(Bloomberg) — Russia’s blockade of Ukraine’s ports is a “declaration of war” that threatens to trigger mass migration and a global food crisis, a United Nations official said, adding to the dire warnings on the opening day of the World Economic Forum in Davos.
In a keynote speech via video link, Ukraine President Volodymyr Zelenskiy reinforced his call for embargoes on oil, technology and other trade with Russia, and said there should be no exceptions in sanctions on the country’s banking sector. The WEF began Monday under the shadow of the Ukraine conflict after a two-year hiatus due to the pandemic, albeit with fewer big names from Wall Street and politics.
Among a host of Bloomberg TV interviews on the sidelines of the event, the head of the International Energy Agency said that oil producers need to act responsibly to help keep a lid on prices otherwise there is a risk of global recession. International Monetary Fund chief Kristalina Georgieva acknowledged that strains on the global economy have intensified but pushed back against concerns about a contraction in output.
That wraps our Davos coverage for the day. Join us on Tuesday when we’ll have Bloomberg TV interviews including European Central Bank President Christine Lagarde, Spanish Prime Minister Pedro Sanchez and UBS AG Chief Executive Officer Ralph Hamers as well as speeches by European Commission President Ursula von der Leyen and NATO Secretary General Jens Stoltenberg.
Key Developments
- Zelenskiy Issues Davos Demand to Shun Russia, Invest in Ukraine
- Biden, Georgieva Push Against Recession Fears Amid Davos Gloom
- Credit Suisse CEO Says We’ll Never Go Back to Office Full Time
- Stiglitz Says US Rate Hikes Killing Economy Won’t Fix Inflation
- Latvia’s President Wants a NATO Brigade to Deter Russia
All times CET:
Qualcomm ‘Faring Better Than Peers’: CEO
Qualcomm Inc. Chief Executive Officer Cristiano Amon said that the company is faring better than its peers due to the geographic mix in its supply chain as semiconductors are in short supply globally.
“We have done better than some of our peers because we have been diversified since the very beginning,” Amon said in an interview with Bloomberg TV. “We are very well balanced between Taiwan and South Korea.” As governments spend to bolster semiconductor production and consumption increases, “there is opportunity to build in different places,” he said.
Saudi Arabia: No Immediate Need for Transfers to Sovereign Fund (5 p.m.)
Saudi Arabia’s windfall from high oil prices won’t end up in its Public Investment Fund just yet, according to the kingdom’s finance minister, Mohammed Al-Jadaan.
“PIF actually has ample liquidity,” he said on a panel. The sovereign wealth fund is one of Crown Prince Mohammed bin Salman’s main vehicles to achieve his “Vision 2030” economic diversification plan. Saudi Arabia is expected to achieve its first budget surplus in nearly a decade this year.
Germany Sees EU Oil Embargo ‘Within Days’ (4:45 p.m.)
Germany expects the European Union to resolve differences delaying agreement on an embargo of Russian oil within days, according to Economy Minister Robert Habeck, amid resistance from Hungary and others.
“Hungary and some other countries they still raised some problems,” Habeck told Bloomberg TV. “I think they’re solvable and I hope to have an oil embargo within days,” he added. “I think we should stick together and not do our national thing alone. This was the great strength in the past months that Europe, and also the transatlantic partnership, stood together.”
Saint-Gobain CEO Doesn’t Fear Recession (4:30 p.m.)
Cie. de Saint-Gobain Chief Executive Officer Benoit Bazin said he doesn’t currently fear recession and expressed confidence about the outlook for the French building-materials firm based on strong demand for building renovation projects.
“There is a perfect alignment on jobs for renovation towards energy efficiency so there is a large backlog of orders in Europe,” Bazin said in an interview with Bloomberg TV. “It varies country by country but overall no I don’t see a recession coming,” he added. “Renovation is 50% of our sales and it’s strong so I’m very confident about that.”
US Senator Urges Fed to Fight Inflation (3 p.m.)
Retiring Republican Senator Pat Toomey urged the Federal Reserve to “stay the course” and fight inflation, even if it means pushing the US into a recession. “The Fed’s got to do its job,” he said.
