(Bloomberg) — Bank of America Chief Executive Officer Brian Moynihan says US consumers have money to spend and will unlikely be deterred by inflation and economic gloom.
The upbeat forecast on the second day of the World Economic Forum in Davos, Switzerland provided a counterpoint to the fallout from Russia’s invasion of Ukraine, which is dominating the gathering in the Swiss Alps.
European Commission President Ursula von der Leyen earlier made an urgent appeal for international action to prevent a global food crisis that she said is being maliciously stoked by Russian President Vladimir Putin. European Central Bank President Christine Lagarde told Bloomberg Television that officials won’t rush into withdrawing stimulus and her French colleague echoed her to insist there’s no consensus for a half-point interest-rate hike.
On Wednesday, Bloomberg TV has interviews lined up with EU Economy Commissioner Paolo Gentiloni, Irish Prime Minister Micheal Martin, Carlyle Group’s Macky Tall and many others. Bloomberg is also hosting panels on global growth and trade, featuring IMF’s Gita Gopinath, Siemens AG Chairman Jim Snabe, and EU Trade Commissioner Valdis Dombrovskis.
Key Developments
- European Leaders in Davos Decry Russia Using Food as ‘Blackmail’
- Lagarde Says ECB Won’t Rush as Consensus Shuns Half-Point Hike
- Food Crisis Risks ‘Messy’ Migration Wave Into Europe, EU Warns
- Saudi Arabia Says It’s Done All it Can For the Global Oil Market
- New World Order Adds Fresh Impetus to M&A, Say Davos Dealmakers
All times CET:
Green Energy Boss Sees Finance Flowing (6:05 p.m.)
Rising fossil-fuel prices aren’t stemming the tide of finance going toward renewables, said Mads Nipper, chief executive officer of the world’s biggest developer of offshore wind farms Orsted AS. “The capital will keep flowing through the green sector,” he said. “I’m not concerned about the long-term structural shift back to fossil-fuel assets.”
New investments in carbon-emitting assets wouldn’t make sense from a climate or financial perspective. “From a pure business point of view, it’s insane,” Nipper said. “They’re going to be stranded assets.”
Galp Calls for New-Energy Incentives (6 p.m.)
Portugal’s biggest oil company called on authorities to provide better incentives for renewable project to encourage the transition away from fossil fues. “We’ve got to avoid the stick on oil and gas and put the carrot into the incentives for the new energy system,” Galp Energia SGPS SA Chief Executive Officer Andy Brown said during a panel discussion.
YouTube Sees Misinformation as Constant Problem (5:45 p.m.)
“There will always be incentives for people to be creating misinformation,” YouTube CEO Susan Wojcicki said in an interview. “The challenge will be to keep staying ahead of that and making sure that we are understanding what they are.”
YouTube “has really focused on free speech” and “must ensure that everyone has a right to express their point of view, provided they meet our community guidelines.”
Bank of America CEO Bullish on US Consumers (5:45 p.m.)
The US consumer is still in a strong position, despite inflation and other macroeconomic concerns, Bank of America CEO Brian Moynihan said in an interview on Bloomberg TV, adding that account balances are “multiples bigger” now than before the pandemic.
“Consumers have more money in their accounts,” he said. They have not spent all their pandemic money, and nothing will slow them down right now, he added.
Erdogan Lists Turkey’s Concerns in Call With NATO Chief (5:40 p.m.)
Turkish President Recep Tayyip Erdogan mentioned concerns including support for alleged terrorism in a call with NATO Secretary General Jens Stoltenberg about membership bids by Sweden and Finland, according to the head of the military alliance.
Erdogan “expressed many of the concerns that he has expressed publicly, and that’s about terrorism, it’s about their concerns about the PKK, and also of course the need for Turkey to be able to acquire the weapons that they need,” Stoltenberg told a panel about the May 21 call. “I still hope and work for a quick solution.”
