Transcripts For CNBC Worldwide Exchange 20150121

Cnbc his company is open for business. President obama uses his state of the Union Address to call on the middle class. Asking them to workers a fair shot. Corporate leaders in davos taking a critical view on his policies. Russia does not want a cold war. He responds to obama saying his country will not be isolated by the west. They tell cnbc it remains part of the global community. We are bringing world investors into russia and russia needs to be connected to the world and the world will be a safer, and better place if it is. Turkish central bank boys for the first time in months but some say the move doesnt go far enough. Cnbc speaks to the turkish finance minister coming up here on Worldwide Exchange. A warm welcome to Worldwide Exchange. We are live at the World Economic forum here in davos. The theme this year the new global context. For a change its broad enough to encompass all the issues that inflate the global environment. A lack of trust. Geo politics. The relationship with russia. How does that change the rise in the islamic state. Problems on the economic front as far as the European Union is concerns. One of the Critical Issues is inflation too. And of course now the expectations or the anticipation is rising ahead of the European Central bank meeting tomorrow. What will mario draghi unveil . Will it be the Bond Buying Program at this point the market is expecting but mario draghi in the past has overpromised and underdelivered. The question is why do we still need stimulus six years on from the crisis . Why so much focus as far as Central Banks and their maneuvers are concerned. Well be talking about the prospect of qe. The global disinflationary environment another crucial issue but the oil price shift weve seen over the last four to six months another crucial issue. We have a great guest lineup coming up on Worldwide Exchange. Well be talking italian banks. Carlo hessina. Well be talking to the ceo of middle east, of europe and the americas for standard charters. Talking about that business too. The secretary central he cries go structural. I look at asset prices and say wheres the incentive. And also david harding. What we have seen from hedge funds has been a real struggle. What does that mean for the situation Going Forward . I did mention italy of course. Lets start there. A historic degree. Thats how the italian Prime Minister described the controversial banking reforms approved by his government. Shares in the largest cooperative banks are rallying this morning. Which obliges shareholders to become joint stock companies. I spoke to the italian Prime Minister late last night and i asked him if ial juan banks in the Banking Sector were seeing a revolution. In italy unfortunately we lost the opportunity to realize or former bank system three years ago. When crisis showed a lot of countries crew money. It was enough. It was too hard. I respect the decision but i believe if the in a good system, the first choice is about bank. I florence become an incredible city for the presence of the bank system and that created the possibility for the painters. So the banks are absolutely central but italy dont save bank. Dont create opportunities for bank. Dont bring money for the banks. The only one around europe. This is very strange because today the reaction is is the italian system is not solid and strong in the bank system. I think this is not correct but today, exactly today, we decided that in the board government and council some about popular banks. In italy there this is tradition of a system of popular banks. Very closed to International Market and from today we decided exactly that. The first time banks, very important some of our banks are forced to become Traditional Company and now they are open to International Markets and international investors. This is a very radical change in the traditional system. So article 84 jobs market. Fiscal system for the International Brand if you are International Brand you can apply the comply the compliance in relation with the physical system in italy. This is important because its very complicated and confused. So with the compliance and relation we change the approach the change of popular banks and the idea of finally if you invest in italy youre not worried about that but you have a possibility to invest. On this Tuesday Morning lets look at how european shares have been trading. We have been losing steam. Look at the stocks up 600. Which did close at a multiyear high. Right now trading flat on the day. Some traders i speak to this morning seeing a little bit of nervousness ahead of the European Central bank meeting tomorrow. The expectation is for full blown quantitative easing for a bond buying plan to be unveiled by mario draghi but theres still uncertainty on whether mario draghi will deliver the goods. In terms of equities where were seeing the gains and losses. The ftse 100 up about 35 points. We do get a read on the health of the labor market in the u. K. In about an hour. That can change that here in the u. K. Xetra dax down. It did come in better than analysts were expecting. Thats one of the reasons we saw it trade in positive territory. Italy seeing a gain of around 20 points as we were just hearing mateo renzi talking about labor reform. That helped the italian banks move to the upside. Taking a look at treasuries uncertainly over whether the ecb will be able to push through with its reform with its quantitative easing despite push back from policy makers. That resulted in system of this rotation out of equities and into treasuries. Take a look at the 10 year german trading at. 46 and as you can see how bonds in italy and japan are trading. We havent seen a big move in the yen given what the boj said earlier this morning. 10 year treasury yield in the u. S. Below 2 . Heres the move in the currency space which is so much of a focal point for investors. We saw the euro break 115 against the u. S. Dollar the first time in 11 years. In terms of putting that into perspective the euro lost about 18 against the u. S. Dollar since may of 201. But how are we trading ahead of that tomorrow . The euro is holding on to 115 strengthening against the u. S. Dollar. The big story really has been in the oil and commodity space. In fact wti crude yesterday closed down by 4. 7 hovering around its lowest level since april of 2009. Interestingly enough the u. S. Earning season kicked off and energy so far has been the weakest sector because of the significant decline in oil prices layering them on. Right now were looking at gain across the board. Wti crude trading higher by 1 . The international gauge on oil, brent crude also higher trading at 48. 67 up about 1. 4 but if you want to know where investors have been looking for safety it has been in gold. Right now at 1,299. A gain of 6 but keep in mind gold has seen a gain of 7 over the past seven days. The best sevenday run for gold since 2007 indicating a flight to safety among investors. Now of course as i have been saying ecb is the meeting everyone will be focussing on. The governing Council Member warned investors not to get too excited about the Central Banks meeting tomorrow. Speaking in vienna he played down the hype but said the meeting would be interesting. He said he didnt see deflation in the euro zone despite low inflation. Now, julia, you have been speaking to various executives as well as leaders on what to expect tomorrow. What has consensus been so far julia. Well, its interesting, isnt it . As you quite rightly said. Interesting is an interesting word to describe what were expecting from the ecb this week. You know around 50 of investors expect the ecb to disappoint. It will be interesting to see how the market reacts to this but Monetary Policy is dominating the discussion here at davos. Listen to what some guest versus been telling us this morning about what they think as far as Central Banks are concerned here. There was a question of doing it while the markets were open. It was extraordinary. I havent met one person that really understands how that was done and why it was done. Theyre going to be on the short end because its been a very drastic move and abrupt move and the businesses didnt have the time to atest to that in the short period of time. In the longer term one has to look for more efficiency and focus on the strengths of the country. The country and exports have always been driven by quality products and not by price. Its important to stay on top of the curve and continuing doing that and see where it ends up. Shortterm not very good and longterm, the strengths of switzerland is not superior. I dont know what these people do and of course the qe program is on the agenda but as we were discussing earlier also i dont know when monetary instruments are the only Instruments Europe should use for dealing with its economic issues. Right now youre gonna ask for my credit card so you can charge me on the down low two weeks later look, credit karma are you talking to websites again . This website says free credit scores. Oh. Credit karma yeah, its really free. Look, you dont even have to put in your credit card information. What . credit