Good morning, everyone. Thank you so much for joining us. Hello, and welcome to this special World Economic Forum, Fox Business Network Collaboration, kicking off the 45th annual World Economic Forum, coming to you today from Davos, Switzerland. Today, we examine the new growth context, a changing world facing business and individuals everywhere. A new set of challenges now seven years after the worst recession in a generation. Today, a sharp sell-off in commodities, a slowing global economy, unconventional monetary policy, persistent youth unemployment, and a new type of terrorist dragging at our well-being. The global economy has come out of one conundrum to face yet another one. What are the risks of 2015? How are they reshaping the global economy? On stage, these very leaders who are focusing and facing these challenges head-on and reacting. John Rice, Vice Chairman of Global Powerhouse General Electric, with revenues of $146 billion in operations spread across 170 countries. David Rubenstein, co-founder and co-CEO of Investment Powerhouse, the Carlisle Group, with over $200 billion in assets under management. Dr. Axel Weber, Chairman of the Board of Directors of Global Banking and Asset Management, giant UBS, with $2.5 trillion in assets under management. Zheng Xin, Chief Executive Officer, co-founder of Soho China, the leading real estate developer in Shanghai and Beijing, among other places in the world. And Zhu Min, Deputy Managing Director, International Monetary Fund, the IMF this week, lowering its expectation for global economic growth by the worst in three years. We begin with the stage set for major change. The European Central Bank expected to announce tomorrow new stimulus to jumpstart the eurozone. But before that, the Swiss Central Bank making its own decisions, rattling global markets. Axel Weber, let me kick this off with you. You approached this environment, both as a business person, but also as a former policymaker, having been the president of the Bundesbank. Can you assess what the Swiss National Bank did last week and what your expectations are for the ECB tomorrow? Well, first, it was always clear that the Swiss bank or the floor to the euro was temporary. And what's temporary got to end sometime, and it was at least clear to me from the start, it would be unexpected and unannounced. And therefore, they did the right thing. There is a saying in German, better an end with a shock than shocks with no end. And we've clearly seen the depreciation of the euro pretty strongly across the board. And the Swiss National Bank did the right thing to stop pegging to the euro or at least having a floor. International Flexible Exchange Rate are the norm and they move back to normality. And I think that's the right thing to do. Now, there are challenges and pressures, but I think they're manageable.  There will be, I think, at least some reversal of this overshooting that we've seen in the market. So I'm quite confident that once the dust settles, we're moving back to more normality with a more normal exchange regime for Switzerland. On the ECB this week, very hard to say. I mean, I'm not privy to any information anymore. And living in Switzerland, I probably have less insight in the discussions in Europe than many others, but I think there is a wide expectations, which will be justified this week by action that the ECB will embark on a program of purchases of assets, QE. They'll have a mix of assets they buy. They'll buy corporate bonds, covered bonds. They already do that. They'll add sovereign bonds. They'll have a sizeable program. I'm not sure I want to add to any of speculation of the size of the program and its features, but I think the real issue is the ECB has continuously bought time for European policymakers to fix the issue. I said on this very same panel last year, and the topic was, is Europe back? And I said, Europe is not back. The headlines have gone. The tension has somewhat gone. And Europe should use the fact that they're flying under the radar screen to do the real reforms and to do what is necessary to have escape velocity for the economy. They didn't do that. Now, Europe's not back. The problems are back. And with the problems there, you have to do these reforms under the scrutiny of financial markets and, so to say, in the spotlight of the international finance community. And once what you put on the table as a policymaker is not convincing, markets will evaluate that and markets will immediately price that. So Europe has lost a good opportunity to do many of the necessary things they could have done in a morbid nine environment, and now they need to deliver. The ECB can only be part of a fix in Europe. In my view, they shouldn't go too far because the more they do, I think they set big incentives for governments to do less. And the real problem is, if you continue to buy time and that time is not used for reforms, I think you have to ask yourself that whether more of the same is the best recipe or whether you should actually change the medication. If so far over the last five, six years, the medication hasn't really led to any sustained improvement in European periphery and in many countries. Europe is in a sluggish, gross environment. They face many challenges. Falling prices is just one of them. But the other problems are really too high on employment, no strong gross environment, lack of reforms, and policymakers shouldn't kid themselves. Policymakers are in charge of reforms. If they don't deliver reforms, they don't do their job. By not doing your job in Europe as a policymaker, you don't add to a better environment. And we've seen too much of this. So really, we need to see policymakers stepping up to the table and doing what is needed. Labor markets are locked in an unemployment rate that is way too high. Product markets are not flexible. Many, many things