Written by 11:31 pm Europe Economy

Davos Latest: Moynihan Sees US Economy in Relatively Good Shape


Bank of America CEO Brian Moynihan added his voice to a host of commentators expressing tentative optimism about the economic outlook, citing resilience among consumers and firm demand for small-business loans as reasons for optimism.

“This year ends up being positive, next year ends up being positive, but you have a little trough in the middle,” Moynihan said in an interview with Bloomberg Television on the penultimate day of the World Economic Forum in Davos. “We’re in a heck of a lot better shape than all these other economies I talk to out here.”

Earlier, Swiss National Bank President Thomas Jordan and the head of the European Central Bank, Christine Lagarde, signaled efforts to tame consumer prices will continue. Jordan told Bloomberg TV that “some tightening” of borrowing costs “is probably in the cards.”

Tune in to Bloomberg TV on the final day of the forum on Friday for interviews with French Finance Minister Bruno Le Maire, Fidelity CEO Anne Richards and Carlyle Group Co-Founder David Rubenstein, among others. Lagarde and Jordan also take part in panels.

• Wall Street Spreads New Year Cheer With Upbeat Outlook at Davos

• SNB’s Jordan Reckons ‘Some Tightening’ Is Probably Still Needed

• US Seen Pushing for Russian Oil Price Cap to Stay at $60

• UK’s Starmer Woos Davos Saying Britain Is Open for Business

• Gorman Says Three Potential Successors Are Already in Place

Tai Cites ‘Honest’ Talks on Climate Law (6 p.m.)

US Trade Representative Katherine Tai said she is having “constructive” and “honest” conversations with allied nations about subsidies and tax breaks in the Inflation Reduction Act that the countries say will unfairly benefit US companies.

The countries “absolutely share the goal of addressing the climate crisis, and “see this legislation as a significant accomplishment,” Tai told Bloomberg TV. She added she has “every confidence that — given the shared values that we have — that we will be able to find a way to work together to address the challenge that, frankly, we are all also being affected by.”

Nigeria Snubs Global Tax Deal (6 p.m.)

Nigeria is refusing to join an overhaul of the global taxation system it says is skewed to the interests of rich nations and could actually undermine the country’s tax revenues, according to Finance Minister Zainab Shamsuna Ahmed.

The negotiations were not conducted on an equal footing, favored wealthy economies and created rules that are too complex for Nigeria to effectively implement, she told a panel. “If we sign up to this, it means we’re excluded from getting taxes from medium-sized companies that we now actually, by our own laws, have an opportunity to collect taxes from,” she said.

Irish PM ‘Somewhat Optimistic’ on Protocol (5:45 p.m.)

Irish Prime Minister Leo Varadkar said he was “somewhat optimistic” that the EU and UK can come to an agreement over the Northern Ireland Protocol — the part of the Brexit divorce deal which deals with the region — “in the coming months,” in light of trust built between the two sides which wasn’t there in the past.

Even so, there needs to be confidence that any agreement reached will last, he said on a panel. “What we want to know from Prime Minister Sunak — and I believe this will be the case — is can we get an agreement that will stick. A landing zone isn’t good enough, it needs to be a stable landing zone.”

BofA Workforce ‘Got Too Big’ (5:30 p.m.)

Moynihan told Bloomberg TV that Bank of America got ahead of where it wanted to be on staffing as its attrition rate started to cool over the past year and it now “can do a slowdown in hiring.”

“I’ve been telling people we’re going to have enough people do a great job for our customers, but let’s be careful,” he added.

Europe ‘Failing on Energy Transition’ (5 p.m.)

Europe is failing in its transition to a cleaner economy, having already made mistakes in terms of supply security and excessive reliance on Russia, according to Repsol CEO Josu Jon Imaz.

“We’re very happy saying that we’re reducing emissions but what we’re doing in many cases is sweeping them under the carpet,” Imaz said during a panel discussion. “We are exporting industries, jobs and emissions to other parts of the world.”

Zoom Upbeat Despite Competition, Job Cuts (4:30 p.m.)

Zoom Video Communications Inc. President Greg Tomb said the collaboration software business has held up in the face of widespread layoffs and competition.

The video-conferencing company sells software to industries like tech and finance which have been hit by large layoffs. But because most contracts are long-term, the job cuts haven’t hurt Zoom, Tomb said in an interview. “It doesn’t mean people don’t fine-tune here or there when they come up for renewal, but it has not been a big impact,” he said.

Greek Premier Flags ‘Turbulence’ in EU-US Ties (4:15 p.m.)

While the war in Ukraine has strengthened the transatlantic bond, other issues have caused turbulence in the US-EU relationship, according to Greek Prime Minister Kyriakos Mitsotakis, who cited recent a climate law introduced by President Joe Biden’s administration.