karma. Really free credit scores. Really. Free. Credit kari love you . Welcome back to the World Economic forum here on davos. Coming into this meeting one of the key concerns for investors is china. How do they manage the reform process . Do they find the balance between allowing further stimulus and allowing the composition of the countrys growth to change . It makes sense that theyre the keynote speakers here and were waiting to hear what they say about that reform process but the president declared a revolution on energy. How is china going to get away from the heavy use of coal and move forward and how is oil filtering into that. Im joined by the director for china energy. Lets just talk about the International Oil decline that we have seen. Theyll continue to grow as we push through 2015. Its Strategic Asset purchases that we see from china surely too. Its good for china. Theres no question about it because you can look at it. Oil price continue for one year. More than 100 billion u. S. Dollars. So theyre not going to use this opportunity to go abroad to buy oil and in other words the oil prices together was Commodity Prices was also lower. Its good for tentative reform. Its actually the idea of the energy revolution. The main idea is Energy Reforms and low oil price is actually good for Energy Reforms. Well come on to the ideas of Energy Reforms right now. Where does china cast its eye. Its not like we havent seen them acquiring assets over the last decade but if we talk about the u. S. Share boom we look at share prices right now for them and theyre really struggling. Where do you expect china to focus. Also that latin america. We present the opportunity for it to go out. You mention russia there. Weve seen two huge deals in particular. The expectation that russia can supply up to a fifth of chinas gas supplies by 2020. Its been obviously a necessity for russia to look elsewhere as far as the demand is concerned but also pretty opportunistic for china in terms of price. It is. For example it is the market at this moment. Desperation. Desperation. For china, its good that something come from russia for two reasons. One is for security reasons. Theres a border that connects both country and china has the market and russia has the resources. So its quite complimentary for russia and china. Theres good cooperation. You can see even better deals coming. You were talking about how they now move. Theyre owned by the state and heavily criticized for corruption and inefficiency right now. Its linked to what happened for International Oil prices. While oil prices are high theres no incentive to reform. Will it really . Economy grows very fast. Demand grows very fast. Its always something to do. Also happen to be low oil prices. So its two things. Its the slow down and also dont separate those two things. Right, right. Doctor, great to chat to you. Of course the director. Back to you. Wonderful interview. Thank you so much. Now president obama sets out an ambition agenda for his final two years in office telling republicans in congress to turn the page by supporting proposals aimed at helping middle class americans. In his 6th state of the Union Address the president took credit for the improving u. S. Economy. He asked lawmakers to pass programs to impose new taxes and fees on high income earners and big banks but also noted areas where democrats and republicans can Work Together such as trade and Corporate Tax reform. We accept an economy where only a few of us do spectacularly well or will we commit ourselves to an economy that generates rising incomes and chances for everyone that makes the effort. Now on Foreign Policy the president is vowing to continue his push to combine military power with strong diplomacy. He called on congress to lift the more than 50 year u. S. Trade embargo on cuba and authorize use of military force by isis. President obama also called for bipartisanship in Congress Although he took jabs at the new republican run congress. I have no more campaigns to run. I know because i won both of them. [ applause ] of course state of the Union Address a lot of americans watching what president obama had to say. If you have any thoughts on the state of the Union Address, his 6th address email us at worldwide at cnbc. Com or you can tweet us at cnbcwx and julia is also on twitter. Now lets get out to julia who is live in davos. Julia, are you keeping warm over there . Im doing my best but a hand rubbing going on right now. But wait and ask me again when we get to 10 00 london time because then it starts to get quite chilly. I spoke to the Prime Minister of italy yesterday. We talked about the banking reform that he announced yesterday. Crucial reforms that have seen the cooperative banks in italy rally some 6 or more in trading today. Its attacking the corporate government structure and hopefully going to revolutionize the Banking Sector and enable Smaller Banks to raise capital which cuts right to the heart of qe. There isnt going to be the filter through to the economy and one of the other issue is the president ial election coming up shortly. Obviously in italy as far as i can see, no one there is really talking about the prospect of mario draghi taking the presidency. I did ask whether we could rule draghi out as far as the presidency is concerned. Listen to what he had to say. I think mario draghi is a great man and the leader of ecb and in the next years hell be the leader of ecb, the president of ecb. Im now joined by the ceo of one of the two largest banks in america. Carlo, great to have you on this morning. The Prime Minister of italy said to me yesterday this is a revolution as far as the Banking Sector in italy is concerned. Do you agree . Yes its a revolution because it is looking at the market and the Banking Sector was not looking at the market with a friendly approach. Now it is open to italy. Thats a broader structure. It is also related to the ability of the government to deliver perform or something not made in the past. Its a move very important for italy. Also italian banks are still overloaded with nonperforming loans and that goes to judicial reforms. Were addressing one. It was also a reduction with a former government. In any case it is a long time. We are recreated so in order to work with them and are not interested in that structure. This goes back to the point for the ecb and you look at the largest 15 banks in italy but what about the others. It comes back to qe. You have been arguing we need qe for more than six months. What do you expect from the ecb this week . In reality were already in the qe mood. It comes from the expoint of view. They reach the evaluation of the euro which is the real target to increase real economy. So these will be the formal decision on quantitative easing and im sure they would take this decision in the next meeting. Theres a lot of questions over risk sharing. Whether we see risk sharing between the ecb and national Central Banks. The imf have both come out and said there shouldnt be risk sharing. Where do you stand on this . Absolutely. There shouldnt be a risk because otherwise you have not unity. It would be crazy. I think that it is not good idea. Why are germany continually undermining the european project. A gain here if they say we don want to only tally in risk. Why should investors only tally in risk . This is the problem, isnt it . But you have to consider the zero rate environment for the german economy. In the end, the institutional investors, the Big Insurance Company are investing in zero rate and in three years times theyll not pay pensions in this country. Its very important that we come out and we recover in all of europe because in the end all the European Councils will pay the bill. You mentioned as far as the Market Pricing is concerned be it bonds, be it the euro its already in the price, how does mario draghi beat expectations . Is it about size or pace . What can he do here given the limitations of germany . The real point is sharing the risk. If the decision was not to share the risk there would be good news for the markets and the amount would be between 500 and 600 billion euro. In the end what is important is a symbolic way of moving because now we are in the range of the euro for exchange it would be enough to speed up the economy in the euro zone. I want to ask you about greece. We have the greek elections coming up and theyre pushing for further debt write downs. How should greece be handled because doesnt this come back to politics . Greece is 3. 5 of the depth of the euro zone. If youre managing your liability side or balance sheet, you are crazy. You have to be fined. So theres no possibility they have to find a solution. So postponement or maturity or Something Like this. For 3. 5 of the european debt you can create a problem in all the euro zone economy. Because were embarrassing ourselves. Its incredible. Were growing at 0 and 1 in the euro zone and all the other countries in the world are growing 3, 4, 5 . Its incredible. It is incredible. What are the European Markets doing this morning. Interestingly enough italy is one of the bright spots when taking a look at europe on the process of further banking consolidation. Its the banks that are providing a little bit of a lift to italian stacks right now. The ftse trading higher by a quarter of a percent. The French Market with a loss of around. 