can be done on unemployment, on insurance schemes, on pension schemes. All of this is heavy lifting, but at some point, at least you've got to start. And I've not seen enough reforms in Europe, and the ECB will not fix this issue. And you have talked about this critical need for structural reform beyond monetary policy and what the ECB can do. In fact, Jumin, one of the catalysts for the IMF this week, lowering expectations for global growth, is the persistent weakness coming out of Europe? Yes, and the European economy still goes slowly. And the last year growth is about 0.8%. So we forecast roughly about only 1.1%. It's a very much relatively low. Why so low? I mean, the one issue is, for example, the investments so weak. Compared today with 2007, the whole euro area investment dropped 5% of GDP, which is a big number, which reflects the fragility of the region, the weak confidence, and also the policy environments. Consumption is a little bit strong, but not as strong enough to overcome the weak investments. So I think this is very important. So I very much agree with what you said. I think that in Europe today, we really need the three key policies to push the growth. Number one, we still need accommodating monetary policy, which we are very much looking forward for the ECB's announcements tomorrow. I think it's absolutely important to, for sure, we have accommodating monetary policy to create a space, but also, as Axel mentioned, to do more on the supply side. I mean, we need the push investments. This is very clear. We need the structural reforms. We need to bring the productivity in service areas. We need to bring productivity in the products sectors. We need the reform in the labor markets. Because when all of the decades of Europe, the whole countries, whole industries, still operate as a silo, I think we have to change their situations. If it is so obvious in terms of what we need, why isn't it happening? Because when we don't have aggregate demand side of policies, because we don't have a fiscal space, the debt is way, way high. In advanced economy, debt will be about 100% end of, say, 2020. We don't have a very much monetary policy. Because central bank's balance is big enough, interest rate is zero already. So what do you do? You need a supply side policy. You need a structural reform. You need smart investments. You need investments in infrastructures, in innovative SMEs, in all these acknowledging economies. But when you do the structural reform, you need a political leadership. Because you have to change, for example, labor laws. You have to change the tax on wages. You need to have to change the pension funds. You have to change the mobility issues. You have to change the service regulatory frameworks. All those things require the political leadership, which we don't see that yet. And there are so many political leaderships in the Eurozone, which, of course, was the criticism as the Euro was first being formed. We will get back to that. Mimol Zhenzhen, the elephant in the room, if you will, is the strength of China, or the slowdown of that strength in terms of real estate and other industries, having been really the engine of growth for the world for so many years. Can you characterize the growth in China right now? You're just listening to the two gentlemen. I feel like China is on the other side of the spectrum, which is so much of the growth was driven by investment and for the last 20 decades. And now we're actually seeing the other problem, which is the return on investment has become less and less, lower and lower. Because of the excess investment and not enough consumption. So China is on the other side, which is how do we grow the consumption? And again, it needs reforms. And if we don't have a tax reform that supports the growth of the consumption, then we can talk about the consumption growth. In the end of the day, we still will see very little consumption growth. The last time we spoke, Zhen, you were talking about some of the measures that the government was taking to actually slow down the Red Hot real estate market. Where are we in that regard? Are we still seeing new measures put in place to limit the number of homes people can buy or limit the number of investments people can make? Well, China has dramatically changed, as I spoke to you last time. The real estate has moved from Red Hot to deep cold. So right now, it's the cold, cold sector of the economy that no money wants to go into real estate. And we can comfortably say that China's urbanization led growth is almost coming to an end. Very, very little money going into buying new land, building new buildings, because there's been so much building being built. Developer like me, who used to spend most of the time buying land building buildings, now are also moving on the consumption side, which is how do I get more people to come in to use my office buildings? And can I come up with a new product that can suit the new generation of the mobile generation? Because people don't want to be renting a whole office building. People want to have mobile office. So that's very, very quick mindset change in China. David Rubenstein, you're investing in the midst of all of this on a global basis. Last night, we heard from President Obama talking about what he'd like to see. You've spent time with him recently. Is it true that the US is seeing the most vibrancy here relatively speaking? And how do you invest around the world right now? Well, let me first say that if we were all here a year ago and we were asked what we were going to think the US economy or the global economy would do, we would probably have been wrong. And so discount everything, at least I say. I wouldn't have predicted oil prices would go down. I wouldn't have predicted the US growth to be as strong as it has been. I wouldn't have predicted the slowdown in