Stoltenberg welcomed efforts to “get more grain out of Ukraine by train, on land, and also the efforts now addressing also if it is possible to get it out on ships.” He added “That is a difficult task, it is not an easy way forward” and urged Russian President Vladimir Putin to end an effective blockade of Odesa and other ports.
Microsoft CEO Says Stronger Regulation Inevitable (5 p.m.)
Microsoft Corp. Chief Executive Officer Satya Nadella said “it’s inevitable to have stronger regulatory regimes around all facets of technology” given the pervasiveness of digital tech in people’s lives, and businesses must “anticipate and adapt to regulation.”
Speaking in an interview at Davos, Nadella said the EU has taken the lead in internet safety and moderation with its General Data Protection Regulation, and companies must align their objectives with the broader good.
Timmermans Cites ‘Incredibly High’ Energy Profits (4:30 p.m.)
EU climate chief Frans Timmermans said companies must carry more of the burden from the surging energy costs that have plunged many of the world’s poorest into a cost-of-living crisis, and warned failure to act could jeopardize support for the green transition.
“The fact that energy companies are now pocketing windfall profits — incredibly high profits — while citizens are suffering because they don’t know how to pay their energy bills” is not helping to create a long-term cooperation between companies and politics, Timmermans said on a Bloomberg panel alongside Spanish Prime Minister Pedro Sanchez and Lithuanian President Gitanas Nauseda.
“Someone who doesn’t know how to make it to the end of the month can’t be bothered with the end of the world,” Timmermans added.
Qatar Wealth Fund Sees Opportunity, No Recession (4 p.m.)
The Qatar Investment Authority is on the hunt for small, growth-stage technology companies in Europe as its regional head plays down recession fears. “If you look at where I would stand today, looking at economic indicators, would I forecast a recession? Probably not,” Ahmed Ali Al Hammadi, the sovereign wealth fund’s chief investment officer for Europe, Russia and Turkey, said on a panel.
Market angst hasn’t deterred the fund from seeking investments in small emerging technology companies in places like France, Germany and Italy that he calls the continent’s “shining stars.” He added “there are rays of hope where valuation is not so sensitive anymore, these companies are smaller in size, and you’re able to get a better value than what you would see probably in the public markets.”
Switzerland Still Mediator, President Says (4 p.m.)
Swiss President Ignazio Cassis defended his government’s carefully-navigated position on Russia’s invasion of Ukraine, telling a panel discussion that “being neutral doesn’t mean not having any values.” Russian Foreign Minister Sergei Lavrov told Cassis his government’s decision to follow the EU’s lead on sanctions meant the end of Swiss neutrality, but the Swiss president told the audience he disagreed.
“We had to draw a line and say this is not a line we could play in this conflict,” Cassis continued. “It doesn’t mean we’ve lost our role as a mediator. By taking this clear position, we’ve shown which values we uphold and where we want to draw the line and where we want to build bridges.”
Citigroup Sees Greater European Inflation Risks (3:40 p.m.)
Citigroup Inc. has seen European corporate clients become more cautious, according to the bank’s top executive in the region. While there’s still enormous liquidity available to companies across Europe, many are struggling with growth as the continent battles inflation and energy disruptions caused by Russia’s invasion of Ukraine, David Livingstone, head of Citigroup’s businesses in Europe, the Middle East and Africa, said in an interview with Bloomberg Television.
“In the U.S., inflation hasn’t been present like this for four decades,” and the situation is similar in western Europe, Livingstone said. “The distinction in Europe, of course, is energy input volatility — gas prices much higher here. And if there’s further interruption I think that’s going to have very significant inflationary effects and that’s going to pass onto the consumer very quickly.”
Dubai Conglomerate Says Higher Food Inflation Coming (3:15 p.m.)
The chief executive officer of Majid Al Futtaim Holding LLC, the Dubai-based retail and property conglomerate that owns the Carrefour hypermarket franchise in the Middle East, said it would no longer be able to stop passing on price rises to customers.