If the US does slip into recession, “it could be mild, it could be brief, unemployment could rise very modestly,” he said on Bloomberg TV. “But we never get back to really strong growth and really good opportunity unless we get stability in the dollar.”
General Atlantic Sees Opportunity in Public Markets (3 p.m.)
General Atlantic is planning to move capital into public markets because stocks have dropped so much. The private equity firm, known for its focus on technology deals, is becoming a public market investor right now because there are so many “terrific opportunities,” Martin Escobari, co-president and head of General Atlantic’s Latin America unit, said in a Bloomberg Television interview.
The effect of that capital shift won’t be felt immediately in private markets because there’s currently so much liquidity, but it will impact those firms in the next six to nine months, he added.
Blocking Ukraine Ports ‘Declaration of War’: UN (2:30 p.m.)
The world was already facing a global food crisis before the Ukraine war but sidelining a nation — known as the breadbasket of Europe, which normally feeds 400 million people — has compounded it and now threatens to trigger mass migration, the head of UN’s World Food Programme said.
“Failure to open up the ports is a declaration of war on global food security,” David Beasley said referring to a Russian blockade, particularly of Odesa, which is preventing shipments of grain out of the country. He said opening the ports wouldn’t solve the entire problem but would provide more stability in the global food market.
Every 1% increase in hunger results in a 2% increase in migration, Beasley said, noting that 49 million people were “knocking on famine’s door” in 43 countries. “Those are the 43 countries we’ve got to be extremely concerned about that will result in destabilization and mass migration if we don’t get ahead of this,” he said.
Carbon Capture Needs Oil-Industry Scale: Swiss Re CEO (2:25 p.m.)
To help combat climate change, carbon capture will be a key solution, but it needs to be scaled “by a factor of one million” to be the size of the oil and gas industry by 2050, according to Christian Mumenthaler, chief executive officer of reinsurer Swiss Re Group. “It’s important to invest now,” he said on a climate panel.
To increase the money flowing to carbon-removal technologies like direct air capture and carbon sequestration, governments must “make it worth the while” of the private sector, said Varun Sivaram, senior director for clean energy and innovation at the US Department of State. There’s three ways to do so, he said: help to develop the technology, create financial incentives and put the right industrial architecture in place.
Stiglitz Calls for Supply-Side Action (2:20 p.m)
The US economy needs supply-side interventions rather than interest-rate hikes by the Federal Reserve that will fail to bring inflation under control, said Nobel laureate economist Joseph Stiglitz.
“Raising interest rates is not going to solve the problem of inflation,” the Columbia University professor said on Bloomberg TV. “It’s not going to create more food. It’s going to make it more difficult because you aren’t going be able to make the investments.”
Mammoth CEO Sees Opportunity in Biotech Dip (2:15 p.m.)
The sinking biotech market is an opportunity for companies to focus on executing on their plans, said Trevor Martin, founder and chief executive of Crispr specialist Mammoth Biosciences Inc.
“I’m a big believer that when times are tough, that’s when you really can put the pedal to the metal, in a responsible way of course,” Martin said in an interview on the sidelines of the WEF. “It’s a huge opportunity for technologies that are really delivering to just completely get into that execution mode.”
Putin Wants to Rebuild Russian Empire: Kyiv Mayor (2 p.m.)
Vladimir Putin views Ukraine as a key part of a plan to reestablish the former Russian empire, according to the mayor of the capital Kyiv, Vitali Klitschko.
Speaking on the same Bloomberg panel, Klitschko’s younger brother Wladimir, who is also a former world boxing champion, criticized what he said was Europe’s inability to fight Russian propaganda. The first thing he saw on TV in his Swiss hotel room was a Russian channel showing pictures from Mariupol claiming that the port city had been destroyed by Ukrainians, he said.
Kerry: Gas Still Needed As Bridging Fuel (2 p.m.)
US Presidential Climate Envoy John Kerry said gas is still needed as a bridging fuel, but over time will be made redundant by new technologies such as green hydrogen and improved battery storage.