15 and dax down. 19 and ftse 100 with a gain of. 5 . Where ecb president mario draghi is expected to unveil some type of Bond Buying Program. Lets get you the Details Behind u. K. Employment. U. K. Economy growing by. 7 in the First Quarter of 2015. Reading through some of the boe minutes, they remain solid in the u. K. And in the u. S. Subdued in the euro zone and slowing. Lets take a look at some of the other data. The bank of england voted unanimously to keep rates on hold in january for the First Time Since july after two policy makers dropped their call for higher rates in the face of tumbling inflation. So there you go. Some of the Details Behind the bank of england minutes. They voted 90 to hold rates in january. So this is a different view in terms of whether bank of england should raise rates. In the past they have been the two descenters. They have been calling for a 25 basis point rise in Interest Rates given the acceleration that we have seen in the u. K. Labor market. You can look at the sterlingpound trade lower against the u. S. Dollar at 1. 5082. Well get you further details again. They voted to keep rates on hold in january for the First Time Since july after those two policy makers dropped their kwaul in the face of tumbling inflation. So acceleration in the labor market but inflation is well below the central bank target. Something we have been seeing in the u. S. As well. Taking a look at how European Markets are responding the u. K. Market was a bright spot looking at europe in addition to italy seeing gains. Ftse 100 picking up a bit of steam after we got the u. K. Unemployment report. Bank of england voted to keep rates on hold 90. First time since july. The two policy makers have dropped their call for higher rates in the face of tumbling inflation. A lot of that having to do with a decline in oil prices. More market reax on that data and the vote from the mpc. Coming up after this break well be back in davos where julia will be peeking to mark wein berger. Chairman at eu. Thats coming up. Cooperative banks in italy rally around 6 after the government passes a radical overhaul of the sector paving the way for consolidation. The italian Prime Minister tells cnbc his country is now open for business. The idea of finally, if you invest in italy you are not worried about the judge, but makes it easy to invest. Within the last two minutes intresa sanpalo gives his opinion on the banking reform. It is revolutionary. Now it is open to have interest from the international investors. So i think it would be a good point for italy. And from italy to the u. S. President obama uses his state of the Union Address to make a pitch for the u. S. Middle class calling on congress to back measures to give workers a fair shot. Corporate leaders in davos take a more critical view on his policies. You have to elevate the poor by taxing the rich. That doesnt work. You can elevate the poor and just really recycle the budget and theres a lot of other things we can look at in the budget. No cold war. The foreign minister responds to obama saying his country will not be isolated by the west. This as the head of the Russian Sovereign Wealth Fund tells cnbc russia is part of the global community. Were doing an important task of bringing world practices into russia and russia needs to be connected to the world and the world will be a safer and better place if it is. President obama did set out for an ambitious agenda telling republicans to turn the page by supporting proposals aimed at helping middle class americans. In his 6th state of the Union Address the president took credit for the improving u. S. Economy. He asked lawmakers to pass programs to improve new taxes and fees on high income earners and big banks. Now president obama also applauded the Administration Efforts to temper russian aggression saying western sanctions were working to isolate the country. Were upholding the principle that bigger nations cant bully the small. By opposing russian aggression and supporting ukraines democracy and reassuring our nato allies. [ applause ] last year as we were doing the hard work of imposing sanctions along with our allies as we were reinforces our presence with the states mr. Putins aggression was a master display of strategy and strength. Thats what i heard from some folks. Today its america that stands strong and is united with our allies while russia is isolated with its economy in tatters. Geopolitical tensions and tax on the wealthy and western sanctions on russia were some of the topics that president obama addressed yesterday on washington during his state of the Union Address. But julia youre in davos where most of the Global Leaders around the world are there. Whats their reaction so far to the address by president obama. Well if we talk about domestic policy youll have to imagine theres been a fair bit of skepticism. Just listen in to what some of the Global Leaders and Decision Makers have been telling us this morning about the state of the Union Address. You have to tax you have to elevate the poor by taxing the rich. That doesnt work. You can elevate the poor and recycle the budget and theres a lot of other things we can look at in the budget. Maybe the public is ready, or a big part of the public is ready for the message that inequality is a huge problem and looking ahead to this week in davos it seems to me theres talk about inequality. This was a speech about his vision of the world. Hes not talking to the Republican Congress and if he was they werent listening but its really where should the Democratic Party go looking forward to 2016 and how do i want to be viewed in history. Well im now joined by Mark Weinberger the chairman of ernst and young. I know youre planning on hiring people and ill get back to what that says about the confidence level but about what the people you already employ . Are they likely to get pay raises this year too . Yes, we have 200,000 people around the world and were adding 65,000 this year. 63,000 last year. The median age of the employees is 28 years old and 40,000 come right out of universities. We have a young group. Theyll continue to get pay raises. Demand is great for services. Middle class economics is the way forward. Hes talking about waging the minimum wage. How do you feel about that . Its a strong speech. But the question is can the Congress Work with the president to get anything done . Can they . Its a short period. You have six months or so where they have to come together and otherwise were into 2016 election. Trade was something that can get done. Particularly the transspecific partner agreement. Huge for wages and opportunity. Lets get back to how hes going to finance that. Hes taxing them to finance the right way forward. The trade greelt would be separate. The way it was proposed its clearly a statement about the middle class. Theres not going to be a 300 beside tax increase this year. You may see them start to talk about Business Tax Reform where they might be able to come together by lowering the corporate rate getting rid of some of the loopholes they call them. Talk about that first. The confidence in the u. S. Is strong. Low inflation, low Interest Rates. Energy will stay low as a commodity price. Were looking at 3 growth or so. Demand for services across the board is high but also in emerging markets and some of the area where is the economies are more flexible. Europe is a great example. Were hiring across europe even though were seeing the slow Growth Opportunities in europe. What about qe from the central bank. Do you think the ecb needs to do qe this week and what are you expecting . Its too much to put on Mario Draghis back. Quantitative easing will be important shortterm. Its not substitute for the reforms that need to occur opening up opportunity. Things like that getting the governments working, dealing with their sovereign debt that has to come and back up qe or it wont be successful. Theres never been a better time to raise cash to invest. We saw a number of high profile corporate deals in 2014. What do you expect as far as that market is concerned . Were looking and we have done predictions. Ipo will be slower in 2014. In the m and a areas we had big blockbuster deals announced in 2014. This year were seeing more the middle market start to do some deals to try to get some growth. The volatility in the markets, the equity markets makes it hard to price the deals. As long as the volatility is high well probably see less but if it stabilizes for a little bit we see strong opportunities in the middle market. You mentioned the keyword there volatility. What we saw from the Swiss National bank last week we look at the market for investors particularly as far as the u. S. Is concerned. Theres a disconnect between what the fed is saying theyre going to do and the market thinks theyre going to do. Are Central Banks the key to volatility again . This is the first time well see a divergence of Central Banks. The u. S. And u. K. Will go backward and look at raising rates. The