(Bloomberg) -- 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.
Day two kicked off with Donald Trump having breakfast with American business executives, including Apple Inc (NASDAQ:AAPL).’s Tim Cook. The U.S. leader, whose impeachment trial began on Tuesday, also held talks with the presidents of Kurdistan and Iraq.
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Trump Lauds Musk, ‘Disappointed’ With Boeing (NYSE:BA) (12 p.m.)
Trump praised on Tesla (NASDAQ:TSLA) Inc. Chief Executive Officer Elon Musk as “one of our great geniuses” but said he’s disappointed in Boeing Co . over its woes around the 737 Max aircraft.
“I was worried about him, because he’s one of our great geniuses, and we have to protect our genius,” Trump said of Musk in a CNBC interview. “You know, we have to protect Thomas Edison and we have to protect all of these people that came up with originally the light bulb and the wheel and all of these things.”
On Boeing, he said: “Very disappointing company. This is one of the great companies of the world, let’s say as of a year ago, and then all of a sudden things happen. I am so disappointed in Boeing-- had a tremendous impact.
‘We Have to Act Now’ on Climate: von der Leyen (11:40 a.m.)
European Commission President Ursula von der Leyen focused on climate change and geopolitics, the two priorities of her five-year mandate which started last month, when she addressed the forum.
“The window of opportunity is closing” to address the environment emergency but “we have to act now,” she said.
Von der Leyen said there has to be “fairness” when it comes to climate and that included protecting European businesses and workers from unfair competition.
“If you engage with Europe you will find a reliable partner, working for a more sustainable world, but we ask for fairness in return,” she said.
France’s Le Maire Hopeful on U.S. Digital-Tax Deal (11:35 a.m.)
France has agreed to put the taxation of digital companies on hold until the end of this year as it seeks to avert a trade war with the U.S., Finance Minister Bruno Le Maire told Bloomberg TV.
Le Maire said international rules for digital taxation would be “far more efficient” and “fairer,” and that he hoped for agreement with U.S. officials “in a few hours” after meetings in Davos.
“Entering into a trade war between the U.S. and Europe would be foolish,” Le Maire said. “And if we are ready to go this way, we would have one single taxation of all digital activities instead of having many national taxations all over the world.”
Trump Says Strong Dollar ‘Very Bad’ for Manufacturing (11:20 a.m.)
Trump reiterated his criticism of Federal Reserve policy, saying the central bank “brought up the rate too fast, and they didn’t drop it fast enough.”
“I want this dollar to be strong. I want it to be so powerful. I want it to be great. But if you lower the interest rates, so many good things would happen,” he told CNBC.
“We have a very strong dollar, and that sounds good, and it is good in many ways, but it’s very bad in terms of manufacturing,” he added.
Mnuchin Threatens Auto Tariffs to Counter Digital Taxes (11:16 a.m.)
U.S. Treasury Secretary Steven Mnuchin Mnuchin dangled the prospect of retaliatory tariffs on automobile imports if countries go ahead with digital taxation plans.
“If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on car companies,” Mnuchin said during a panel discussion. “We think the digital tax is discriminatory in nature.”
Internet companies have long been the target of complaints that they don’t pay enough in taxes, and France imposed a 3% levy on the digital revenue of companies that make their sales primarily in cyberspace, such as Facebook Inc (NASDAQ:FB). and Alphabet (NASDAQ:GOOGL) Inc.’s Google.
On the same panel, U.K. Chancellor of the Exchequer Sajid Javid said the country plans to go ahead with a tax on digital services in April, with the levy designed to fall away once there’s international agreement on the issue.
Mnuchin said the U.S. will have private talks with the U.K. over the plan, just as Trump had with French President Emmanuel Macron to defuse the spat over digital tax.
Trump Would Be ‘Very Surprised’ to Have to Impose EU Tariffs (11 a.m.)
Trump said that he threatened von der Leyen with “very high tariffs” on “cars and other things that come into our country” at a meeting on Tuesday but that he would be “very surprised” if he had to implement them.
“They’ve taken advantage of our country, the European Union, for many, many years,” Trump told CNBC.
“They’re going to make a deal because they have to, they have to, they have no choice,” he added. “I would be very surprised if I had to implement the tariffs.”
The U.S. leader dismissed worries about a possible pandemic from a a new respiratory virus in China: “It’s one person coming in from China, and we have it under control,” he said. “It’s going to be just fine.”
U.K’s Javid Says EU Trade-Deal Timetable Feasible (10:50 a.m.)
