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tv   Street Signs  CNBC  May 23, 2022 4:00am-5:00am EDT

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money. i think he liked playing god. i think he's a true sociopath. i do. and i think that he's just an evil person. good morning welcome to davos this is the world economic forum. we are live from switzerland i'm geoff cufmorre >> i'm steve sedgwick. >> the world is facing its biggest test since the second world war with a confluence of calamities i'll be getting her view along
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the top financial players at the forum at 16:30 central european time we are witnessing a market rebound. u.s. futures turning green after the s&p flirts with bear market territory. one of the biggest names in advertising tells cnbc he is pull itcbullish on the tech stos >> i'm bullish on the tech giants the war will have an impact. we talk about that geographic and technical one. google and meta and amazon will benefit as a result of the war u.s. president biden is considering dropping tariffs on china, but admits he is ready to use force to defend taiwan and
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also launching the inindopacifi. >> we will help all of our countries grow faster and fair we will do that by taking on some of the most acute challenges that drag down growth and by maximizing the potential of our strongest growth engine russia claims to have captured the ukrainian city of mariupol and grants the energy aggression against europe. halting gas flows to finland the boss of the iaea says mosco is no longer reliable. >> russia proved that it is not rely energy partner. as such, i see there is an orientation of trade whatever the situation is with russia and ukraine is, this will continue and belgium is the first
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country introducing a quarantine over monkeypox there is still a lot to learn. >> we are living in a world with global warming and increased population and population movement this is evolutionary certain we will see more outbreaks. that is why pandemic preparedness is important. look what happened so after two years of virtual events, we are back physically now in the swiss mountains. it is, we should point out, a different time of year this is the spring the weather is a little bit better. >> lovely today. perhaps not as warm later in the week
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i'm told switszerland in early summer can be fluid. we . >> weir're at the world economi forum and we are watching up with the ceos and how they feel about the global estate of the economy. we had as we kicked off the event the head of the imf warning the growth economy is facing significant head winds. some of the biggest tests since the second world war speaking in davos, she was telling us there are significant challenges in using this terrific phrase. using the illiteration of confluence of calamities she says it is important the world comes together to help
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ukraine prevail at this moment we will be talking with her later on she urged countries not to succumb to the forces of geo economic fragmentation to make the world poorer and more dangdanger ous. she will be on a panel on the world economic growth outlook with me later on in the day. that's also mentioned that some of the other people. david rubenstein and francois villeroy they will have different perspective perspectives >> have you thought about your opening salvo? >> i should not mention this
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i am thinking about asking the room how it feels if we are heading into a recession or not or depression. i think it is interesting when you have a gathering, there should be over 1,000 people in the meeting room, and it will be fascinating to see how people were feeling martin soros was here saying that davos can be an indication if it is bearish here. >> and bullish in 2012, i was honest at the time and they were on the verge of the recovery we are in the depth of the crisis it was wrong they were way too optimistic maybe too pessimistic. >> high on the agenda in davos as we discussed the slow done in growth and the expected down
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turn instead of us talking, let's hear from the guests about the risk of recession. >> we started to see signs of food and cpg clients reducing budgets becauses th they cannot the price points we see the tech clients in silicon valley become cautious i think we can power through this we have strong health care and financial services is good retail has been good until last week i think it is 50/50 recession for the end of the year. >> i do think central banks can play the key factor in making sure that if we do have a recession, it is more short-term and not harsh. the other thing that is a big conversation is how long is some kind of recessionary or down economy will last. the one thing i will tell you is everything we think about with
