 2: or indeed anything like that, and as a result, it's

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Speaker 2: injected new life into the industry. These more experienced, older

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Speaker 2: bond traders are now highly in demand. Their demand they're

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Speaker 2: commanding higher salaries and there's a recruitment frenzy going on.

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Speaker 2: So if you're someone who was around the last time

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Speaker 2: that Japan was looking at a situation like this, someone

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Speaker 2: perhaps working through the nineteen eighties.

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Speaker 1: Yeah, I was going to say that it could be

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Speaker 1: very much three nineteen nineties. That is a long time

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Speaker 1: ago high salary for some that's interesting. I mean in

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Speaker 1: that piece also lovely photographs of trading, vintage trading from

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Speaker 1: the nineteen eighties, because it is such a long time

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Speaker 1: ago since.

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Speaker 2: They've been extremely stylish was might take away from those

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Speaker 2: photos as well. Those six styles have come back into

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Speaker 2: fashion up more now though, from the World's Economic Forum

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Speaker 2: in Davas. While the tensions in the Middle East and

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Speaker 2: in Ukraine have formed the backdrop to this year's discussions,

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Speaker 2: business and political leaders have been pointing to the continued

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Speaker 2: resilience in the global economy. Our head of Bloomberg Media Editorial,

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Speaker 2: David Merritt, joins us now for more from DAVOSK Morning

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Speaker 2: to you, David. This are two narratives we're looking at,

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Speaker 2: one of economic strength and one of geopolitical instability. How

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Speaker 2: are they playing out in Davas well?

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Speaker 9: Those certainly are the two big themes I think, you know.

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Speaker 9: The most sort of notable moment that I saw yesterday

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Speaker 9: in the conference center was the Ukrainian president from the

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Speaker 9: mid Zelensky sweeping through the corridor with an enormous entourage

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Speaker 9: and an enormous security detail around. So, of course he's probably

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Speaker 9: the number one target for Vladimir Putin, so security has

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Speaker 9: been incredibly tight and at one point yesterday evening really

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Speaker 9: brought the center of town to a standstill as his

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Speaker 9: group of cars went through. Everyone was forced to the tour.

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Speaker 9: So he's been the thing that everyone has been talking about,

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Speaker 9: you know, trying to raise the profile or put put

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Speaker 9: the situation in Ukraine back on the top of everyone's agenda.

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Speaker 9: On the geopolitical front, clearly something that everyone is trying

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Speaker 9: to put back on the agender. And yet the economic

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Speaker 9: backdrop really, you know, with the companies here, with the banks,

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Speaker 9: with the technology companies talking about, you know, the fact

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Speaker 9: that actually the economy isn't as bad as people were hoping.

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Speaker 9: We have some private meetings yesterday with CEOs as bankers

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Speaker 9: saying the same thing they're saying to us on camera.

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Speaker 9: We've been more television, that things could be worse. You know,

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Speaker 9: I think a year ago people were worried about inflation,

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Speaker 9: worried about the prospects of the herdbanding. It hadn't happened,

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Speaker 9: we haven't seen a recession. So the sort of mixture

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Speaker 9: of geopolitical concerns and also a little bit of relief

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Speaker 9: the economy isn't as bad as it could be.

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Speaker 1: Are people though that you're speaking to, convinced that actually

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Speaker 1: inflation has sort of been vanquished all that we're on

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Speaker 1: the way.

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Speaker 9: To that now, Well, there's certainly been the sense of

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Speaker 9: relief that you know, and I had I heard there

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Speaker 9: of a couple of people yesterday in senior positions at

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Speaker 9: European banks, European corporations that you know, I'll take this

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Speaker 9: situation when one executive said to me, if you asked

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Speaker 9: me a year ago, where we would have been right now.