some of the emerging markets. And I certainly wouldn't have predicted deflation in Europe. So caution everything I say about what's likely to happen. Right now, the United States seems to be the greatest place in the world in which to invest, because we have growth of over 3%. The IMF is predicting 3.4%. Our own numbers would suggest something like that for this year. Inflation is very low. The Fed, if it increased interest rates, are going to be very, very modest if it does it at all this year. We have a problem in the United States historically of some political dysfunction. And we've seen the President and Congress aren't getting along all that well. But that hasn't slowed down the US economy. And the US economy is doing quite well despite the political dysfunction, which suggests maybe political dysfunction is something that maybe is not so bad, because we're actually doing pretty well despite it. Just imagine if Congress and the President get along, what the economy could do. We're not likely in the United States to grow at 5% or 6% anytime soon. But 3.5% is still very good growth when you have a $19 trillion economy. And the biggest problem in the United States right now is that the dollar could become very, very strong, because as interest rates maybe go up a little bit and the US economy has seen such a great place to invest, more and more money is going to go in there into the US. And the result is that the dollar will get stronger. And I think it could hurt some exports at some point from the United States. Secondly, we have a big problem in the United States in that the numbers we use to measure our economy, GDP growth, unemployment going down, and so forth, these numbers are somewhat dated because they don't take into account the people that are left behind. So if our GDP growth is 3.5%, that sounds great, and corporate profits are terrific, stock market prices are very high, but what about the people left behind? And we're seeing very good indications on Fortune United States that many people in the middle class are being left behind and obviously people in the underclass are left behind. So the people who are in the investment world are doing quite well. People below that are not doing so well and that's a real problem in the United States. In terms of investing, I'd say there's nothing better right now than the United States because of the rule of law, transparency, good economic factors, but still, the emerging market is still the largest part of the global economy. It's now 85% of the population of the world is in the emerging markets and 55% of the GDP. And although it's slowed down, it's now probably a buying opportunity, not a selling opportunity. So I'm still really bullish on many emerging markets, particularly China and Sub-Saharan Africa and India. Particularly as valuations in the U.S. have been rising. They have been. And it's a trade-off. I think that in the emerging markets, you probably can get things at lower prices or somewhat greater risk, political risk and other things. But in the United States right now, prices are not cheap. EBITDA multiples for buyouts are roughly the same as they were in 2007. And one other thing that is a concern that should be for everybody is that typically in the West and typically in the United States, we have recessions every seven years. And we are about seven years from the last recession. So while no arm would have had a recession, things happen. A year from now, we will say, well, it was obvious that something was gonna happen, but it's not that obvious today that we'll be in a recession. And I'm not predicting it, but something is going to happen in the United States and the global economy that we're not projecting. Something similar to the oil price tax cut in effect. And I say tax cut because the oil prices are going down. It's an effect of the gigantic tax cut in the United States and in Europe. In the United States for a family of four, average income of $65,000, which is the middle class media and income. It's about a tax cut of about $900 to $1,000 per family. And that is gonna spur consumer spending in the United States and it will spur consumer spending in Europe as well. I hope the United States will do certain things to take advantage of this and build some of the infrastructure we need to do and take advantage of the fact that oil prices are low and that we don't allow our energy industry to kind of go to sleep. You know, it's interesting. We have been talking about the positive ramifications of a 50 plus percent sell-off in the price of oil now for a little while. More money in people's pockets, obviously, expected to jump start things. And yet, what have we seen as a result of the 50 plus percent sell-off in the price of oil? We've seen layoffs in the oil industry. We've seen contract cancellations in terms of rigs and we have seen some speculation about the biggest growth story of America, the Shale Revolution getting hampered as a result of the price of oil. So we're waiting for that positive impact. For Shale oil to be efficient and profitable, you probably, for a new well, probably need to be able to sell it at $70 to $80 a barrel. And so if oil is at $40 a barrel, are you gonna still expend the money to keep the well open, knowing you're probably gonna lose money when you sell the oil? So I think some people are taking rigs offline. We're probably down 500 rigs from the peak of the number of rigs in the United States, 500 down, and I suspect it will go down another couple hundred. I think the oil industry in the United States is not the dominant part of the United States economy. Consumer part of the economy is much larger, it's about 65% of the economy. Still, it's an important part of our economy and now we're producing about nine and a half million barrels of oil a day and it would be important to continue to produce