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cycles is faster >> there will be a recession in certain parts. again, this is something that everyone is looking at and saying how do we manage it rising rates resulted in recession on numerous occasions in the past 100 years. almost every occasion except 1945 given the fact that central banks found a way to address issues that come their way, my sense is it will be cautiously optimistic >> i thought about what you said about what was the confluence of calamities i don't know if i agree. i think the war and other wars in the world which are also
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clamatous as well, and i get we are coming out of the tragedy that is and was covid. i don't think a lot of the confluence of on other events or calamities are it. there are two things the economic that is cyclical and there are things that happen in generations we are seeing higher inflation, not because of ukraine or covid, but things building up for a long time. you and i argued with people over the year about the central banks and if they allowed recessions to take the natural course recessions happen on the cyclical basis the ammo is left in the tank that is one issue we are discussing now the end of the 30-year bond market bull run has happened aggressively now again, that is a confluence of calamity it is inevitable i i'll add that people are having to concentrate on the balance
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sheet and cash flow and profitability. it looks very, very familiar to what you and i were talking about 20 years ago as well i do believe there is a confluence of events i don't think they are all calamity others were going to happen at some stage and happening now. >> i think the world can manage a recession of it is not something we have seen before with he we know sencentral bank flattening out with the rece recession. the rule is getting away from the boom and bust. the other side of the ledger is people argue is they stoked up the problems that we might be experiencing now
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just to misquote behavior economics is thing happen slowly and then very quickly. >> is that happening >> i think it is the economy things have been happening in a relatively manageable way. we got to grips with it with the pandemic crisis in most of the developed world. as we heard from seth berkeley, we are still dealing with the challenges i think we know what we're dealing with when it comes to the raising of interest rates, the fed has been signaling for a long time. other central banks are doing it businesses are adjusting markets are adjusting. when you look at russia/ukraine. initially, i don't think we understood the consequences would be of that now we are starting to come to terms with that. the bit we don't understand is the second round effect or the counter party risk all of those things we have to bring back the language from
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2008 and start talking about it again. we know that back then property was the sleeping crisis waiting to happen. where are the risks at the moment we haven't necessarily seen the cracks exposed that's what i think we all need to be a little bit worried about and why it is interesting to be here to try to have those c conversations with people about the slumbering risks lie >> we had a boss about 15 years ago who said what are the themes for davos? we said let it happen. this morning, i learned about people's attitudes and concern of ceos. viewers had insight into the closed shop dinners that occurred every night we heard from two of the most influence already. both times it was the economy and recession that was top of
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the conversation at the closed shop dinners i disagree slightly. we don't know how they will pan out. i think we do. that is history and economic history and looking back at how markets reacted to certain situations historically. we hhave templates we have policymakers and business leaders and politicians know how it will pan out and they are blooming terrified about it because history rhymes. >> let me come back at you the consequences often look the same the causes are always different. when you look at the factors that generate the crisis, they are always different so let me just throw up a question to you. we have a potential stagflation scenario for a lot of economies. we get lower growth while we have high inflation. what is the right policy mix
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appran approach to that do you stimulator e or throw hie inflation? do you pay bills and lift inflation? that is the issue. if the response is the wrong response, mthen more people wil lose jobs and more people will run higher with debt and that is raise the consequence of the value of currency that will generate high inflation pressure that's going to make things worse as we watch the cycle. >> i want to come back at you. i know what will happen. how exciting is that i know from our conversations austerity is dead.