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Speaker 9: You know, this fere a year ago that inflation was

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Speaker 9: out of control, that in order to get it into control,

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Speaker 9: the European Central Bank and the Fed and the Bank

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Speaker 9: of England we're going to have to engineer a real

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Speaker 9: crash in the economy that just hasn't happened. And you know,

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Speaker 9: we have some bad economic news, perhaps out of Germany,

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Speaker 9: but with the rest of Europe. We had the governor

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Speaker 9: of the Bank of France on television yesterday he said, look,

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Speaker 9: there's not going to be a recession in Europe this year.

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Speaker 9: So everyone should be happy about that. Everyone should feel

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Speaker 9: that the European Central Bank, you know, they've done their job.

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Speaker 9: Inflation has more under control. And yet you know, we're

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Speaker 9: still seeing levels of growth, not rapid levels of growth perhaps,

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Speaker 9: but we're still seeing the economy moving ahead. So a

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Speaker 9: little bit of relief certainly both public and privately that

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Speaker 9: I've been hearing around the place, and you know, and

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Speaker 9: again there's a lot of nervousness and a lot of

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Speaker 9: negativity about the gear political situation, yet economically definitely some

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Speaker 9: feeling of relief among amongst executives here.

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Speaker 2: There are none of the last risks in the year ahead, Dave,

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Speaker 2: notably from elections. How is the prospect of another Donald

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Speaker 2: Trump presidency being discussed in Davos or what are the

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Speaker 2: other big issues that you're the people that you're talking

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Speaker 2: to are worried about in the year ahead?

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Speaker 9: Well, that's right. You know, the World Economic Forum put

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Speaker 9: out their lists of risks and the things that people

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Speaker 9: are can turn about. Right at the top of that

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Speaker 9: is about misinformation, disinformation. With the backdrop of this very

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Speaker 9: big political year that the world is say, more than

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Speaker 9: half of the population of the world going to the polls

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Speaker 9: on Monday, we had that sort of record time victory

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Speaker 9: by Donald that is certainly in the backdrop here people

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Speaker 9: are preparing for the prospect of a second Donald Trump

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Speaker 9: presidency and try to be pragmatic about it. What does

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Speaker 9: it mean? What are the actions that is going to

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Speaker 9: take that lots of discussions around that. What does it

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Speaker 9: mean for Nata, what does it mean for Ukraine, what

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Speaker 9: does it mean for the geopolitical situation? You know, people

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Speaker 9: that must like to think of themselves as you know,

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Speaker 9: coming up with solutions for some of the problems of

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Speaker 9: world places. So you know the difference I suppose to

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Speaker 9: now versus the first time Donald Trump was elected, which

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Speaker 9: was a bit of a surprise for the global elite.

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Speaker 9: Everyone here feels like they are ready for it. They

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Speaker 9: think that they know what to expect, and so it's

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Speaker 9: being discussed here less in terms of a shock to

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Speaker 9: the world's elites and more of something that they've seen before,

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Speaker 9: and what can they do to prepare for it? And

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Speaker 9: obviously that news on Monday from the first prime in

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Speaker 9: the United States has really underlined the fact that he

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Speaker 9: very well is most probably going to be the candidate.

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Speaker 9: And so what are the companies, what are the governments

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Speaker 9: who are representative going to be to prepare for that?

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Speaker 1: Yeah, and of course got to remember that Donald Trump

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Speaker 1: actually went to Davils a couple of times twenty nineteen,

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Speaker 1: twenty twenty one, and like some other leaders now who

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Speaker 1: for various reasons have avoided it or not attender, so yeah,

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Speaker 1: quite interesting. David, thank you so much for being with us,

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Speaker 1: so you have a great day to day. David Merritt,

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Speaker 1: our head of Bloomberg Media Editorial, just laying out really

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Speaker 1: what some of the top executives there are talking about.

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Speaker 2: We're going to stay in Davas for our next story

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Speaker 2: and focus on the trip by Ukraine's President Vladimir Zelenski.