Britain and the European Union have set a “tight timetable” for negotiating a trade deal by the end of this year, but it “absolutely can be done,” according to the U.K.’s Javid.
“Both sides recognize that it’s a tight timetable, a lot needs to be put together in the time that we have, but it can be done,” Javid said during a panel on “The Future of Financial Markets.”
“And it can be done for both goods, where we want to see free trade, zero tariffs, zero quotas, but also on services,” he added. Work has also started on a trade agreement with the U.S., which is a “huge priority” for the new government, Javid said.
Mnuchin Says U.K. Trade Pact Is U.S. Priority (10:49 a.m.)
Securing a trade deal with the U.K. is a big priority for the Trump administration this year, Mnuchin said during the same panel discussion with the U.K.’s Javid.
Tariffs provided an incentive for China to sign the phase-one trade deal last week, Mnuchin said, adding that the U.S. is trying to open global markets, not close them. There are no deadlines to start talks on a second phase, which could be pursued in smaller increments.
International Monetary Fund Managing Director Kristalina Georgieva said the world is in a better place than it was a few months ago, as trade and industrial output bottom out and the outlook brightens.
Saudi Aramco’s International Listing Isn’t Coming Soon (10:21 a.m.)
The international listing of Saudi Aramco (SE:2222) is “still on the cards” but likely won’t happen soon, Saudi Arabian Finance Minister Mohammed Al-Jadaan told Bloomberg TV.
In the oil giant’s IPO, Aramco opted for a local listing after global investors balked at its hopes of valuing the company at $2 trillion. Instead, Aramco relied heavily on local investors and funds from neighboring Gulf Arab monarchies.
Al-Jadaan said he’s “very confident” that the Saudi economy is picking up. After issuing a $5 billion eurobond, he said the country could borrow another $4 billion more this year and is considering debt in euros, riyals as well as sukuk.
AstraZeneca Sees Climate Change Bigger Risk Than China Virus (9:35 a.m.)
While the spread of the coronavirus is “a threat that must be taken seriously,” it appears to be relatively contained, AstraZeneca Plc Chief Executive Officer Pascal Soriot said in a Bloomberg TV interview.
“I personally think there’s a much bigger threat that is facing the world today, and it’s global warming and climate change,” said Soriot. “We all need to do something about it.”
Thiam Says European Bank Mergers ‘Desirable’ (9:25 a.m.)
Consolidation among top European banks should be pursued, but work is still needed to convince taxpayers that larger lenders won’t be a threat to the financial system, according to Credit Suisse (SIX:CSGN) Group AG Chief Executive Officer Tidjane Thiam.
“I think it’s desirable,” Thiam told Bloomberg TV when asked if European banking mergers should take place. “It will happen, but it will take some time. We still have a job to do to convince the public that larger banks can be safe and not endanger the whole economy.”
Thiam said he’s “moderately optimistic” about the euro-region economy and “still very positive” about the global economy. “It’s early days, but I think people are positive about 2020 and so are we. The U.S.-China agreement is very positive for markets,” he added.
Carney Bemoans Lack of U.S. Climate Engagement (9:22 a.m.)
Bank of England Governor Mark Carney warned of mounting risks to the financial sector and the economy from climate change and urged the U.S. to play bigger role.
“Something which was largely on the periphery of finance has come into the mainstream,” Carney said at the Bloomberg Climate Forum. “Transition risk has become more important.”
Asked if the world could contain global warming without the U.S., the governor said: “It’s much more difficult.”
Messina Sees Future European Banking Champions (9:10 a.m.)
Intesa Sanpaolo (MI:ISP) SpA Chief Executive Officer Carlo Messina says Europe needs to create banks on the scale of JPMorgan Chase (NYSE:JPM) & Co. in order to compete with the U.S. and China in geopolitics. That means common rules that could facilitate mergers across the bloc.
“If you look at Europe, U.S.A and China, you need absolutely to create some champions with scale that can compete with U.S.A.,” said Messina in a Bloomberg TV interview. “In the medium term in Europe, we need to have consolidation, but at the same time, we need to have rules of the game that could be the same in all the European countries. That is the problem of Europe.”
While these issues will unlikely be resolved this year, he said he expects it to happen in the future. The banking sector in Italy is under control, and Intesa’s non-performing loans are close to European levels, he added.
Staley Sees ‘Extraordinary’ Tech Valuations (8:45 a.m.)
Asset valuations are currently “quite high,” particularly in the tech sector, and vigilance is needed in case of a correction, according to Jes Staley, chief executive officer of Barclays (LON:BARC) Plc.