“The inflation reduction act in the US is important but it’s causing headaches as it’s protectionist,” he said during a Q&A. ‘There are ways to work around the law in terms of the way it’s implemented, but at some point Europe has a responsibility to protect its own industrial base,” he added.

Potential Successors at Morgan Stanley in Place (4 p.m.)

Morgan Stanley CEO James Gorman said he knows the three candidates in the running to replace him when he steps down, calling them “all very, very talented executives.”

“You plan a generation of people who can take over,” Gorman, 64, told Bloomberg TV. “Ultimately the board will decide.”

Though he didn’t name his likely successors, Jonathan Pruzan’s announced exit will leave Ted Pick and Andy Saperstein, the New York-based firm’s co-presidents, in the running alongside investment-management chief Dan Simkowitz.

Manchin Wants Bipartisan Commissions to Avert Default (4 p.m.)

US Senator Joe Manchin called for bipartisan, bicameral commissions on federal spending and trust funds as part of a deal to avert a catastrophic default that would devastate markets worldwide.

“People like drama,” the West Virginia Democrat said of brinkmanship over the issue during an interview with Bloomberg TV. Manchin, a critical moderate vote in the Senate, who last year forced Biden to whittle down his domestic agenda, said there has to be discipline and sacrifice to control the federal debt. But, he said, lawmakers shouldn’t “scare the bejeezus out of people.”

Climate Solutions ‘Won’t Come From Davos’ (3:20 p.m.)

Swedish environmental activist Greta Thunberg blamed the climate crisis on the business and financial elite at the WEF and said they’re unlikely to come up with effective measures to tackle global warming.

“We are right now in Davos where basically the people are who are mostly fueling the destruction of the planet, the people who are at the very core of the climate crisis,” said Thunberg, who isn’t attending the official forum. “Somehow these are the people that we seem to rely on solving our problems.”

“Right now, the changes that we need are not very likely to come from the inside rather I believe that it will come from the bottom up,” the activist added, just days after being detained by German police during a protest over plans to expand a coal mine.

Starmer Slams Sunak’s Davos Absence (3:15 p.m.)

Keir Starmer, leader of the UK opposition Labour party, took aim at Prime Minister Rishi Sunak for not attending Davos this year, telling a panel that his absence is evidence of the country’s “drift” away from green-energy opportunities.

“One of the things that’s been impressed on me since I’ve been here is the absence of the UK and that’s why its important I’m here,” Starmer said, adding that the UK should show the country “will play its part on the global stage in a way it probably hasn’t in recent years.” Sunak — a multimillionaire whose opponents have attempted to paint as unable to relate to ordinary Britons — chose to avoid the optics of a trip to Davos, especially at a time when the UK is struggling with a record squeeze in living standards.

Manchin Seeks to Calm Europe’s IRA Fears (2:40 p.m.)

Manchin sought to reassure delegates that the multibillion-dollar energy subsidy plan to spark a green revolution in the US isn’t meant to hurt allies.

“There’s been a lot of consternation and concerns about the IRA, Inflation Reduction Act, thinking that it’s going to harm the EU,” he said on an energy panel. “There’s no intent whatsoever to harm any of our allies and basically to be able to give them the assurance that we’re always going to be there.”

Working Less May Be Key to Avoiding Burnout (12:35 p.m.)

Boosting work flexibility through changes such as a four-day week may both raise productivity and reverse the growing trend toward burnout, according to a panel of experts.

Read more: Working Less and Better May Be Key to Avoiding Burnout Society

A study coordinated by nonprofit advocacy group 4 Day Week Global involving dozens of companies showed a reduction in stress and anxiety, and gains in efficiency and revenue, said Adam Grant, an organizational psychologist at the University of Pennsylvania. “We’re running quickly into a burnout society,” said Dutch Labor Minister Karien van Gennip.

Carbon Pricing Key for Climate Fight: Winters (12:30 p.m.)

Bill Winters, CEO of Standard Chartered, said carbon pricing is key to financing the fight against climate change, but warned that a lack of political will was holding back progress.

“You’ve got to get the money into the right hands,” he told a climate-finance panel. “If we have a proper price for carbon, paying for” preserving natural carbon sinks isn’t an issue, but “we need trillions and we’re talking billions.” 

Dutch PM Frets About Borrowing, Low Growth (12:20 p.m.)

Dutch Prime Minister Mark Rutte said he’s worried about inflation in combination with low-growth prospects in Europe. “We need to bring down government borrowing,” he said on a panel. “It’s still too high in Italy, France and other countries.”