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Speaker 2: He spent a whirlwind twenty four hours in the Swiss Alps,

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Speaker 2: was rained from handshakes with Jamie Diamond to burying the

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Speaker 2: hatchet with Poland's president and Duda. Joining us now is

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Speaker 2: our executive editor for Economics and Government across them Europe,

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Speaker 2: the Middle East, Africa and Latin America. Flavia christ Jackson, Fava,

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Speaker 2: great to have you with us as well. What was

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Speaker 2: it like for Vlaje mare Zelenski at the World Economic Forum?

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Speaker 10: It was a fascinating site really because Zelenski has you know,

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Speaker 10: is no stranger to trucking around the world and you know,

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Speaker 10: crashing various meetings or being invited at the G sevenths

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Speaker 10: of the G twenties. He's a fantastic speaker. He's addressed Congress,

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Speaker 10: but you know, of late, the shyness come off him somewhat,

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Speaker 10: and you know, now he's not quite as welcome as

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Speaker 10: he was. You know, there was the wartime hero in

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Speaker 10: his combat gear. You know, it was very clear, for example,

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Speaker 10: when he went to Washington that he got just a

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Speaker 10: very different welcome in Congress. You know, they were the

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Speaker 10: money taps have turned off and the US is far

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Speaker 10: more reluctant now to disperse funds. So in that context,

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Speaker 10: it was really interesting to see him absolutely dominate the

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Speaker 10: agenda yesterday, and it almost felt like in a way

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Speaker 10: he'd sort of learned some of the lessons that he

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Speaker 10: couldn't come across as punty or stridence that you know,

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Speaker 10: certainly of governments across the world they still support them.

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Speaker 10: That there had been a change of merative, right, it

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Speaker 10: was no longer uh, whatever it takes. It's like, well,

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Speaker 10: we're trying to do our best. And so with that,

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Speaker 10: it was clear that he kind of knew knew his crowd,

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Speaker 10: and so he spent the first part of the day

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Speaker 10: really kind of schmoothing with the titans of finance. I mean,

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Speaker 10: what better way than you know, have Jamie Dimond say

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Speaker 10: God bless you and you know, there was a lot

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Speaker 10: of very very positive noise around. A lot of the

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Speaker 10: execs that we spoke to who met with him ran

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Speaker 10: closed doors, said he was very excited, he has a plan,

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Speaker 10: He was open and they were excited about something funding

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Speaker 10: what was essentially would be the second Marshall Plan, so

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Speaker 10: investment on that scale on the corporate side. And then

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Speaker 10: of course, perhaps with some of the more awkward meeting

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Speaker 10: were the ones with the US officials and some of

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Speaker 10: the European allies where he's really pushing thing, I really

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Speaker 10: need help to stay in this fight that is running

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Speaker 10: out of money, is running out of AMMO. And also

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Speaker 10: there have been some tactical disagreements between the US and

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Speaker 10: Ukraine that so you know, we Bloomberg reported on and

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Speaker 10: Broken News on. So also that was an opportunity to have,

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Speaker 10: perhaps privately, some of the most some of those more

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Speaker 10: uncomfortable conversations that you know, even friends and allies need

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Speaker 10: to have.

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Speaker 1: Yeah, and I suppose that the again I want to

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Speaker 1: ask the Donald Trump question, it's we're thinking about a

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Speaker 1: change potentially of US presidency and lots of I Zelensky

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Speaker 1: and Trump haven't particularly been friends. So I suppose very

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Speaker 1: interesting that you talk about Zelenski talking to sort of

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Speaker 1: Wall Street as it were, in terms of getting the

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Speaker 1: funding that he sees as absolutely necessary for Ukraine. What

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Speaker 1: about that Ukrainian US relation ship as we get further

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Speaker 1: into the year and next year.

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Speaker 10: Yeah, I mean you've hit the nail absolutely on the head.