Asked in a Bloomberg TV interview what the biggest risk is to the economic outlook, Staley said: “Having been in this industry for some 40 years now, it generally starts with credit somewhere. People may get overextended and if there’s a shock to interest rates that could be quite a correction.”
Staley said there are “extraordinary valuations in some tech sectors, particularly the large tech players in the U.S.”
“When you have zero to negative interest rates almost by definition you’re going to have asset bubbles,” he added. “You want to ride that wave while it’s happening but keep your eyes wide open in case there’s a correction.”
After a tumultuous 12 months, Barclays is sticking to a strategy that keeps Staley in charge of its closely scrutinized investment bank, he added.
ABB Chairman Sees Chance for Smaller Deals (8:09 a.m.)
ABB Ltd. sees potential for smaller divestments and acquisitions ahead as it refines its portfolio of businesses, Chairman Peter Voser said in a Bloomberg TV interview.
The Swiss engineering company has identified units with 3 billion euros ($3.3 billion) in revenue that it plans to fix or sell. As that program continues, ABB is also expanding its reach, such as its purchase of a stake in a Chinese electric-car charging company last year. But bigger deals aren’t planned, Voser said.
“There is no talk about bigger portfolio transactions at this stage,” he said, adding that the focus of the new CEO will be on improving ABB’s operational performance and executing on the board’s strategic plan.
Fake News Is Biggest Risk: Malaysia’s Leiking (7:28 a.m.)
Malaysian Trade Minister Darell Leiking said recent indicators such as purchasing managers’ indexes suggest the economic outlook is positive.
“Continuously, we see encouraging PMI results all over the world, Malaysia as well,” Leiking said in an interview with Bloomberg TV. “We hope that some positiveness will continue throughout this year. The biggest risk for the Malaysian economy is a lot of fake news about things.”
Malaysia is unlikely to suffer any loss in its palm oil business from China, despite Beijing pledging to boost soybean purchases from the U.S. amid the trade war, Leiking added.
UBS Focused on Gaining U.S. Market Share (7:22 a.m.)
UBS Group AG Chairman Axel Weber said the Swiss bank wants to focus on its wealthy clients and expand particularly in the U.S.
“We now want to focus on efficiency in wealth management,” Weber said in a Bloomberg TV interview. “We want to maintain our No. 1 one position globally, and we want to build the market where we’re not among the top four and that is in the U.S. And really build that part.”
Negative interest rates in Europe are more a distortion than a useful tool, Weber added.
Zimbabwe Dealing With Inflation: Ncube (6:50 a.m.)
Zimbabwe is on track in dealing with inflation, even with consumer prices increasing more than 500% on an annual basis, according to Finance Minister Mthuli Ncube.
Annual inflation remains high, “but that’s expected, that happens when you liberalize a currency,” Ncube told Bloomberg TV. “We believe are on our way to deal with inflation. It will take time, but we are headed there,” Ncube said.
Wednesday Highlights
- 9:15 a.m. | U.S. President Trump breakfast with U.S. CEOs, business leaders
- 10:30 a.m. | Finance Panel with U.S. Treasury Secretary Mnuchin, UBS’s Weber, IMF’s Kristalina Georgieva
- 11:00 a.m. | Spanish Prime Minister Sanchez special address
- 11:30 a.m. | European Commission President von der Leyen special address
- 2:15 p.m. | Hong Kong Chief Executive Lam addresses WEF
- 6 p.m. | Iraqi President Barham Salih special address
- Be on the lookout for Bloomberg Television’s interviews with
- Barclays CEO Jes Staley
- Credit Suisse CEO Tidjane Thiam
- Morgan Stanley (NYSE:MS) CEO James Gorman
- French Finance Minister Bruno Le Maire
- Saudi Finance Minister Mohammed Al-Jadaan
- U.S. Secretary of Transportation Elaine Chao
- China Securities Regulatory Commission Vice Chairman Fang Xinghai
- Trump’s victory lap | Trump boasted about his handling of the U.S. economy in a speech to business and political leaders in Davos, hours before his impeachment trial started in Washington.
- Opening doors | Chinese Vice Premier Han Zheng said his country’s trade deal with the U.S. won’t hurt rival exporting nations as complaints mount from governments that were left out of the agreement.
- Vowing to stay | Hong Kong Chief Executive Officer Lam told Bloomberg she has no plans to step aside to help resolve protests that have racked the city: “I will do my utmost to stay in this position to help arrest the current situation.”
- Austerity bashing | The co-leader of Germany’s Greens sided with the U.S. in demanding more spending from Berlin, saying that Chancellor Angela Merkel should drop her balanced-budget “fetishism.”