“We do not want Europe to become a sort of museum where you go to because of the beautiful cities,” he added. “It has to be the place of growth, innovation and industry base.”

Okonjo-Iweala Praises Departing Ardern (12:30 p.m.)

WTO Director General Ngozi Okonjo-Iweala paid tribute to Jacinda Ardern, calling the New Zealand prime minister “such a good example” after her surprise resignation ahead of a general election later this year.

“Let me put it in a positive fashion: women know when to step down,” Okonjo-Iweala told Bloomberg TV. “When they think they’ve given their best and they’re ready to go they say so and we shouldn’t overread anything into it,” she said, adding that “their egos are lower” and “work does not define them.”

Walsh Warns of Choppy Credit Markets (12:30 p.m.)

Guggenheim’s Anne Walsh struck a more downbeat note than many Davos attendees, warning the investment firm expects a recession by the middle of 2023.

Guggenheim expects credit markets to get choppier in the months ahead and is repositioning its portfolios into areas of higher credit quality to avoid dicier debt, she said. Walsh also paid tribute to colleague Scott Minerd, who died suddenly in December. The industry has “lost a tremendous visionary,” she said.

‘Wake up!’: Global Elite Confronts Risks (12 p.m.)

In this week’s episode of the Stephanomics podcast, host Stephanie Flanders chats with international economists, finance ministers and corporate chieftains from Davos, including Gita Gopinath, first deputy managing director of the IMF, and Raghuram Rajan, a finance professor at the University of Chicago and former governor of the Reserve Bank of India.

Lagarde Says ECB Will Stay the Course (11:50 a.m.)

Lagarde said inflation remains far too elevated, vowing that policy makers won’t let up in their efforts to return price growth to target.

Read more: Lagarde Says Inflation ‘Way Too High,’ ECB Will Stay the Course

“Inflation by all accounts, whichever way you look at it, is way too high,” Lagarde told a panel. “We shall stay the course until such time we have moved into restrictive territory for long enough so that we can return inflation to 2% in a timely manner.”

Deutsche Bank Calls Inflation ‘Poison’ (11:50 a.m.)

Deutsche Bank AG Chief Executive Officer Christian Sewing was supportive of the ECB’s efforts, calling surging consumer prices “poison” for the economy, and said he’s not concerned about any potential over-tightening since he continues to see inflation as the biggest risk.

He said he shares the more upbeat economic outlook presented by economists and said that Europe can grow if it can get inflation back under control.

Merck KGaA Has €20 Billion War Chest (11:45 a.m.)

Merck KGaA has as much as €20 billion ($21.6 billion) of dealmaking firepower and is “scanning the market permanently” as the German company looks to accelerate growth, Chief Executive Officer Belen Garijo told Bloomberg TV.

Merck especially likes the life sciences sector — which includes research labs and biotech and pharma companies — because of predictable and stable demand, Garijo said. The company is interested in either bolt-on or bigger takeovers to bolster its portfolio of medicines or strengthen its semiconductor-solutions business. Merck’s last multibillion deal was the 2019 purchase of Versum Materials Inc. for $6.4 billion.

Health Equity Can Be Achieved: Takeda CEO (11:30 am)

Takeda Pharmaceutical’s CEO Christophe Weber said tackling health disparities between nations and within populations in the same country is morally necessary, and also good for business.

“We have been looking at our clinical trial diversity, and we know it’s not where we should be in terms of recruitment of patients,” Weber said. “If you don’t have the data for a certain group of patients, then they potentially won’t trust the vaccines or the treatment.”

UK Warns of ‘Dangerous’ US Subsidies (10:10 a.m.)

Joe Biden’s plan to subsidize clean energy is “dangerous” and risks pushing the world toward protectionism, UK Business Secretary Grant Shapps said, in Britain’s strongest criticism to date of the US Inflation Reduction Act.

“Its very important we don’t slip into protectionism and that is where at the edges, the Inflation Reduction Act in the US is dangerous because it could slip into protection,” Shapps said in a panel discussion. “It’s not its intention, I don’t think its necessarily where it is going but if it’s not amended I think that’s where we have to be really careful.”

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.

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.

Read more: Goldman’s Gnodde Says Firm to Hire Selectively After Job Cuts

“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 SpA Chief Executive Officer Andrea Orcel joined the chorus of tentative optimism at the forum, saying Europe may see slightly positive growth this year, even as risks remain including the war in Ukraine and rising borrowing costs.

Read more: UniCredit CEO Sees Higher Shareholder Returns on Tailwinds

Rising rates are a tailwind for the bank, which could still potentially pay investors a higher dividend for 2022 than a year earlier, Orcel said. 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, he added.

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.

More stories like this are available on bloomberg.com

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