eu is going to go into quantitative easing big time. Japan is going to have flexible and more liberal Monetary Policy. For the first time well see major markets in the world going opposite directions and this is going to have effect on currency which is will remain volatile throughout this year if that continues. How do you adapt . You have to know and stay close to the market. You have to be nimble. You have to make sure that your investments are hedged and youre making investments and things for the longterm. When we make investments its not for the next quarter or based on the current volatility in the market. Its how we get ahead of them. If you think longer term some of the volatility you can get through. As far as europe is concerned youre investing in europe and hiring people in europe so the longer term gain there youre positive. Absolutely. Europe is going to have to come back at some point. Theres major structural problems youth unemployment, income inequality. But youre seeing germany start to come back. If china is able to stabilize and grow at the rate it is some exports will continue to occur. So we see Good Opportunity in europe largely on the export side. Just tough to not rely on mario draghi in the future. Mark weinberger. On that note back to you. Thank you so much. Interesting to hear him talk about income inequality. Interesting to see though what he will try to do to combat that issue. Now coming up of course a flurry of different managers and thought provoking leaders from around the world will be joining us. Kasper rorsted live after this break and turkey will be a focal point for us as well. The finance minister is coming up as well. Welcome back to this special edition of Worldwide Exchange. Turkey continues to be a focal point for investors. The Central Bank Cut its benchmark Interest Rate by 50 basis points for 7. 75 for the first time in six months following intense political pressure but the announcement was swiftly condemned by turkeys government demanding even further cuts. Shortly after the move the relief at the bank had not yielded to political pressure with a deeper reduction. I will be speaking to turkeys finance minister. Thats a first on cnbc interview this morning. Be sure to watch for that. The bank of japan slashed its inflation outlook for fiscal 2015 today citing downward pressure from falling oil prices. Something countries around the world have been dealing with. We have more details live from tokyo. Yes the central bank concluded its two day policy Board Meeting today and cut its Consumer Price inflation outlook from 1. 7 to just 1 . The largest factor was the recent plunge in oil price which is the bank said would prevent Consumer Prices from rising and some market watchers expected additional easing pressures but the bank kept its policy unchanged saying the japanese economy continued on its moderate recovery trend. Its a step back from the original goal of a 2 price increase in 2015 and the governor admitted at a press conference this afternoon it may take longer than planned to achieve the target but also stressed that employment and wages are improving and that in the long run Lower Oil Prices will generate the economy including japan. Thats all from the nikkei. Back to you. What keeps you awake when you look at the issues ahead in 2015. We have been asking our guests all morning what is their top pick of our 5 in 15 issues. Listen to what some of our guests have been telling us this morning. It effects all parts of the business and finding our way through is challenging and exciting year and would be very important but its going to be very exciting. The technology is going to be a big game for us and its not going to play itself out. But over this year were going to see significant steps to make sure that the Business Model were used to in the past that is going to get disrupted. One of the main issues i think, well for the Global Growth economy is this question of risk is creating more nationalism and its creating some protectionism as well so i would say medium term nationalism. Well im now joined by the ceo. Thank you so much for joining us. You said that we need to expect greater volatility. Explain what you mean and what youre expecting. Youve seen big differences in oil price and big differences in currency and you have the russian situation that has deteriorated and will impact the overall european economy. Its not all bad news but its a mixed picture of what is good and bad in the Global Economy and double digit Quarterly Results as far as china. So maybe youre not seeing a decline as far as russia is concerned from that country but youre seeing spill over effects into eastern europe. What do you think as a result of the sanctions and the impact were having . Should we be reassessing how stringent we are as far as the sanctions are concerned in your view . From an economy standpoint were also starting to see the russian chuy sis in western europe. We could be very concerned this could last for a long time and could bring europe back into recession. In the shortterm of the weakening of the euro. I know youre seeing the strongest growth in europe it was backed up earlier this week but without the growth from the rest of the eurozone germany is still wanting to struggle. What are you expecting . Thats a good sign but not only money missing but flexibility and reforms and money will sort out one thing but without flexibility and reforms in the European Market we will not see a return of growth in europe and while we are optimistic about germany i want to put into context to china, china is growing about four to five times stronger than germany and ten times the rate of the european zone so theres a huge difference up to the head of the pack. Its interesting. Theres so much concern about china. How they manage the reform process and manage the balance between stimulating the economy and not creating the euphoria in 2009 but its not impacting your numbers at all. We had very strong double digit Growth Numbers in the first three quarters in china this year or the past year. But i have been here for many years. Every year i hear about the decline of china. China is still growing at 7 . Theres few countries in the world that grow at 7 . U. S. Which im a big fan of is growing at 2. 5 to 3 points. So china is still the growth rate of the world. What are you seeing and expething this year and how is the strongest dollar impacting weaker euro stronger Dollar Exchange rate impacting what youre seeing this year. I think low unemployment low energy price, strong dem demographics. We expect a Strong Economy and were very bullish on the u. S. Divergent policy likely to be an issue. Do you expect the fed to raise rates and do you worry that could have an impact . With the latest changes i think the rates in the u. S. Will take longer than originally anticipated. You were talking about Monetary Policy as far as europe is concerned too. Germany obviously limiting to some degree the effect that Monetary Policy can have just by putting conditions on it. Would you agree that as much as Structural Reforms are a limitation so is germany in sticking a block as far as the effectiveness of Monetary Policy is concerned . I dont quite agree i have to say but i very much agree and that goes for all European Countries including germany that the progress has Structural Reforms has been nowhere. It will make europe more competitive in the future and to me thats the hampering point for growth in europe. Its all about going structural. Its all about going structural. I look at asset prices particularly in europe and bond price where is they are, where the euro is. Is draghi fuelling complacency here . I dont think he is. Thats why i mentioned russia up front. Im concerned russia will drag europe down. Hes doing what he can on the monetary side. We were asking earlier today what is keeping you awake . What are your biggest concerns for 2015. What are they . Russia. Is that the real one . Not russia alone but because of the impact of the european economy for russia. Theres so many good news around the rest of the world. With strong u. S. Economy was solid, china. Its by far the biggest for me. Thats interesting, isnt it . The question is whether the low oil prices the economic decline makes the situation worse as far as nationalism is concerned. Great to chat with you. Well be talking more about russia. We have him later on in the show and well talk to him about this. A lot of focus on turkey and the central bank policy. Well be talking to the finance minister right after the break. Stay with us. Were back in two. [ male announcer ] meet jill. She thought shed feel better after seeing her doctor. And she might have if not for kari, the identity thief who stole jills Social Security number to open credit cards destroying jills credit and her dream of retirement. Every year, millions of americans just like you learn that a little personal information in the wrong hands could wreak havoc on your life. This is Identity Theft. And no one helps stop it better than lifelock. Lifelock offers the most comprehensive Identity Theft protection available. 