“It’s not possible any more,” Alain Bejjani said in an interview. The impact of the Ukrainian conflict on global supply chains is “huge.” Saudi Arabia and Dubai are “bright spots” for the company, he said, with demand in those two almost back to pre-Covid levels.
IPO Pipeline ‘Incredibly Strong’: NYSE (3 p.m.)
The number of companies planning to go public on the New York Stock Exchange remains robust even amid the recent market downturn, NYSE President Lynn Martin said.
“The good news is the demand to go public has never been stronger,” Martin told Bloomberg TV. “The pipeline’s incredibly strong,” she said, adding that many companies are just trying to figure out the right moment to sell shares.
Monkeypox Can Be Contained, Officials Say (2:50 p.m.)
Monkeypox isn’t the next Covid-19, and the world already has the tools it needs to contain the outbreak, according to public health experts.
The virus probably won’t trigger the next pandemic, Seth Berkley, chief executive officer of the GAVI Alliance, said in an interview with Bloomberg TV. WHO officials said that the disease can be contained if people are informed of the symptoms so they can recognize it quickly.
Spain’s Economy ‘Much Better Prepared’: Sanchez (2:45 p.m.)
Spain’s economy will suffer from the fallout of the war in Ukraine but the nation is “much better prepared” than some of its European peers due to a relatively low dependence on Russian energy, according to Prime Minister Sanchez.
“It is also true that we have good fundamentals, strong fundamentals of the Spanish economy,” Sanchez said in an interview with Bloomberg TV. Spain gets less than 8% of its gas and less than 5% of its oil from Russia, and renewables account for 57% of installed capacity, Sanchez said.
Luxembourg Defends EU Unity on Sanctions (2:35 p.m.)
The EU shouldn’t go ahead with a Russian oil embargo without Hungary, Luxembourg’s Prime Minister Xavier Bettel told Bloomberg. Solidarity remains key, he said, adding it wouldn’t be helpful if sanctions packages were agreed only among 26 of the EU’s 27 countries this time, and 25 next time.
“It’s not sanctions a la carte, unity is important,” he said, adding that within those packages there could be modalities, like delays or quantities, for different countries to comply with those sanctions.
Ukraine War Triggering New Fossil-Fuel Drive (2:25 p.m.)
The war in Ukraine is prompting a “headlong plunge” to expand fossil fuel production, US Climate Envoy John Kerry told a panel.
The next eight years will be crucial in terms of the world’s ability to meet the Paris Agreement target, but “we cannot do this if the new theology is to build out massive new gas infrastructure” without abatement, he said.
New World Order Adds Fresh Impetus to M&A (2:20 p.m.)
The emergence of a new geopolitical order in the coming years will help to drive cross-border mergers and acquisitions, according to senior dealmakers.
“From a US policy perspective, hopefully we will see the emergence of a US-European super block that rearranges the global order and has significant implications for M&A transactions,” Peter Orszag, chief executive officer of financial advisory at Lazard Ltd., said on a panel. A desire to relocate supply chains in the wake of Russia’s war in Ukraine will underpin the trend, said Luisa Gomez Bravo, global head of corporate and investment banking at Banco Bilbao Vizcaya Argentaria SA.
Bridgewater Sees US on Verge of Stagflation (1:30 p.m.)
The US is on the on the verge of stagflation and markets are under-discounting gains in consumer prices, according to Bob Prince of Bridgewater Associates.
“We could very easily be into this very quickly,” Bridgewater’s Prince, who is co-chief investment officer alongside founder Ray Dalio and Greg Jensen, said on the prospect of stagflation.
The world’s largest hedge fund firm runs the Pure Alpha II fund, which jumped 26.4% through April, outperforming peers.
Ireland’s Varadkar Warns London to Consider Rest of UK (1:10 p.m.)
The UK government needs to consider the impact of imposing decisions on other parts of the UK and its potential impact on the strength of the union, Ireland’s Deputy Prime Minister Leo Varadkar said in a Bloomberg Television interview.