those number of barrels of oil a day. I am afraid that some oil will not be produced because of this lower prices. I do think that the prices will stay low for a while. It's not the case that it went down quickly and all of a sudden it's gonna come back in six months. It's likely to come back over a multi-year period of time, probably two or three years. John Rice, 170 countries you're doing business in, how do you assess what you've heard this morning and how do you decide how to allocate capital? Well, I think we live in a world where everybody is focused on jobs and one of the themes you've heard some of the other panelists mentioned and you hear a lot around the world, economic form is around sustainable inclusive growth. You don't have that if you're not creating jobs and every country has figured that out and they have to be the right jobs. So companies like ours are being called on to create jobs in lots of places including the United States. You don't have sustainable inclusive growth if you're not creating jobs. So countries with high unemployment where unemployment rates among youth, educated youth in some cases are at 30 or 40 or 50% have a real issue and companies like ours are being called on to help solve the problem. You don't create jobs if you don't have basic infrastructure. If you don't have electricity, you don't have good healthcare, you don't have good forms of education, you can't create those jobs. So for us, amidst all this swirl, it ends up being resulting in a continuing demand for infrastructure, whether that's power generation or basic forms of healthcare that are available to all. You still have a billion and a half people in this world that lack the basics. We and others need to be involved in fixing that and helping to create the jobs and then you can solve some of those issues. Men, you want to- I just want to come back to David's comments on the oil issues. Oil do have a multiple impact on the global economies. On one hand, David's right. It's terrific news for the consumers and for the consumer driven economies. It's a good impact. But it's not a good news for producers, David Ray mentioned also these things. And also for the investments probably will slow down. And also there's more than trillion dollars the energy industry's bonds in the markets. How do you reprise these bonds and how is the express change? This also may have an impact on the financial sector as well. And particularly for the oil export countries, the physical production costs are still relatively low. For many countries, lower than $20 per barrel. But I mean for the physical, but fiscal, the budgetary cost is way, way higher. For many countries, around $100 per barrel to meet that budget needs. So obviously those countries will suffer the lower kind of surplus and deficits and all the low growths, exchange rate depreciations, equity market drops. So we saw all those things happens which may have a speed over impact for the other countries as well. So I would say oil, and I agree with David's, oil probably will stay as a low. And net to net is positive, but we should not overestimate this positive impact from oil. I didn't mean to say it's an unalloyed wonderful thing because there are consequences to it. For example, there will be layoffs and already are some in the energy companies. The companies, the countries that produce a lot of oil, they have budgets as you suggested are either $80, $90 a barrel. And now they're not going to get that. So they're going to have to go into deficit spending. But here's a good example of something that you wouldn't have anticipated. Russia, Russian companies have borrowed roughly $650 billion from the West. The Russian companies, because their economy is weak, can't service that debt. That's going to be a problem. And who is owned most of that debt? I think it's mostly European banks. So the European banks, which have been struggling for a while, they could struggle again if the Russians can't pay off that debt. I would say the single greatest new energy opportunity to invest is probably distressed debt and energy. In other words, the debt of companies that expanded a lot, assuming that oil would be at $100 a barrel or higher, now when that's not the case, their debt isn't going to be worth $0.100 a dollar. And a lot of people are going to spend time buying that debt at discounted and taking maybe perhaps control of some of these entities. But you make the, Axel. So I think it's very useful to think about oil as normalizing. And it's normalizing because two things happened. First, the US central bank has stopped adding liquidity to its balance sheet. It's actually running off. They're in a normal interest rate environment where they talk interest rate hikes. We're starting a tightening cycle. Going forward, global liquidity is coming down. So if you look back over the last seven years, there was a lot of money that flew into the oil markets and actually was driving commodities also as part of an asset class. That's normalizing. Commodities are back to being more commodities. And the other thing, don't forget, in the US, the biggest marginal supplier of energy is actually now the United States. It's changing its energy balance and that has an impact. OPEC as a cartel is now producing less than one-third of the known supplies of oil in the next couple of years. And that means that there is very little ability to basically reduce capacity utilization in a fast way. And therefore, I think we've seen a strong correction in the oil market. I think oil will trade back to something between 50 and 70 because that's where the largest part of global marginal supplies, but it does not go up to where it was. And I think that should be welcome as a normalization of what used to be a pure commodity area and which kind of over the couple of years after the crisis became