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You have so much to protect and nothing to lose when you call lifelock right now and try 60 days of Identity Theft protection risk free. 60 days risk free. Use promo code onguard. Order now and get this document shredder to keep sensitive documents out of the wrong hands. A 29 value free. Call the number on your screen or go to lifelock. Com onguard to try 60 days of lifelock Identity Theft protection risk free and get a document shredder free. Call the number on your screen right now. Welcome to the special edition of Worldwide Exchange with live coverage from davos. Here are your headlines around the world. Cooperative banks in italy rally around 6 after the government patsz passes a overhaul of the sector. The Prime Minister tells cnbc his country is now open for business. The idea of finally, if you invest in italy you are not worried about the judge or theres the possibility to invest. President obama uses his state of the union to make a pitch for the middle class calling on congress to give workers a fair shot. So the verdict is clear. Middle class economics works. Expanding opportunity works and these policies will continue to work as long as politics dont get in the way. Turkey central bank boys to pressure with the first rate cut in six months but some members of the administration say the move doesnt go far enough. Cnbc speaks to the finance minister in a few minutes coming up live from davos and profits on demand. Netflix with Fourth Quarter results as the Company Signs up millions of new customers and lays out grand Global Expansion plans. World leaders are converging in davos, switzerland and julia is on the ground speaking to leaders and executives as well. There was an interesting survey that came out yesterday. The annual survey shows that 37 think the economy will improve in 2015. Thats down from 44 last year. Do you sense from your conversation that Business Leaders are not as confidence about the Global Economy and if so what is their main reason . Its interesting. We have come off a week where the world bank and imf all downgraded their growth estimates as far as the Global Economy is concerned. Theres still a number of bright spots. Were hearing people talk about africa, like indonesia, like india so theres bright spots. I cant move further without talking about the u. S. Economy. We heard from obama with his state of the Union Address but thats not to say theres not real concerns here. Whether its nationalism and pop you populism in europe. Theres huge concerns. Another one, russia theres many concerns here but theres also reasons to be optimistic. Its a great time i think to bring leaders together and debate some of the huge issues going on right now. Whether its conflict. Whether its growth. A number of things impacting investors right now. Italy continues to be a focal point for investors. A historic decree if you will. This is how italian Prime Minister matteo renzi described the reforms shared by the government. Shares soared this week in anticipation of the measures which changed shareholder voting rules and obliged them to become joint stock companies. This could lead to banking consolidation and your conversation addressed that. And i asked him also how concerned he is about this idea of risk sharing between the ecb and the national Central Banks. Listen to what he had to say on that point. Institutional investors, the big insurance countries are investing in the rate and in three years time they will not pay pensions in this country. Its very important that we come out and in the end all of the European Councils will pay the bill of not having recovery in the euro zone. Well im not pleased to say im joined by the secretary general of the oecd. Thank you for joining us this morning. We were just talking about the limitations perhaps to the qe set to be announced by the ecb this week. You recently said the limits as far as Monetary Policy is concerned. Can ecb qe help . Of course it can help. They can just get on with it and we should not be talking so much about the limitations. Well see what the limits are. You know . Well see how far they can get. Lets do it. Come on limitations can be huge. If we see risk sharing between the ecb and National Central bank. The limitations of the ecb are greater than those of the fed. You mean the german limitations. Or the British Central Bank or Japanese Central bank. There are limitations but still lets see how far they can go and then dont forget Central Banks can only do so much. Its the governments that have to do education, innovation competition, plex blt in the labor markets. Flexibility in the product markets. They are the ones that have to deal with the tax structure so its more conducive to do business and create jobs. Theyre the ones that have to do more in research and development. Its the governments, the governments, the governments. The Central Banks gain time. They hold a fort okay . They can atinuate the volatility. Theyre not going to go for the median and longterm. Youre arguing that they need to go structural and more structural more deep but then i look at asset prices. The ecb is already in action. The euro is down spreads right now negative in many countries at the front end of the curve. Wheres the incentive to go structural when that kind of asset price its the only game in town. We practically ran out of room on the Monetary Policy side. The ecb is the last actor to join in on the qe. Everybody else is coming out of the other door because they tried it and did it and theyre leaving it to some of us. The question is why is it the only game in town. Simply, Interest Rates, 0. And then you say okay lets go fiscal. Lets spend our way out of this. Well we did that. Already. And we have increased 30 to 40 basis points 30 to 40 debt to gdp ratios. So were more vulnerable than we have ever been. So the only game in town the only shortterm is the longterm issues of structural change. So we go structural. We go institutional and lets go social also. Remember theres a lot of victims or a lot of Vulnerable People because of the crisis. Theres still very high levels of unemployment. Inequalities are still growing and theres a massive loss of trust which we have to regain. You talked also about the limitations of Monetary Policy as we see it. Look at what the snb did last week. Is that the limitation in action right now of the Central Banks and what they can do here . What do you think of what they did . Well frankly, you never announce that youre going to invade a country or declare war. You never announce the day before that youre going to deval or unhinge any currency to any other currency. They did effectively probably the only thing they could do. It was building up over time. They had reserves in euros up almost equal to their gdp. Clearly unsustainable. Parts used to be distributed and it wasnt happening anymore so they were very swiss reasons why that was no longer sustainable but you dont announce youre going to unhinge the swiss franc the day before because everybody goes against it. You create more turbulence you recently commented that theres no end in site as far as the crisis in russia is concerned. We have falling oil prices. The economic concern in that country. What impact does that have as far as russian funds and policies are concerned this year. Is it going to deteriorate because of the issues. I dont think theres no end in sight for any problem or any crisis anywhere in the world. Theres always an end in sight and you can always do something about it. However in the case of russia these two first of all, there is whatever its called a circular need for big large investment chunks in order to upgrade their infrastructure. It was already there before the drop in the prices of oil and before the sanctions and now you have the sanctions and the price of oil which are both effecting the country at the same time so we see flat growth and its not flowing in because of the restrictions and the caution of investors. So for some time theres going to be stress. Does the Foreign Policy deteriorate because of it . Well the problem is clearly the countries in the west are dedicated to the sanctions because of the very serious implications in the ground in the case of ukraine. So what you see are the consequences of that. But what was not in the cards was the drop in the price of oil. That effects every single exporter of oil but that has added to accelerated a process. Theyre not going to be accumulated at the same speed and their balance of payments can be under stress because of the oil drop period regardless of the situation that was building up. Thank you for talking to us. A number of points of concern about russia but also as far as the ecb and their qe is concerned, get on with it is the message here. Lets see if mario draghi is listening. Lets get you up to speed on where markets are trading right now. U. S. Futures trading lower across the board this after stocks did manage to close mostly positive yesterday. The dow was down as many as 164 points at the lows of the session but finish flat on the day. Interestingly enough Consumer Staples, the sectors hit a new all time high. In fact the consumer stables the only group to hit a 5 week high so far in 2015 but i want to draw your attention to whats taking place in european equities right now because we were firmly in the green this morning but since then stock versus moved lower. Xetra dax down 41 points. The ftse mib was higher an hour ago but it too is trading in negative territory. Down. 2 . The u. K. Market is a bright spot after unemployment fell to 5. 