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no matter the austrians. austerity is dead. we have seen it with var various initiatives with biden and trump. and then in japan and china. we know that side of things. we also know regardless and this is the secret. regardless of what central banks do and how hawkish they look they are stunningly dovish historically i'm going to go there. everyone says they're hawks. they are not hawks they are less dovish the fact of the matter is going back to the mid '70s, we were alive and well, young men. we have not seen higher negative interest rates in our lifetime in our 50 years plus on this planet, each of us, we have not seen it. no matter what the viewers say, they are hawkish they are going 3% by the end of
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the year with the fed. they will go to zero at the ecb. that is not hawkish. that is less ldovish they will not get hawkish or put positive rates in the system i think i know what the response is from the governments and what it is from central banks >> i know we need to move on i'll mention a great book we both read. this time it is different. the debt will matter >> the line is that the debt crisis isn't debt. it is dormant. it is sleeping i remember that 90% to gdp contested. europeans have thrown that out the window the fiscal rules will not apply. we have to move on the director is doing this adam, does that mean we have to move on? let's head to julianna with the latest in london on the market
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action >> thank you european investors are shrugging off the persistent growth concerns european stocks are raidtrading higher we opened up 1%. we have come off the highs we are still in the positive territory for the day. up 0.6% for the first hour and 15 minutes of trade. as for u.s. future this is the picture right now. we are coming off a negative week another one for u.s. stocks. the seventh negative week in the row for the s&p. worth noting, we have come off the highs according to the u.s. futures. dow was looking at a 300 jump at open the nasdaq and s&p looking at a fi firmer start on the trade. coming up, christine le gard
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lkabt crypto being wo worthless. we'll talk to brad garlinghouse with ripple coming up next
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welcome back a sharpening of rhetoric with the two super powers china's foreign ministry says it rejects president biden's comments that he is willing to use force to defend taiwan biden explained his position >> we agree with the one china policy w we signed on to it. the idea that it can be taken by force is just not appropriate. it will dislocate the entire region and another action similar to what happened in ukraine. so, it is a burden that is even stronger >> well, it is worth pointing out that president biden talked about the consideration they are giving to reducing tariffs on
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china. that put a bit of support behind the chinese currency we have seen the yuan strengthening against the greenback here it is the best rate in almost 18 months there is a question if whether the lockdowns in shanghai are easing as well which would give the chinese currency a little bit of backbone. as far as the tech stocks are concerned, though, that's been a slightly more negative story for the hong kong exchange we know many of the businesses are listed there the hong kong market off 1% through the trading session as investors are still concerned about the regulatory picture with the technology stocks and beijing going forward. i want to get to the next guest. here is what some of our guests in davos have been saying about the market turmoil >> our market has taken a setback recently because of the
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liquidity issue and general market sentiment you know, as we all know markets come and go. it goes up and down. i'm confident what made hong kong a place to invest remain. >> i'm bullish on the tech giants giants we talked about two impacts. google or alphabet and meta and amazon will benefit as a result of the war >> i'm looking at companies these days and those are falling behind on digital. they are suffering you need digital technology. you need our business network to offset pressure and where we are financing transactions and timed with banks around the world and using ai to automate those companies not doing that are facing higher pressure these days
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>> let me do this quickly. lots from the ecb. she said we are in the position to exit the negative interest rates by p the third quarter this would allow the liftoff in july asset purchase program it to end early this the third quarter she says there are disinflationary dynamics un unlikely to return she is also talking about cryptocurrency many assets are worth nothing. she repeated her position of the asset class is highly speculative and very risky cryptocurrencies recovered ground after weeks of heavy losses terrific to get the chance to catch up with brad of ripple brad, thanks for being with us give us reaction to christine le
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garde's reaction. >> not long ago, jamie dimon said bitcoin was a fraud and subsequently come around this industry is not going around today it is valued at $1.2 trillion. i spoken to christine personally we need to stop measuring it by what is going with the overall value and how assets are being used to solve real-world problems we see use cases where blockchain technology can reduce friction measured by cost and speed and overall improves the economy. >> does the 19,000 cryptocurrencies largely as speculative assets do underlining case you are arguing
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for? >> i think yes i said there were 2,000. you said 19,000 today. there were 2,000 and i got heat from the crypto market by saying 99% i thought would go to zero that was not a popular sta statement. my prediction for now has moved in the wrong direction you know, there are some tokens out that are focused on solving a problem. those are ones used in the future and we can give a number of examples. some present here in davos there are ones i look at and hear the description and don't get it there is risk at legarde commented on it. >> i find this conversation refreshing there are crypto experts waho want to bring people in the
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ponzi scheme to say you think most of the products are going to disappear and investors will lose money over the coming years? >> there is a high risk. we say most, more than 50% is high risk. >> how many currencies in the world? >> there is clearly examples ripple is using our xrp which is solve age cross border payment progress we all experienced when you move money cross borders, it is slow and typically expensive. >> i hear you. you know what? i think more regulation better than we think. why are you in a fight with the s.e.c.'s gary gensler? >> gary was quoted as saying justice delayed is justice denied every turn the s.e.c. is slowing this one down.