“It is appropriate to have a gas transition for some period of time while you bring technology to scale that is going to change altogether what we’re doing,” he said in an interview with Bloomberg TV. The US government is planning a major announcement on Wednesday with Microsoft Co-founder Bill Gates and Salesforce’s Marc Benioff around corporate emissions reductions and investments in new green technologies, Kerry said.
US Lawmakers Expect Continued Cooperation on Ukraine (1:50 p.m.)
US lawmakers from both parties are confident the country will continue to support Ukraine’s efforts to fight off Russia’s invasion, downplaying the idea that electoral politics will soon interfere with bipartisan cooperation.
Republican Senator Roger Wicker said the Senate was “reflecting public opinion” when it passed a $40 billion bill last week to help Ukraine. Democrat Chris Coons, however, acknowledged that the pandemic and inflation, especially rising energy prices, will divert attention ahead of the November midterm elections that will decide control of both the House and Senate.
“I think Putin is counting on the West to lose focus,” Coons said. “And I think that is our real challenge. To ensure we are providing enough support for Ukraine so they can make real gains on the battle field soon and get to some negotiation that is obviously Ukrainian led.”
Bridgewater Highlights Dollar Vulnerability (1:30 p.m.)
The U.S. dollar is vulnerable on a cyclical as well as on a structural basis, according to Rebecca Patterson, the chief investment strategist at Bridgewater Associates, the world’s largest hedge fund. The current account deficit for the US had widened to about 3.5% of gross domestic product officially, but her firm’s latest estimates suggest that it’s closer to as much as 6%, she said.
“For the dollar to stay supported, we need to continue getting enough capital to offset them, and we think there’s a growing risk around that,” she said in an interview with Bloomberg Television. “The most important thing to understand about the dollar right now is how quickly our external need for foreign capital is increasing.”
Anti-Russia Unity to Endure, Latvian President Says (1:25 p.m.)
The “unusual unity” against Russia is likely to last as countries now have “no illusions” about the dangers posed by Moscow, according to Latvian President Egils Levits. That includes an appreciation of the threat to global agricultural supply posed by the conflict, he told Bloomberg News.
Phasing out Russian oil and gas will be difficult for all countries in Europe, and harder for some, Levits added. Despite the difficulties, he insisted that the will remained to agree on an oil embargo as “we shouldn’t finance the war against Ukraine.” There is an understanding that some countries require special consideration and exemptions on potential time lines, he said.
AstraZeneca Seeks Partnerships to Boost Vaccines Unit (1:20 p.m.)
AstraZeneca Plc is looking for partnerships to expand its newly-created vaccine and immune therapies unit as well as seeking to speed its existing portfolio, unit chief Iskra Reic said. The UK drugmaker is interested in partnerships that would give it access to new technologies or accelerate development in the areas of vaccines or antibody treatments.
“We are really looking at how to accelerate and step up with internal resources, and as always we are very much open to external partnership,” Reic said in an interview on the sidelines of the WEF. The UK company still sees a role for its Covid vaccine in places like Latin America and Asia, where it’s the most-used vaccine, she said.
Bankers Not Rushing Back to the Office (12:05 p.m.)
Credit Suisse Chief Executive Officer Thomas Gottstein doesn’t think banks will ever return to working full-time from the office. “It’s unrealistic and it is not what employees want,” he said in an interview. “We are in a soft way trying to encourage people to come back, but it’s counterproductive if you push too hard.”
“We will never go back to the old 80% to 90% of the people in the office,” Gottstein said. Based on the company’s policies, about 60% of employees should be working from the office but the true number is 37%, and Gottstein indicated there’s not much that can be done to force people back.
Zelenskiy Asks for Help With Grain, Reconstruction (11:55 a.m.)
Zelenskiy also said Russia was stealing Ukraine’s grain supplies and asked for help from the international community to reject shipments, while urging safe corridors so the country can import its own supplies.