8 . Inflation also falling significantly. Thats why the mpc voted 90 for boe rate action. Now the euro is Holding Steady at 115. Lets recap whats taking place in the euro so far. It did break the threshold last week on the commentary coming from various policy makers as well as mario draghi. Will there be a Bond Buying Program . Thats what the market is anticipating but still a little bit of nervousness. Thats when well hear from mario draghi. That continues to be the story. Significant losses looking at the oil story. Wti crude losing about 5 . Today at this point in the morning were looking at gains across the board. The wti crude trading up 1 . Brent crude up 1. 4 . The big story has been the rally we have been seeing in shares of gold. Is that indicating that investors are looking for a safe haven during the times of rising volatility. Spot gold now trading at 1,300 an ounce. A gain of around. 6 . Now back to julia. I will ask you julia to ask some of the various leaders about what their thoughts are on gold in that rally because clearly gold so far has been one of the underperformers when you look at the twoyear performance by this interesting rally over the last one week something to talk about, i guess. Absolutely but gold is one of the key outperformers. Well be talking all about oil. What does it mean for the demand outlook for Global Demand right now. We saw the oil price pool. Well be talking opec and china. Were talking oil after the break. Stay with us were back in two. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back. President obama appeals to the middleclass in the state of the Union Address. Netflix jumping an after hours trade on Solid Earnings as the company eyes Global Expansion. Italian banks rally as the government pushes through bold reform. Matteo renzi says his company is now open for business. Crisis or opportunity what does the plunging oil price mean for corporates and the border Global Markets. Listen in to what some of the guests have been telling us this morning morning. Prices are low. Certain countries like brazil india, depending on the pricing. Prices are low. Currencies are weak. It provides good investment opportunity. This is a big opportunity. The prices goes down dramatically which should help our competitiveness. We provided some of the Tax Exemptions from companies to explore oil and siberia and forest. We also thought about financing including opportunist for those companies. Some products should be on hold. Lets broaden this out now. Dan when the world bank downgraded their growth estimates we saw an instant reaction and theres a question here about Global Demand and thats also an issue for the saudis isnt it . They talked about this . Exactly. People are focussing on the growth of supply but starting last august you saw the World Economy weakening and you see these recent numbers from china telling you weakening and that means weakening demand and when the king gave his statement about a week or so ago and he said the number one reason for this oil crisis is weakness in Global Demand so thats on the minds of anybody that wants to be a longterm oil producer. You just got back from china. What was your sense of being there too. Lead to construction and infrastructure. You can feel the slow down and you can see it and the fact that the oil demand is so constructive and thats where the weakness is coming from and particularly toward the last part of 2014. It eliminates the subsidies but raises prices at home. So thats another knock on effect here isnt it . Exactly. Many countries are take the opportunity to eliminate the subsidies which are such a big drain on their budget. But thats going to effect the demand growth. When you look at this on a global basis you dont see a lot of places where youll see demand coming back. Europe is so much of the prices is taxed. Europe youll see the bump. We keep talking about the stim you louse effects and in europe in particular. But youre saying here look the tax situation in europe negates a lot of that. In the u. S. The money goes into the pocket of consumers and into the cash registers. In europe it goes into the government treasury. They need it dont they . Lets flip it on to the saudi side in particular too. We talk a lot about the top down Leadership Structure but if we look at the two most powerful men in the country. I just wonder whether were waiting for information praps from the wrong people and we have to see a change or at least an improvement in the health of leaders there before we see a decision. Decisions are made by consensus and it didnt happen overnight and as the other producers were saying we have to cut again in march because more of that oil will come into the market. So what they really wanted to do is temper demand and temper supply and stimulate demand. One very quick question for you. The bombings that we saw last year, we can name a whole host of geo political issue. Why in this period did we not see oil price those geo politics. Its amazing now as you say that its not in the price of oil. Theres a surplus around the world but theres a bigger surplus in oil. How low can it go. Well hand back to you. Thank you so much. Interestingly enough we are looking at oil trading slightly high yaer higher on the day. Trading at a multiyear low. What does this all mean for u. S. Futures . Right now arrows pointing to a mixed open. The dow indicating a lower open buy around 4 points. S p 500 higher. And nasdaq up 1. 5 points. The dow was done as much as 164 points at the lows of the session but finished flat on the day. More investors betting on the consumer. The s p Consumer Staples set a new all time high. What does this all mean for European Markets ahead of the ecb meeting . What could be potentially history in the making if he unveils a program which could include bond buying as well. Holding on to a gain around. 7 . Its a bright spot because of the better than expected jobs data that came out about a half hour ago. Falling to 5. 8 . The lowest since june of 2008 so they voted 90 because of lower inflation coming well below the Central Bank Market in november it was at 1 so holding on to gains of 7. 1 . Reducing in the sector over the next six months it also reported its iron ore output jumped 16 while the selling price fell over 27 on that period. Now theyre also scaling back u. S. Shale production as part of a plan to cut spending this year in an interview with the Financial Times. The ceo of the french oil and gas group said there would be cuts in the u. K. s north sea. Canadian oil sands and some of its african developments. Lets look at how shares are trading down about a half a per percent but its down about 14 over the past six months. Now back out to julia who is live in davos. Who do you have coming next . Were going to continue the story here talking about energy now. Im joined by peter. Hes the ceo of rwe. Thank you for speaking to us today. Peter you were saying look our business is at a stand still. The Energy Policy in europe is a total mess. We dont know how to invest. We dont have the money to invest. The situation is pretty desperate and i hear an announcement this morning that youre talking about shutting down gas fired power plants and shipping them abroad. This is the most extreme policy we have seen from your company so far. Talk to me about it right now. Its Common Market sense. At this point in time all of them are at a stand still. And a very weird situation is that germany is going to Close Nuclear power plants. And well need them at the end of the decade. As long as theres no market frame work to insure the supply for the power plants i cant let them standing still and not making any money. Many ceos are concerned that the Energy Policy right now in europe is broken down into the individual countries. How do we change . In brussels when i go speak to european leaders its always on the agenda and nothing seems to change. I think in my opinion, im more optimistic. I think since the last two years a group of industries, the Largest Companies in europe has been enjoying them for transmitting the situation of any sector in europe and the risk for europe in terms of supply. So we have been ready, anything can be put on. Were paying taxes, charges, obligations and today almost three times the statewide. Not because we have no shale gas. Not because theyre more expensive but just because we are putting charges and taxes, the americans have not made. But the risk of that one is the whole surprise in europe is down and their rates is going up. So we are not guilty for that and i think we are concerned that we are not changing the trend. Europe as my colleague is saying in the next few years can already solve some problems of supply and we as responsible companies are trying to do our best to transmit to all