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we were the ones advocating for years we needed regulatory clarity in the united states for the s.e.c. to say it is to the clear and we will bring a civil lawsuit. i'm advocating for regulatory clarity. >> and not xrp to be sdmecuriti? >> they are commodities. people say as gary gensler said this is the wild west. we are a regulated body. outside of the united states, you have the regulatory clearit. >> so what if it is security there is more reporting and clarity and less opacity it would have us think differently about bitcoin. >> there is all kinds of friction you are adding to it. let's reduce frisk anction.
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let's make it faster and cheaper. there isn't a disclosure we don't know who owns xrp the requirement of security is the security ownerhas to have inventory of everyone who owns it in an open source world, we don't know everyone who owns xrp. for ripple to say we don't control xrp. how do we determine security i view it more like gold or currency or silver these are securities these are commodities. they are regulated as commodities. united states is way behind and out of step with markets to provide the regulatory clarity >> you say good g20 markets. there is no indication that any of them are in a rush to legitimize as they see it,
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cryptocurrency what is the issue of the wrong generation of an establishment and wedded to the idea that consumer protection? why do you believe we are not seeing the adoption or embracin of what clearly you described is technology that has fascinating opportunities for reducing costs and improving the efficiency of transactions are they just too old? >> i think there is a generational dynamic as i got inv involved with the internet there were parallels with a hype cycle and get ahead of reality here we are 20 years later and the internet changed our economy and how we live. i think to say that g7 markets
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are not embracing digital asset is not accurate. the uk, japan, singapore, uae, these are all countries which provided regulatory clarity so they can build new technologies to solve the problems. that is good for those countries. what is happening in the united states is really at risk of putting the u.s. way behind in the next generation of technology evolution which might in part be a generational shift. >> very polite brad garlinghouse of ripple. katherine garrett-cox will be up with us shortly. much later on this morning, i'll be speaking with the chairman of credit suisse. that's the exclusive
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conversation with axel lehmann that is coming up at 11:30 central european time.
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welcome back we are live from davos this is us on the road again >> on the record at the economic forum. >> on the road again i'm geoff cutmore. >> i'm steve sedgwick. >> we should talk about president biden. the u.s. president says the u.s. would woulintervene if chinese n v invades taiwan this prompted beijing it will not make concessions on the territory integrity. >> for the 21st century economy. they will help all of our country's economy grow faster and fair we will do that by taking on some of the most acute challenges that drag down growth and by maximizing the strongest
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growth engine. equities in europe trading higher technology stocks dragged down the hang send into the red after the nasdaq logs the longest weekly losing streak since the dot-com bubble bursting. >> taking some setback because of the liquidity issue and the general market sentiment you know, as we all know, m markets go up and down i'm confident that what made hong kong a place to invest remain the same. the global economy is facing the worst economy since the second world war i will be speaking with her later on as we gather the top
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financial players at 16:40 central european time. russia claiming the last strong hold in the east as the final resistance in mariupol falls to russian forces. volodymyr zelenskyy will address the forum at 11:15 cet let's look at european markets. with w we started out strong. 1% higher for the stoxx 600. we have come off the highs we are seeing green for the most part the dax trading at 1.4% higher ftse 100 is up .70%. only major markets with the red
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which is ftse mib. inn vvestors are watching comme from davos, but comments from president biden is top of mind the u.s. would be ready to intervene should china make a move for taiwan. we'll continue to watch for further fallout from the comments that is capturing a lot of attention. we got comments from the ecb today. issuing a blog post to clarify the path toward policy normalcy. in it, she would expect to end asset purchases early in q3 and raise rates in july and exit negative rates by the end of the accept september. as for the u.s., all three m majors pointing to a positive
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start. steve, over to you the shortages in supply chains and logistics are having an impact within the shipping space. we spoken this morning to the heads of major logistics groups. here is what they told us. >> companies like us have to work on that on a daily basis. technology helps there overall, of course, the markets and supply chains are distorted by high energy prices and shortages and lockdowns in china. we have managed that for two years with covid we found solutions for customers. >> the pandemic showed how fragile the supply chain is. the supply chain is one of the industries that hasn't been dig dig digital. we need to do more the issues today is we wish it