driven by many other things. I think we're seeing that disappear. With oil at 100, when oil was at 140, there were more people predicting 200 than 50. And I think we live in a world where this commodity is gonna cycle and we have to live and work in those cycles. I think at 50, you've gotten rid of some of the marginal projects that probably shouldn't have been contemplated anyways. So the point that Axel and others talked about, I mean in the 70 or 70 to 80 range, that would seem to make sense, but oil is always gonna cycle. Projects that you invest in are long-term projects. So part of this is a reaction to today's price at 50 or below 50. And part of it's a long-term view as to what's gonna happen to this commodity and the technologies you have to have to get it out and produce it. I guess the point that I was raising was there was a report by the Dallas Federal Reserve recently which basically said all of the job creation that we have seen from 2007 has been in Texas in the United States. Well, you would expect the Dallas people to say that, right? The Dallas Federal Reserve. I don't know that I wanna question the Dallas Federal Reserve however on this. I mean that's all of the jobs. So does the decline in oil put a crimp in what has been the strongest industry in relatively speaking the strongest country economically? It puts a crimp in that industry but it also puts a crimp in the renewable energy industry. Renewables work maybe on oil is at 80, 90, $100 a barrel. But when oil is at 40 or $50 a barrel you can't really justify the expenditure in many types of renewable energy because it just doesn't economically work without enormous subsidies. So I suspect unfortunately that renewable energy as a form of energy will go down in terms of the industry's strength and that will be an unfortunate consequence of the lower oil prices. I wanna get back to something you said David and that is the European banks and their vulnerability as a result of what we're hearing this morning because we are trying to identify what could be the catalyst in terms of sending us back into recession. How vulnerable is Europe right now? Well the American banks went through lots of heartache and lots of angst and today they are in reasonably strong shape. They're not happy with all the government constraints and the Volcker rule and so forth but they're in reasonably good shape. The European banks honestly didn't do all the things the American banks did maybe the government regulators didn't force them to do it. Today they are not in a strong shape as the American banks. So if for example there were defaults from Russia I suspect it would hurt the European banks and I suspect as well some there will be a lot more currency turbulence I suspect in Europe and I suspect that's gonna hurt some of the banks as well. So I think the banks really are much more vulnerable to turbulence in the US and the global economy than maybe the American banks are but actually you may disagree. And unfortunately oftentimes it's politics that gets in the way. Axel I want you to look at this headline which no doubt you saw this morning in the financial times. Tension simmer over Eurozone QE as investors buy up Spanish debt. Can you talk to us about the political backdrop within the Eurozone and why there is such a fight in terms of what is required or needed from the European central bank. That could have been your picture right on there. I prefer not to be. So no look the point is very simple. Europe has moved to the European level and I'm talking the EU and the Eurozone in particular has moved to the European level two responsibilities that are government responsibilities. The first one is a common market was created so there is a European competition authority at the EU commission and that has all the antitrust responsibility for that common market. And the second thing that happened is we created one currency. So there's one central bank. We're building a banking union so there's one banking supervisor for the large bank that's emerging. It just started operating January this year. We're building a capital market union which is a sort of fuzzy concept of integrating all other markets in addition to banking. We have no fiscal union. We have no political union. There is no risk sharing among governments and when you really want to go back to the picture it's not the European commission that's in charge of structural reforms in Spain, in Portugal, in Greece, in France, in Italy. It's national governments. And so what we're seeing now is a mismatch between the monetary policy that's a single monetary policy that can act without governments because we have an independent central bank and the fiscal dimension of some of this action that is taken, for example, when the central bank buys sovereign debt. The contention around not having a fiscal union, not having risk sharing and a single budget at the European level always plays out when unusual monetary policy has that edge to it that it involves sovereign debt purchases. And that's why you have a debate currently at the ECB whether they should risk share or should not risk share these purchases, whether they empower national central banks to do the purchases of their sovereign in these programs. And that's basically reflecting the state at which Europe is. It's not a fiscal union and doing monetary policy focused on QE is much more difficult because the safe haven assets were usually considered to be sovereign debt and therefore operating in sovereign debt markets has this fiscal dimension whether you want it or not and that's what's pulling the ECB back and forth. You're better off today because it has the euro. If the euro had never come into existence, would Europe be worse off or better off than it is today? It's very hard to say. Look, I now work in Switzerland. I'm speaking for a Swiss bank. Switzerland