people concerned about the conversation. And optimistic because certain of our message has been listened by the european leaders. So its created a presence for the European Union. Has really nominated a new commissioner which i think the first interview in the Financial Times is absolutely aware. So he would like to move in trying to make the things in a different manner. So i think we take and say our comment has been listened and there are action plans for changing it. Peter, your comment on that. Yes, its a very weird situation. We dont get any money for our power and the consumer is paying too much. How come . Theres a delta in between and i think we have all problems on the table. The European Commission but also the governments are very well aware of the problems. We are joint only to look for solutions and they can be in Market Designs and be a capacity market and european trade scheme. I think we set tough targets there in order for us to have a planable reduction of co2. We can get into a real Bright Future for security of supply. Thats what we need. Were not only an industry on its own. If this isnt going to work anymore all of the other value added industries will not be able to operate in europe. Can i ask you about russia because theyre one of your key trade partners too. You were able to negotiate compensation because your contracts are linked to the oil prices right now. What are your expectations as far as oil is concerned this year and b how is that going to filter in as far as russia is concerned with the contracts again. Lets start with the first one. I dont see oil coming up very quickly. Not sure how long its going to last. Its about 12 or 18 months at least. Theres a lot of oil at the moment so that will take some time. Its something which will have a Lasting Impact on things like inflation or deflation and on industrial development. Well i think ive seen that in a positive way. We are commenting in europe certain things around implementation so theyre already a target for mission trading and mission reduction. So is there time to use these lower cost of oil and gas for introducing it . So co2 for carbon emission to make already the reserve system already working and to use already the ats already put in place. Do you know what you just both collectively mentioned a few keywords there. Concerns about growth but also more broadly as far as europe is concerned versus the rest of the world. What do you expect from mario draghi and are you calling on him to come in size to at least get the economy. He should look for structural improvement. Thats not his job. But he can disrupt it. So youre saying that hes making the market complacent with his market economy. Im not saying anything. You were hinting. He should look at the longterm impact of all he is doing. You cannot leverage up to a certain extent without consequence for the future. Its a good job that europe isnt a company then given the leverage situation there. Your views on what draghi should be doing here. We have been already for so long in a crisis in europe. So something have to be done for changing it. He is trying to change themes. We have the example of spain. Two years ago here so they already consider us a disaster in terms of our economy. Its been implemented and as a consequence of the reform the country is growing more. So the European Central bank is the same thing. They have to do anything but not stand by. So do things and theyre moving. Great to chat to you. K and peter the ceo of rwe. Strong comment there is as far as mario draghi is concerned. We have to take a quick break but afterwards well be speaking to you. V. Shankar. Plenty of comments. What does he think about qe . What are his views on the middle east . Stay with us. Plenty more to come after the break from here in davos. Were back in 2. Uh, and i know my iq. Okay. Uh, and i knowuhi know what blood type i have. Oh, wow uh huh, yeah. I dont know my credit score. You dont know your credit score . I dont know my credit score. Thats really important. I mean i dont know my credit score. Dont you want to buy a house. Like, ever . You should probably check out credit karma, its free. Credit . Karma . Free . So, thats. How much . Thats how much its free. Credit karma really free credit scores. No credit card needed. Welcome to Worldwide Exchange live from davos. Thats right. It is 11 30 in davos, 5 30 in new york. Welcome to Worldwide Exchange. Here are your headlines. President obama uses his state of the Union Address to make a pitch for the u. S. Middle class calling on congress to back measures to give workers a fair shot. So the verdict is clear, middle class economics works. Expanding opportunity works, and these policies will continue to work as long as politics dont get in the way. Cooperative banks in italy rally around 6 after the government passes a radical overhaul of the sector paving the way for consolidation. The italian Prime Minister matteo renzi tells cnbc his country is open for business. The idea of finally if you invest in italy youre not worried about the judge but you have the possibility to invest. The countdown to the ecb meeting is on and the prospect of qe also a hot topic for leaders here in davos. Speaking to me just 30 minutes ago its a last resort. Its the only game in town. We practically ran out of room on the Monetary Policy side. The ecb is the last actor to join in on the qe. And a stock on the move. Profits on demand for netflix beating the street with its 4th Quarter Results as the Company Signs up millions of new customers and lays out grand Global Expansion plan. Welcome everyone. Heres a look at how u. S. Futures are fairing. This after stock closed mostly positive on monday. The Consumer Staples sector hitting an all time high. The only group to hit a new 52 week high so far in 2015. The dow indicating a lower open. S p 500 up about 1 point. The nasdaq with a gain of one point as well. Lets switch focus to european equities. So volatile session so far. Some nervousness ahead of tomorrows all important European Central bank decision. Still a lot of uncertainty around what exactly mario draghi, the ecb president will unveil. Will it be a Bond Buying Program . Thats the announcement the market is expecting tomorrow. Lets take a look at the other top stories this hour as well. President obama sets out an ambitious agenda telling republicans in congress to turn the page by supporting proposals aimed at helping middle class americans. Now in his 6th state of the union the president took credit for the improving u. S. Economy. He asked lawmakers to impose new taxes and fees on high income earners and big banks. Now president obama also applauded the administrations efforts to temper russian aggression saying western sanctions were working to isolate the country. Listen in. Were upholding the principle that bigger nations cant bully the small by opposing russian aggression and supporting ukraines democracy and reassuring our nato allies. [ applause ] last year as we were doing the heart work of imposing sanctions along with our allies as we were reinforcing our presence with the front line states mr. Putins aggression, it was suggested was a masterful display of strategy and strength. Thats what i heard from some folks. Well today it is america that stands strong and united with our allies while russia is isolated with its economy in tatters. Now heres where it gets interesting. Russian foreign minister responded to the president s comments in the last hour saying the west will not isolate russia. Speaking at his annual News Conference in Moscow Russia does not want a new cold war and called on the u. S. To return to mutual cooperation. Now we know julia russia has been a hot topic in davos. Tell us what various leaders have been telling you. The European Bank said growth would fall for 5 for russia. Is there a no go or still opportunities there. Listen to what they had to say. Theres no doubt we also stand to see the russian crisis in western europe. Theres no resolution. We should be concerned this could last for a long time and could bring europe back into recession. We are doing the important task of bringing world practices into russia world investors into russia and russia needs to be connected to the world and the world will be a safer and better place if it is. What was not in the cards was the drop in the price of oil. That doesnt effect only russia. It effects every exporter of oil but that has added, i would say accelerated a process. They had 500 billion in reserves and they have been losing but that means theyre not going to be accumulating simply because of the oil drop period. Now i want to pick up on the oil part of that equation as far as the russian economy is concerned with the ceo for europe the middle east and youre very well connected in the middle east. Give us a sense of how people are viewing the Current Situation in the oil price declined that we have seen. Clearly winners and losers in this. People that produce oil are losers consumers, china, india, korea, japan are winners. Individuals that use gas for their automobiles are winners but its a lit more mixed han that. If you look at Even Airlines that should be obvious