He also asked for financial assistance to help the Ukraine recover from Putin’s invasion. Russia is “blocking our ports, they ruined our refinery, our fuel deposits,” he said, responding to questions from WEF Chairman Klaus Schwab. “Ukraine faces many challenges,” Zelenskiy added. “I ask for help for Ukraine. The economy must work. I ask you to act promptly. If it is not promptly, we will lose a lot.”
Zelenskiy Calls for Russian Isolation (11:45 a.m.)
In a video address, Zelenskiy also called on the international community to establish a precedent to deter the Kremlin now as well as prevent future aggression.
“If brute force dominates, then there is no need to gather in Davos,” he said in a keynote address. “Brute force does not discuss, It kills.” He said that Ukraine was open for companies that leave Russia. “You will have access not only to a market of 40 million consumers but also to the EU market,” he said, with reference to his country’s comprehensive trade deal with bloc.
Thai Central Bank Upbeat on Inflation Target (11:45 a.m.)
Thailand’s central bank is confident inflation will return to target next year, signaling there was no rush to change monetary policy settings just yet to check price gains hovering around a 13-year high.
“Inflation is no doubt trending higher,” Governor Sethaput Suthiwartnarueput said in an interview with Bloomberg TV. “It’s relatively concentrated in energy and food. And we don’t see the kind of demand-side inflationary pressures in terms of an overheating economy.”
Hong Kong IPOs ‘Held Back by Sentiment’ (11:40 a.m.)
Hong Kong Exchanges & Clearing Ltd. Chief Executive Officer Nicolas Aguzin said that the main message he took with him from a recent visit to mainland China was the importance of Hong Kong continuing to develop as a key international financial center.
The CEO also said the pipeline of initial public offerings in the city also remains high — with between 170 to 180 applications — but are being held back by market sentiment. It was too early to predict when deals will pick up again, but “eventually the market will come back,” he said in an interview in with Bloomberg TV.
Winters ‘Skeptical’ of HSBC Breakup (11:30 a.m.)
Standard Chartered Plc Chief Executive Officer Bill Winters said he was “skeptical” of any push to break up rival lender HSBC Holdings Plc, which is under pressure from its largest shareholder to consider carving out its Asian operations.
“You end up taking something which is a reasonably well-functioning whole and splitting it up in pieces,” he said in an interview with Bloomberg TV. “Certainly for Standard Chartered bank, the cost would be much greater than the benefit. But frankly, nobody is suggesting that in our case.”
Canada Offers Help With ‘Critical Minerals’ (11:20 a.m.)
Canada can be “part of the solution” as countries and businesses seek more energy security, Francois-Philippe Champagne, Canada’s innovation, science and industry minister, told Bloomberg TV.
Supply chains are becoming more regional, “certainly more emphasis on resiliency than pure efficiency,” and Canada can help with critical minerals, he said. The country can also help power the world with “greener solutions,” he said.
Ukraine Makes War Crimes Case (11:05 a.m.)
Ukrainian officials in Davos, including a group of mayors, launched an exhibit of photos and video showing alleged war crimes committed by Russian troops. Speaking at the exhibition launch by video address, Andriy Yermak — an aide to President Zelenskiy — said the exhibit, which features 4,600 pieces of evidence, was not just a symbolic move. “It is honest, it is fair,” he said.
The WEF this year features a large Ukrainian continent, including Zelenskiy’s keynote via video link, and no Russian presence. The site of exhibit was particularly poignant, occupying the building that usually serves as “Russia House” at the WEF, but now dubbed “Russian War Crimes House.”
Germany Wants Market Changes to Limit Energy Prices (10:45 a.m.)
Germany’s Habeck called for changes in the rules governing energy markets to try to keep a lid on surging prices and limit Russia’s earnings from selling fossil fuels.
“Not only Gazprom and Putin have earned a fortune but also some companies have,” Habeck said on an energy panel. “So this is what I meant when I said that we have to keep the markets open but we have to change the rules,” he said, adding that one option could be for consumers to “agree that we don’t pay any price.”