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was the past because as you can see, the cost of shipping containers are high. there are exceptions with china in lockdown and many parts throughout china let's get to katherine garrett-cox. nice to see you. the markets are worrying of recession time it is with some employment in countries and central banks are worried enough to raise rates. it is a difficult back drop. what do you think? >> you said it yourself. these are challenging times with policymakers and investors and also for companies who are trying to navigate their way through this extraordinary period of time clearly from the inflation perspective, i don't think anybody expected us to be here
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even 12 months ago let alone six months ago as you commented on with the challenges on the supply chainpd that is giving us deeply challenging issues our best guess is we manage our way through it >> i think you are being generous they got this wrong with the transitory language and negative rates. they encourage too much speculation. in the real world which created bubbles to the left and right and everywhere is tathat too harsh a view >> these are unprecedented times. we now got to turn the tap off we have a perspective with money free thflowing and easy to acces what is different is right now you have corporate balance sheets looking more healthy than
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they have in recent years. what does that potentially enable certainly, i think, in our view, it gives you options around an increase in activity and clearly from the investor position is where we get the return. one could argue that it was a little too much too late what it enable is for corporate balance sheets to be better and resilient for the future. >> that is fascinating something we talked about on the program is why ceos insist by buying back their shares of market highs we have the point of share prices are falling that will stimulate more corporate activity related to m & a and cut more fat. >> that is interesting you talked about the fed put for ages, the system is awash
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with cash. the cfo put gives the power back into the hands of cfos to buy back shares or m & a that will open a range of new options. the options need to be on the table. if you are facing a string of potential options now, i hate to say it, it is under certain. it is sell in may and go away of the i wonder how long people will stay away >> are out the supervisor board of deutsche bank >> not any longer. >> not deutsche bank specifically i'll raise that in the question i'll ask you you are wearing the asset management hat at the moment european financials have been, i don't know, in a troubled place for a very long time we are starting to see most of the problems worked out.
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we know because of a lot of work done the hard miles by regulators help improve capital levels that they do have a better profile going into any recession. should we be concerned that there are going to be a significant hike in defaults in businesses that borrowed too much during the cheap money years? how confident do you feel about the repair that has been done in the european financial space we have not seen any of the real big cross border deals done that we told were going to happen after the financial crisis and in many ways you look at a country likeitaly and you stil see businesses that would not make it necessarily in another very serious recession how do you feel about owning european financials at the moment or how do you think they will fare if we have a deep recession? >> i come back to what i mentioned before
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i think that the conditions that we have seen economically over the past few years have probably led a number of big european institutions to be better positioned and capitalized that comes to the power of the regulators to invest the organizations of simply not going to default it is not just the defaulting in terms of the investors if you think about the cascade effects across the multiplicity of stake holders at the institutions support is profound i think that actually what that shows is that the power of regulators can create change i would say a huge topic at this meeting is what will happen around climate change? this is another focus at gib asset management and the global disclosure platform. i think what i'm hoping to see this week is real collaboration around systems change and actually it is a real proof point when regulators start to
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mandate this stuff, people take it seriously inasmuch as successful balance sheets, let's turn it positive let's not waste of the crisis and put our money where our mouth is and finance the investments in companies to make a difference and make us proud. >> a great point to leave it on. we will have to say good-bye thank you for joining us katherine garrett-cox. i've just crossed that out lovely to see you. thank you very much. coming up, a man i believe who is still the ceo is christian mumenthaler. do not miss that exclusive interview. later this morning, i'll be speaking to the chairman of credit suisse. axel lehmann don't miss that discussion at
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11:30 central european time.