winners in this and an airline would probably save close to about 3 billion this year in fuel costs but other airlines hitched the fuel costs so they wont get to benefit. Take a country like india, last year it was about 150 billion and you can do the math they would save probably 70 to 75 billion. And the other side of it is that if you take the top 30 sovereign belt funds in the world half of them are from Oil Producing nations. To the extent oil prices are falling a major source of fdi flows is going to suffer. Its confusing. Its confusing to workout just where the flows in particular will be retracted as far as petro dollars are concerned but i want to talk about the supply side. Theres been vocal criticism within the saudi royal family now about the policy as far as supplies are concerned but we know theres a top down structure. I wonder if were looking for the wrong man to wait for a shift in policy as far as the saudis are concerned. Ke with look at it that way . I dont think you can. The strategy is one of let the market dictate the price. Were a low cost producer. We have enough financial wherewithal. Reserves are somewhere between 700 to 900 billion. We can take the pain for a few years. Lets shake off new producers such as shale, particularly the higher cost ones or deep off short drilling. Oil at the end of the day is a slow growth industry. If you take Oil Consumption its grown at 1. 3 . The annual crease and consumption is about 1 Million Barrels a day. If you take the u. S. Production its gone up by almost 4 Million Barrels a day. Theres a huge amount of supply coming in. The demand is slow growing demand so i think the saudi strategy is quite right. Thats interesting and they were saying we can see oil at 25 barrel. I want to talk to you about standard charters business. Its a transitional time for the business. Stripping out the equity trading business is the latest one. The share price of the stock is a 30 discount right now to book value. A number of brokers are odds on now to see peter sans leave. Do you need a perspective as far as the leadership at the bank is concerned . First of all we are executing on our refresh strategy. We believe we are well positioned in asiaafrica at least. We have a very diversified business as far as products and clients. We are strong as an institution. The board has affirmed its confidence in us as well as our chairman. We are executing on a strategy. We will be taking out 400 million of cost which well reinvest into the business in 2015 and the equities business that you mentioned is part of our 2016 cost cut. So very quickly peter sans is going nowhere. He is here for good. Great to chat to you. The ceo of europe and the middle east africa and the americas. We have to take a break, afterwards ill be speaking to david harding. Hes the ceo and chairman of winton capital management. Well be talking about the hedge funds and different approach and what weve seen as far as the performance. What is their future and what are they expecting as far as performance goes. Stay with us. Plenty more discussion coming from davos. Thanks to that better than expected jobs report were lower across the board. Italy seeing a little bit of green. Of course some nervousness on the street ahead of tomorrows all important European Central bank meeting. What does this all mean for u. S. Futures . Energy earnings dented optimism over the last couple of days. The dow with a higher open up about 6 points. Julia, i know you have a special guest coming up. Yeah i do. But before that we have been really focussing on Monetary Policy. This morning the countdown is on but one of the crucial questions this morning is will the ecb deliver . Listen to what some of our guests this morning have been saying about that prospect. Its the only game in town. We practically ran out of room on the Monetary Policy side. The ecb is the last actor to join in on the qe. I think that would be a very good sign but its only reforms. But without flexibility and reforms we can see a return of growth in europe and ten times the rate. So theres a huge difference up to, you know ahead of the pack. In reality we are already in that mood because from that point of view they started because from the announcement they reached an evaluation on the euro that its the real target. So these will be the formal decision of quantitative easing and im sure that they will take this position in the next meeting. Now im joined by our next guest. Its david harding. Fantastic to have you on. Stark difference in performance over the last 12 months between the hedge fund or traditional Hedge Fund Industry and what we have seen as far as the managed future is concerned. Given the debate the volatility, the noise about whats going on is there an advantage here to not having to predict where markets are going . Well, some of the commentary had some headlines in like, you know, the ruble with human traders last year. So on and so forth. The idea of course we in our business dont really feel like that actually. The impression is always given the computer is doing the trading. Its helpful in a preresearched program of trading but last year our sort of trading is based upon a preresearch program. We dont take views on economies. Were agnostic about things. We bet on more abstract things such as theres always been trends in the past and there will be trends in the future. Last year there were lots of trends actually so we benefitted. A lot of volatility and where as some peel might have been second guessing as you said a preprepared program allowed you to benefit in some way. I know you dont believe in the idea of a paradigm shift that government policy created an environment that makes your industry more difficult does this squash it. I dont think anything will. When we havent made money for a bit everyone says its dying and dead. People prefer relating to stories about the world and economies which proport to say whats going to happen. People can identify. Their instinct is to believe and bet on that. A Crucial Point is what happened to the swiss last week. Can i ask you if you actually long swiss yes its gone sideways for three years but actually its been in an up trend for a long time. Rather a shame to admit we were shortly actually. Why . Well we down rated euro swiss when the two things pegged together. We said theres a big changed in the volatility so we modified our program and we made a modification. We were short against the dollar. On the day we were down. 1 of 1 . Thats because we made money in all the other markets that made up for the losses. Very interesting that you adapt your program for Something Like a g5 peg that would make you question. You were very diversified. In some ways sophisticated enough to handle the risk but weve also seen a number of brokers and Retail Investors get wiped out by this. What are your thoughts if we look at the leverages they were allowing them to run. You know im not totally against Financial Markets as an investment industry. Im not totally against it. I dont do it myself. I dont gamble in Financial Markets myself for entertainment and i dont gamble in casinos. But they are. I wouldnt ban them from doing so. Certainly theyre not allowed to do that sort of thing and the regulators need to make very certain that where Public Policy are concerned that people are protected. Public regulators arent always on the ball. They could be theyre not sending a message. They need to keep alive because the more loef raj, the more money you make and people start to say they did very well. So we made a lot less money because of less rev raj and some people say why didnt you do better . We werent leveraged. Wee wont take a loss of leverage these days. Fantastic to get your perspectives. David harding the chairman and ceo of winton capital management. Well be back tomorrow with plenty more exciting guests here from davos. Great stuff as always. Thank you so much. Same time. Same place. Worldwide Exchange Special edition coming up tomorrow with live coverage from davos. Thank you for watching and the special coverage continues with squawk box. Good morning and welcome to davos 2015. The most powerful names in business and government are gathering for the World Economic forum and were bringing you a front row seat. We have etna aig, at t airasia, blackrock, dow chemical and snp. More than 2400 miles from here president obama calls on congress to lift the middle class. Plus the world Central Banks on center stage one day before the ecb gathers for the most anticipated meeting in recent memory. The bank of japan announcing its keeping its massive Monetary Policy stimulus in place. Its wednesday, january 21st 2015 and squawk box begins right now. Good morning everybody. Welcome to squawk box here on cnbc. Were live from the World Economic forum in davos switzerland. Were spending the week in the beautiful swiss alps in the tiny town of davos flooded with more than 40 heads of state and government and 2500 other Business Leaders and investors. Why do they want to come here . To talk about each other. Macro issues to generate investment ideas and make connections and deals. We all alived yesterday and we have been getting