“There has to be more creativity, more flexibility to think the unthinkable, to find solutions over the short term that we don’t give all the money to Putin,” Habeck said. “We have to find new solutions and we have to find them fast.”
Ukraine Calls for Further Russian Isolation (10:35 a.m.)
Speaking hours before Zelenskiy addresses the conference virtually, Ukraine’s First Deputy Prime Minister Yulia Svyrydenko took to a Davos stage to say Russia’s invasion had put the “world on edge” and more could be done to isolate it.
“Russia uses its leverage like a weapon,” she said. “Food, energy. Now it’s treating the world with world hunger. Their actions are intentional. There should be reaction on its weaponization of everything.”
She said companies that have bypassed the economic curbs imposed after the invasion should face sanctions too. “Armies win battles but the economy wins wars,” she said. “Now is not the time for a cost benefit analysis. We have to cut Russia off from the global economy completely.”
Tougher Sanctions on Russia Urged (9:30 a.m.)
The world needs to do more to “impose pain on Russia’s elite,” Republican Congresswoman Ann Wagner said. “The Russian elite must understand that continued support for Putin is no longer in their interests,” she said.
During a panel on sanctions, Eric Cantor, vice chairman of Moelis & Co., also called for “tightening the vice” on Russia but stressed that the US should secure the support of its allies. Because of the dollar’s status as a reserve currency, “every time we use it even our allies and our friends start to wonder why is it that you can do this, and how are we going to make sure that we don’t become subject to those sanctions,” he said.
Further Forecast Downgrades Possible: IMF (9:20 a.m.)
The International Monetary Fund may need to further trim forecasts for economic growth this year but doesn’t expect a global recession, according to Managing Director Kristalina Georgieva.
She told Bloomberg TV in Davos that there have been some “incremental changes” since the Fund last month cut its global growth forecast to 3.6%, including “tightening of financial conditions,” the rise in the value of the dollar and a “slowdown in China.”
“All of this is making further downgrades not out of the question and for some countries there is now an increased risk of recession,” she said. “But we do not anticipate a global recession.”
Algebris Sees Stocks Tumbling Further (9:10 a.m.)
U.S. stocks have further to fall because expectations for earnings are still too high, according to Davide Serra, chief executive officer of Algebris Investments.
The S&P 500 will fall to a base of 3200 to 3400 points, down from 3901 currently, Serra said in a Bloomberg TV interview. The money manager, who founded Algebris in 2006, also flagged a “sad” mood at Davos because of the war in Ukraine. “Three hours from here, people are dying and shooting each other,” he said. “And so I think that’s why it’s different.”
IEA’s Birol Warns of Global Recession Risk (8:45 a.m.)
Oil producers need to act responsibly to help keep a lid on prices otherwise there is a risk of global recession, according to Fatih Birol, the executive director of the International Energy Agency.
“If we don’t make a positive contribution here we may see prices even going higher, being much more volatile and becoming a major risk for recession for the global economy,” Birol said in an interview with Bloomberg TV from Davos. “This summer will be difficult because as we know in summer oil demand normally goes up,” he said, adding that a major question is whether demand from China will remain flat due to weakness in the economy there.
Credit Suisse CEO Says He Has ‘Clear Mandate’ (8:25 a.m.)
Credit Suisse CEO Gottstein, who has been under pressure because of a string of scandals and earnings setbacks, said he has a “clear mandate” from the board to continue in his position.
Responding to questions about his future, Gottstein said in a Bloomberg Television interview that he is focused on executing the bank’s strategy and is working well with other members of the executive board.
Germany Warns of Food ‘Catastrophe’ (8 a.m.)
Germany’s Habeck said the WEF can help policy makers coordinate strategy on how to address a looming global food “catastrophe” and reiterated an accusation that Russian President Vladimir Putin is weaponizing hunger.
“We shouldn’t kid ourselves that there are limits to Putin’s brutality,” Habeck said in an interview with Germany’s Deutschlandfunk radio. “The task here at Davos is for us to recognize that hunger is being used as a weapon,” he added. “That’s why it’s good that the discussions are taking place in person here again and so many people are coming.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