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welcome back israel and switzerland and
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austria are the latest to confirm monkeypox cases. more than 100 infections have now been regulaistered in europ. it is similar to smallpox, but mild it is acquired by person to person contact and it was first recorded in the 1 1970s. p speaking to us is seth berkeley. he said the spread of monkeypox around the world is a cause for concern. >> this is a definition of epidemic what you are talking about there is an unusual above background rate if this was a small outbreak, people would take that as n normal you do see person-to-person transmission to have it appear, 100 cases, in 12 countries were no connection,
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means we have to figure out what is happening we don't know what that is and we don't know how severe it will be it is likely we will see more cases. >> as a back drop to the issue, russians gained control of mariupol volodymyr zelenskyy set to address the delegation this morning. we will bring you his speech at 11:15 cet. another great guest on set. let move on and bring in christian mumenthaler. christian, nice to see you here. let me start and ask a broad outlook question on current business and trading how are conditions >> certainly darker than we were when we started the year i hope we would see the pandemic go away. it is now endemic which is positive when the war broke out in ukraine, it became clear lots of challenges come with that.
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food crisis, energy crisis discontent in the street stagflation which is the basic scenario a lot of things changed in the last three months. >> what visibility do you think you have i talked to john, the cfo, about the earnings it is a difficult question for a lot of ceos. a lot of issues are so ranking there is long-term thinking about the sector how much visibility do you have throughout to the end of the year >> i think the ukraine war usually war is not insurance we estimate this to be a medium-sized event for the industry $10 billion and $20 billion u.s. we think inflation is more because this touches all
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reserves and financial markets that goes through european held. there is a lot of disturbance this year. we are committed to the financial targets. it is hard to predict now in may where the year will end. >> christian, a lot of concern with the economic fallout with events in inflation. we will lose track of the bigger issues you mentioned climate and the food chain and acute with 40% of the planet reversed already. climate change will only get worse and create more problems for the economy and your business potentially >> you know, it is a huge issue. nobody thinks it will do away because we have other issues we have a lot of issues which require international cooperation. that has suffered a lot from covid. everything is really inter
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related. in terms of climate change for the sector, the risk doesn't rely with the sector it can re-price every year most of the risk, the trend risk, remains with society a warning force. we try to put a price to risk. you know, we are not the ultimate taker of the risk. >> you say you re-price every year i remember my partner was telling me how it worked a long time ago the fact of the matter is, if you have the scale of the nat-cat disaster several times a year, will you re-price? you will have crisis after crisis and claim after claim will this work for the industry? >> that is not the basic scenario we see perils more frequent like heat and drought these perils are smaller than the big andrew-type event. if you came to the event, that
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would not be insurable anymore that is something that is not an i i insurable event. >> if we are headed to a recession, how worried are you that customers will drop away or potential customers won't insure because they are worried about the hike in the premium? >> uninsured parts is an issue today. we estimate half to 60% of every loss that happens is not insured. everything that is insured has a quicker recovery that shows you have money coming back to reconstruct. the recession will add it to the low. i agree with you this might need, depending on the country, it might need the help of the government to avoid the protection gap as we call
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them. >> is there anything you can do? >> i think the gap in protection is something that the industry can imagine which is business and we are not fulfilling our purpose. there is a lot of movement to close the gap. we are having success in some of the developing countries the pressing fact that countries rich like in european countries, some of them, the people do not buy insurance. >> a real pleasure catching up thank you for joining us christian, the ceo of the esg council. we have to wrap it up from here in davaos stay tuned to cnbc we have a lot of exciting interviews coming up
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it is 5:00 a.m. on wall street here is the top five at 5:00. futures higher president biden said america would defend taiwan. this coming after one of the worst weeks for stocks in years with the dow doing something for the first time in nearly a century. merger monday? this time a multibillion dollar deal in the semiconductor space. plus the state where it will cost you nearly $150 to fill up your t


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