“London and Westminster needs to think about the consequences of imposing things on Northern Ireland and Scotland that they don’t want, and I’m not sure they think about that enough,” the Minister for Enterprise, Trade and Employment said, as a row continues between the UK and EU over the part of the Brexit agreement dealing with Northern Ireland.
“The U.K. is our nearest neighbor, a really important trading partner,” he said, adding that he wants to see a stable and successful UK that is “sure about its place in the world.”
Gopinath Says Food Prices May Continue to Increase (12:45 p.m.)
IMF First Deputy Managing Director Gita Gopinath predicted that restrictions on food exports and a shortage of fertilizer mean global food prices are likely to continue to increase.
IMF officials “worry a lot about what’s going to happen with food prices,” she said on Bloomberg TV. Gopinath also said it’s premature to talk about a global recession, though some regions are being hit harder than others, and a technical recession is possible in some countries, such as in Europe.
World ‘Can Win Ukraine, Climate Change Battles’ (12:30 p.m.)
US Climate Envoy Kerry said the world must not retreat from its goal of tackling climate change even as Russia’s war in Ukraine stokes soaring energy prices. America will help make up Europe’s shortfall of Russian gas and more oil production from the Middle East may be required to quell inflationary pressures, but that does not mean there should be a “massive build out” of fossil-fuel infrastructure, he said.
“If we make the right choices here, we can win all of these battles,” he said. “We can do what we need to do with respect to Ukraine, we can do what we need to do with respect to the climate crisis,” Kerry said. “But we cannot be seduced into believing that this suddenly is an open door to going back and doing what we were doing, which created the crisis in the first place.”
NATO Chief Confident on Sweden, Finland (12:15 p.m.)
NATO Secretary General Jens Stoltenberg said he’s confident that the alliance will find a way to resolve Turkish concerns and accept Finland and Sweden into the military alliance.
Russia’s Putin “wanted less NATO on his borders and launched a war. Now, he’s getting more NATO on his borders and more members,” Stoltenberg said. NATO allies are in talks to overcome Ankara’s opposition to the admission of Sweden and Finland, over their alleged support for autonomy-seeking Kurdish militants who’ve been battling Turkey for years.
Poland Sees Unrest in North Africa Over Grain (11:50 a.m.)
Polish President Andrzej Duda warned of civil unrest in North Africa unless Ukraine is able to ship its grains that are trapped in the country because of the war.
Ukraine accounts for about 80% of grains exports to countries like Egypt, and it’s key to ensure the shipments are made through ports including on the Baltic Sea in Poland, Latvia and Lithuania, he told a panel. If that doesn’t happen, many in northern Africa could face starvation, he said.
Von der Leyen Denounces Russian ‘Blackmail’ (11:30 a.m.)
“Russian artillery is bombarding grain warehouses across Ukraine –- deliberately — and Russian warships in the Black Sea are blockading Ukrainian ships full of wheat and sunflower seeds,” von der Leyen said in a speech, denouncing what she called “Russia’s blackmail.”
Europe is “working hard to get grain to global markets,” including 20 million tons of wheat currently stuck in Ukraine, she said. The bloc is also boosting its own production and working with the World Food Programme make sure vulnerable countries can buy food at affordable prices, she added.
Estonia Sees Turkey Spat Slowing NATO Enlargement (11 a.m.)
Estonian President Alar Karis said he’s confident that negotiations with Turkey will overcome its objections to Sweden and Finland joining NATO. But he told Bloomberg that the dispute over support for Kurdish groups, which Ankara regards as terrorists, could potentially slow down their inclusion in the military alliance.
“Maybe in 6 months,” he said. “Within a year it should be there. But again it’s very difficult to predict especially in this stage of this process.” Asked what would be the repercussion if Turkey refused to budge, he replied “I don’t know, I don’t think about it. NATO’s a collective organization and then we have to sit down and think about it. If it’s right to have a veto from one country or if we should have a voting system, I don’t know.”
