UniCredit SpA Chief Executive Officer Andrea Orcel joined the chorus of cautious optimism among the global elite in Davos, saying Europe may see slightly positive growth this year even as risks remain including the war in Ukraine and rising borrowing costs.
(Bloomberg) — UniCredit SpA Chief Executive Officer Andrea Orcel joined the chorus of cautious optimism among the global elite in Davos, saying Europe may see slightly positive growth this year even as risks remain including the war in Ukraine and rising borrowing costs.
Meanwhile, Elon Musk mixed things up by asking users of his Twitter platform to vote on whether the World Economic Forum should control the world.
Highlights from the penultimate day of the World Economic Forum include an address by South Korean President Yoon Suk Yeol at 11:30 a.m. CET and a panel on “Finding Europe’s New Growth” with Christine Lagarde. The European Central Bank president will be joined at 11 a.m. by Deutsche Bank CEO Christian Sewing, Netherlands Prime Minister Mark Rutte and European Commission Vice President Valdis Dombrovskis. Greek Prime Minister Kyriakos Mitsotakis takes part in a Q&A at 3 p.m.
Stay tuned to Bloomberg TV for exclusive interviews on Thursday with SNB Chief Thomas Jordan, Carlyle Group Co-Founder David Rubenstein, Morgan Stanley CEO James Gorman, Bank of America CEO Brian Moynihan and UK Business Secretary Grant Shapps, among many others.
Key Developments
- ECB’s Knot Sees ‘Multiple’ Half-Point Rate Hikes to Tame Prices
- Goldman’s Gnodde Says Firm to Hire Selectively After Job Cuts
- UniCredit CEO Orcel Sees Higher Shareholder Returns on Tailwinds
- US Debt-Crisis Worries Sour Davos Optimism on Global Economy
- European Executives Eye US Climate Plan With Envy in Davos
(All times CET)
UK Warns of ‘Dangerous’ US Subsidies (10:10 a.m.)
President Joe Biden’s multi-billion dollar green subsidy program is “dangerous,” Britain’s business secretary said on a panel at Davos. Grant Shapps said the Inflation Reduction Act “at the edges is dangerous because it could slip into protectionism.”
Shapps said countries have learned from both the pandemic and Russia’s invasion of Ukraine that “you’ve got to be self-reliant,” but leaders also need to ensure they keep “the world as open as possible.” On the IRA, he said “it is protectionism, whether it is intentional protectionism or not is the debate.”
The raft of US subsidies on everything from green-energy manufacturing to microchips has infuriated Brussels, as European businesses threaten to shift production to America. The EU is preparing a response that could include watering down state-aid rules.
Musk Poll Doesn’t Look Good for Davos (9:45 a.m.)
Musk, who’s not a fan of Davos, posted a poll on Twitter asking whether the WEF should “control the world.”
Unsurprisingly, users of the social media platform, which Musk owns, weren’t in favor of the proposal. With more than 2 million responses, 86% voted “no.”
Deal on EU Fiscal Rules ‘Very Challenging’ (9:15 a.m.)
Paolo Gentiloni, the European Union’s economy commissioner, said it will be “very challenging” for the 27 member states to reach an agreement by March on the review of the bloc’s fiscal rules.
Still, he said that the controversial reform of the bloc’s deficit and debt thresholds is being tackled with a “shared awareness of the fact that we need more flexible rules and more enforceable rules,” he told Bloomberg TV. EU governments disagree over how far the Stability and Growth Pact should be watered down to allow for more spending — fueled by debt — to support growth.
Knot Sees ‘Multiple’ Half-Point Hikes (8:50 a.m.)
European Central Bank Governing Council member Klaas Knot said there’ll be more than one half-point increase in interest rates, with the inflation situation still “not satisfactory.”
Investors, who’ve softened bets on monetary tightening, may be underestimating the ECB’s commitment to tame prices, the hawkish Dutch central bank chief told CNBC from Davos, adding that policy makers are focused currently on the risk of doing too little. “Our president has already announced that most of the ground that we have to cover we will cover at a constant pace of multiple 50 basis-point hikes,” he added.
Goldman to Hire Selectively After Job Cuts (8:40 a.m.)
The head of Goldman Sachs Group Inc. international said the bank’s recent round of job cuts has “right-sized” it for the economic environment. The firm will continue to hire and is due to add more than 3,000 graduates this year, as well as more selectively at other levels of the firm, Richard Gnodde told Bloomberg TV.
“We’ve sized the firm to suit what we think the outlook to be,” he added. “But of course you have to be nimble.” He also said bonuses, reflecting overall performance, would be lower. “You have to take a long-term view and look through the cycle.”
Unicredit Sees Chance for Growth in Europe (8:35 a.m.)
UniCredit’s Orcel said the bank is expecting Europe to avoid a recession this year and may even see slightly positive growth.
Rising rates are a tailwind for the bank, which could still potentially pay investors a higher dividend for 2022 than a year earlier. The Italian lender is also seeing its stock of non-performing loans decline, though it has created an extra buffer to protect against loans going bad this year.
Remote Work Is Changing Commuting (8:15 a.m.)
Working from home is having a permanent impact on commuting patterns, rail-and-property developer MTR Corp. CEO Jacob Kam said in a Bloomberg TV interview. The comments from the transport chief is telling as employees globally are grappling with one of the pandemics’ best perks, which business are less keen on continuing.
Read more: Hong Kong Property Prices to Improve on Border Reopening
MTR — one of the most profitable and richest public transport operators, thanks to its property business in Hong Kong — has a vast array of rail business interests stretching from its home in Hong Kong to Australia, Sweden, Mainland China and the UK.
Zelenskiy Pressures Allies for Arms (8 a.m.)
Ukrainian President Volodymyr Zelenskiy put additional pressure on Germany to step up and deliver battle tanks.
Without naming Berlin directly, he said it was wrong for countries to say they will only supply his government with battle tanks if an ally outside the European Union, such as the US, does the same. Chancellor Olaf Scholz has indicated the ruling coalition in Berlin won’t move unilaterally to supply Leopard 2 tanks.
Speaking via video link, Zelenskiy told a WEF breakfast meeting that artillery and missile systems won’t be used to strike inside Russia but to target occupied territories from where Russian forces are launching attacks. Asked whether Ukraine would target Russian-occupied Crimea, he said: “This is not our intention, it is our land. Give us your weapons and we’ll bring our land back.”
Johnson Calls for Additional Ukraine Aid (8 a.m.)
Former UK Prime Minister Boris Johnson told an audience in Davos that allies should increase their support for Ukraine and focus on that rather than trying to analyze Russian President Vladimir Putin’s plans.
Johnson said governments should give Ukraine weapons, including tanks. He said there is little point debating whether Putin will use nuclear weapons because he won’t.
Climate Activist Wants Real Commitments (8 a.m.)
Ugandan climate activist Vanessa Nakate is in Davos to press politicians and business leaders to halt new fossil-fuel investments.
“There is a disconnect between what people say here and what is happening on the ground – they don’t get the urgency of the climate crisis,” Nakate told Bloomberg. “Economic growth shouldn’t leave people and communities behind,” she said, adding that Davos isn’t accessible for many and the event should be open to activists who highlight the real challenges.
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