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Speaker 10: I'm sure for valenskap wasn't lost on him as he

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Speaker 10: was arriving this very important moment was happening over in Iowa, right,

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Speaker 10: I mean, this is his first this is his biggest

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Speaker 10: nightmare if you go back to sort of the early

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Speaker 10: days of when he himself went went to that but Us,

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Speaker 10: I mean, he was not really one of the big

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Speaker 10: characters to watch out for, and all people sort of

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Speaker 10: knew of him was essentially he was he was the

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Speaker 10: guy who was getting bullied by the President of the

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Speaker 10: United States to sort of you know, you know, if

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Speaker 10: you want some money, do me a favor. And this

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Speaker 10: shout on Hunter Biden. It was quite a shock. If

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Speaker 10: you're you know, a rookie leader you're better known as

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Speaker 10: as a comedian new kind of now is thrust in

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Speaker 10: and having a conversation the most important man on the planet,

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Speaker 10: and you know, and it gets leak to the to

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Speaker 10: the world media. So that is Zolenski's sort of relationship

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Speaker 10: with with with Trump. Trump, of course is not being

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Speaker 10: shy about praising Putin as a strong man, as you know,

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Speaker 10: as brave and all and all that kind of stuff.

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Speaker 10: So you know, if you're Selenski, you want to lock

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Speaker 10: away as much support as you can. And if anyone

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Speaker 10: is sort of preparing and dirting the e vituality of possibility,

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Speaker 10: maybe even for some inevitability of a Trump two point

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Speaker 10: nine presidency, it will be him.

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Speaker 2: Flavy, you were talking to us about some of the

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Speaker 2: support that was shown from Vladimir Zelenski at Davos. Of course,

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Speaker 2: Ukraine heading into a difficult winter, the conflict continuing. They're

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Speaker 2: still a very difficult situation facing Ukraine. Is there a

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Speaker 2: fear or any sign of fatigue in that support for

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Speaker 2: Ukraine from its allies?

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Speaker 10: There absolutely is. I mean, I think there was a

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Speaker 10: lot of hope. I mean, perhaps outside and maybe not

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Speaker 10: entirely fair, that this was the decisive year that you

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Speaker 10: know that the Allies were putting it all and like

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Speaker 10: this was this was the year where the pres Ukrainians

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Speaker 10: would breakthrough with this counter offensive. And of course it

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Speaker 10: became pretty apparent over the summer that that was not happening,

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Speaker 10: and around that suddenly there was a change of matter

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Speaker 10: and it's like, oh, you know, the war fatigue, the

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Speaker 10: dreaded words set in and initially, you know, no one

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Speaker 10: really wanted to talk about it because it would feel

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Speaker 10: like a betrayal of the Ukrainians. But now, I mean,

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Speaker 10: it was interesting to see a president due of Poland

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Speaker 10: essentially stayed the quiet path out loud and in a

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Speaker 10: ways of owning that allows everyone to sort of have

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Speaker 10: a bit of more of an honest conversation. And I

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Speaker 10: think one thing that a couple of people remarked upon

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Speaker 10: is it was very easy, for example, Endavos for the

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Speaker 10: attention to sort of shift over to what is happening

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Speaker 10: in the Middle East. But Zelenski did a very good

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Speaker 10: job of refocusing attention back to Ukraine, partly because he

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Speaker 10: kind of presented it as an investment opportunity to the

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Speaker 10: corporate world, and partly because he was also able to

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Speaker 10: bury the hatchet, if you will, with with Poland. Poland

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Speaker 10: was absolutely critical in in a way rallying support. So

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Speaker 10: back in September at the Margins do you in general assembly.

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Speaker 10: It was it was quite a moment to sort of

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Speaker 10: steeze a len Ski and do that kind of like

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Speaker 10: just kind of annoy each other. And it was a

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Speaker 10: sort of a moment of like, actually, you sort of

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Speaker 10: need to make this relationship. Okay, Poland is right there

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Speaker 10: with Ukraine geographically. He's also very very exposed. So in

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Speaker 10: a way, if you're sort of losing such a thematicit

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Speaker 10: as Poland, you're in trouble. So that his ability to

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Speaker 10: in a way kind of turn that around and to

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Speaker 10: sort of pug it out also speak to the kind

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Speaker 10: of pragmatism that's who's going to need to, you know,

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Speaker 10: stay in this fight.

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