Goldman Sees ‘Cyclical Carnage’ in Tech Stocks (10:45 a.m.)
Goldman Sachs sees strong long-term returns in tech once it weathers the current rough patch. “The very big picture for technology — I just want to be super clear — is that we’re facing cyclical carnage at the moment in public markets,” Katie Koch, CIO of public markets equity at Goldman Asset Management, said in a Bloomberg TV interview. “The long-term opportunity here is actually exceptional.”
Private markets discounting bad news on technology is “still a couple of quarters away,” she added. The market has priced in a lot of bad news in China, but there are selective opportunities in Chinese firms driving climate transition and those in digitalization of the economy, she told a panel on markets.
IBM Warns of Cyber-Attack Risk (10:40 a.m.)
IBM CEO Arvind Krishna said a major cyber attack on “critical infrastructure is going to happen.” Speaking on a panel, he said it was inevitable that “a bad actor, probably a nation state” will hack essential public services. He revealed that digital coverage of the Augusta Masters golf tournament was hit with 40 million cyber attacks.
War Must Not be Excuse for Climate U-Turn: Sanchez (10:30 a.m.)
Spain’s Sanchez warned fellow leaders that the war in Ukraine must not be used as an excuse for backpedaling on climate goals.
“I think it’s very important to reaffirm this commitment today, because perhaps for some leaders this war could be used as an excuse not to fulfill their commitments on climate,” Sanchez said during a Q&A. “We should not forget that for climate change we don’t have a vaccine,” he added. “And for that we need to strengthen multilateralism and not forget the biggest threat that we have ahead of us.”
Enel Seeks Viable Buyer for Russia Unit (10:10 a.m.)
Enel SpA needs to find a “viable buyer” for its Russian unit after starting the selling process in the wake of Russia’s invasion of Ukraine, CEO Francesco Starace said in an interview on Bloomberg Television.
Starace also said “we need to be prepared for shocks” on Russia fossil-fuel supply. “We have to be prepared for the worst. This is not a simple situation,” he added.
Gnodde Says M&A Business ‘Surprisingly Strong’ (9:40 a.m.)
Goldman Sachs Group Inc.’s Richard Gnodde said the M&A pipeline is “still surprisingly strong” as companies continue to look to buy assets as prices fall.
“We really haven’t seen a slowdown,” the chief executive officer of Goldman Sachs International said on Bloomberg TV. About 70% of Goldman’s workforce are now typically in the office and that number is “drifting upwards,” he added.
CATL Sees Switch From Combustion Cars by 2035 (9:30 a.m.)
The world’s biggest maker of electric-vehicle batteries said it expects sales of combustion vehicles to end in major markets by 2035 at the latest.
Contemporary Amperex Technology Co. is pouring billions into rapidly expanding production to meet anticipated demand as batteries displace engines powered by fossil fuels. Chief Manufacturing Officer Jun Ni made the forecast at a panel on Tuesday, in which he didn’t specify any geographical markets. Still, it’s in line with major automakers like Volkswagen AG also planning to eliminate combustion car sales in Europe by 2035.
Swiss Re Quantifies Ukraine War Hit (9:20 a.m.)
Swiss Re expects a hit of $10 billion to $20 billion for the insurance industry from the war in Ukraine, Chairman Sergio Ermotti said in an interview with Bloomberg TV. Between the war and the Covid-19 pandemic, the reinsurer has seen its share of volatility in recent quarters, he said.
“You see more people taking on life-insurance protections, you see people taking on more cyber-risk protections as a consequence of what’s going on in Ukraine,” he added.
UBS Sees Clouds Clearing in the Next Three Months (9:15 a.m.)
UBS CEO Hamers said that he expects to see more clarity in global markets within the next three months as clients digest the fallout from recent geopolitical events. “We had to digest three major shocks: the pandemic shock, the war shock and the energy-transition shock,” he said. “Supply shocks and demand shocks all mixed in one.”
Wealthy clients, he said, aren’t panicking. They are staying invested, though not necessarily putting new money into the market. “I’m not sure they’re worried about what’s coming,” Hamers said. “It’s just they don’t know what’s coming.”
Unilever Sees Commercial Rationale for ESG Moves (9:15 a.m.)
Investors are exhorting us to put sustainability and ESG at the heart of our business model and that’s for hard commercial purposes, said Unilever CEO Alan Jope, citing consumer demand, cost efficiencies and the ability to attract top talent.
But a lack of clear, harmonized metrics is a major challenge. “We are in danger of letting perfect get in the way of good, of letting complex get in the way of simple, and of local getting in the way of the global,” he said.
BofA’s Moynihan Understands Musk’s ESG Frustration (9:05 a.m.)
Bank of America’s Moynihan said that he can “understand the frustration” of Tesla Inc.’s Elon Musk over ESG metrics that penalize companies for historical or obscure reasons.
Speaking on a panel, Moynihan said his bank faced similar issues with old acquisitions that had overhanging litigation, for example, despite a broader commitment to investors to meet ESG standards. He was responding to a question about Musk’s recent tweet calling ESG an “outrageous scam.”
Unilever’s Jope chimed into the debate, saying “Elon can relax.” Tesla could be “at the top of the pack” at one of the ESG ratings agencies, he said on the same panel. But we shouldn’t be able to “pick and choose” the standards, he added.
Recession Not ECB Baseline, Lagarde Says (9 a.m.)
Lagarde rejected the idea that the euro area is heading for a recession for the time being, while acknowledging the need to be “very attentive” to economic developments. “We don’t have that as a baseline,” she said.
“We are not in a panic mode,” she added. “We are now at a stage where there is every certainty that we will stop net assets purchases very early in July, deciding so in June, which will then clear the way for rate hikes that will come reasonably shortly after that.”
Lagarde: Monetary Policy at ‘Turning Point’ (8:50 a.m.)
Lagarde said she decided to set out the future path of monetary policy in a blog post on Monday in part to address “expectations that were not necessarily founded.”
Read more: Lagarde’s Rate-Hike Plan Irks Some at ECB Who Want Faster Option
“We are clearly now at a turning point, and I thought it was appropriate at this point to explain what the journey is, what the direction of travel is, what the destination is in the relatively short term and what is our aim point as well,” Lagarde said in an interview with Bloomberg TV.
“I thought it was a good time given the combination of volatility that was out there, expectations that were not necessarily founded and the strong convergence that arose from the Governing Council due to the multiple positions as expressed during the last few days,” she added.
Top Polluters Face $67 Trillion Bill to Hit Climate Goal (8:45 a.m.)
The world’s seven-biggest polluters will have to spend $67 trillion by the end of this decade to stay on the path of achieving climate neutrality mid-century, according to a report from Polish Economic Institute that’s due to be presented in Davos on Tuesday.
The economies — China, the US, the EU, Brazil, India, Russia and Japan — are responsible for 70% of global greenhouse gas emissions. Their efforts are key for the world to meet the goals of the 2015 Paris Agreement to limit warming to “well below” 2 degrees Celsius above preindustrial levels.
With current investment pledges to green their economies, the EU will reach climate neutrality in 2056, followed by the US four years later and China only in 2071 — 11 years later than its target, according to the report. Russia won’t be able to reach climate neutrality until 2086.
Edelman CEO Praises More Intimate, ‘Less Cold’ Davos (7:25 a.m.)
Richard Edelman, chief executive officer of public-relations firm Edelman, said he was a fan of this year’s iteration of Davos saying its smaller scale was provoking better conversations.
“Davos has been actually great because its smaller, CEOs are really looking to talk,” Edelman said in a Bloomberg Television interview. Plus, he said, it is “less cold.”
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