is that part of Europe where they always put the flag so you don't see that Switzerland's not part of the EU and Switzerland has its problems with 60% of the exports go into Europe. You just talked at the start about the Swiss National Bank choice on policy. So it's very hard to say. I think Europe, particularly the euro zone, needs to continue to work at integration and they need to deliver policy reforms rather than just lose monetary policy. If that doesn't happen, the project of a single currency area that you've seen that had benefits very much so becomes increasingly a difficult project to run. We need to move Europe to that next stage and if that doesn't happen, I think there will always be questions about the viability of the project and Europe has not done enough to dispel these concerns. The central bank can dispel them to some degree so they can exclude tail risks and they did in 2012 but since then we haven't really seen governments unite and take action, bold action to move Europe forward to a new normal and that's what's troubling Europe and it increasingly sort of comes back. We do have cyclical development so we don't want every second year at Davos to have a discussion is Europe back, is Europe not back, are the problems back but I can predict if nothing really happens you have that debate every two years and I really don't see the bold action that is needed on the government side to kick in and that's where Europe doesn't get to escape velocity. 1% growth against the demographics that Europe has is just not enough, 3.5% the US growth, US growth at the moment globally is almost unique in the sense that it's above long-term potential and the rest is suffering from growth at subpar, output gaps that are big, inflation very low and that cannot just be fixed by monetary policy and the real difference between the US which we all, we basically told all our clients we're overweight US and we're overweight on basically the dollar developments and we've seen a very strong investment in Asia but the real problem is US unemployment increase was largely cyclical as a result of the deepest crisis the US had in post-war history. European unemployment is largely structural. Whatever the central bank does might eliminate a small part of that but the ballpark of use unemployment is weaknesses in labor markets, no competitive reforms, a sort of pension system that doesn't entice you to be active so they need to work on these structural issues if they want European unemployment down. All these years later we're still trying to contemplate whether or not the euro was a success or is a success so far. Let me put one point on the banking sector. I think I agree with Axel and David say that on banking sector overall today the whole world banking sector is much stronger than a few years ago including European banks, the capital issues, liquidity issues and SS. Although there are concerns on European banks after its SS reviews you will see non-performing increase roughly $136 billion, added them to the $800 billion for the whole banking sector which is quite a bit. But overall I would say banking sector today is stronger than a few years ago. Now if you're looking for the whole financial sector. US or global? Global, even including the European banks I think the situation is better, that's very clear. But the risk, everything have a but. In financial sector the risk has really shifted into the shadow banking sector now. I mean if you're looking for even US since the crisis to today, the copper credit they received from banking sector actually reduced it's a net negative of $300 billion, $300 billion. But if you see how much the credit were received from serial banking, from SS management company, from Davis families and 1.3 trillion. Are you benefiting from the regulatory stranglehold that the banks are facing today David? Yes absolutely because the banks had to get out of certain businesses and because they're out of certain businesses people like firms like mine are going into these businesses and not just in investing but in lending. We have businesses as do other firms like mine that are lending money to people who can't get it from regular banks. Now banks are stronger than they were before but they're not more profitable than they were before and they're not actually the engines of creativity. The most creative people in the financial world generally don't go work at the biggest banks in the world. They're going to work in hedge funds or private equity or other kinds of places where you can get more adequately rewarded we would say. But I think banks have an important role in society but I don't think their role 20 years from today is going to be as important as it has been historically because many other vehicles were being set up to take advantage of the fact that banks can't do certain things. You're a long time investor. David get opportunity at moving. I mean this is fine but the real issues and from the whole regulatory framework point of views like you will see all the credit intermediation moving into the non-banking sectors and the transparency is not there. You have to think about the risk and we see the concentrations on particularly on the asset management companies. The top 10 asset management companies really hold quite a big chunk of the bonds issuing and the credit provider to the copper sector as well. So I think that's the key risks today and not particularly in the banking sector. It's different but for example in our firms we don't have FDIC protection. So in other words the banks were basically doing certain things they would argue was argued and they had deposit money that they were risking and the U.S. government was on the hook in effect for the FDIC guarantee. In our case and other firms like mine we're not really guaranteeing people that they're gonna get their money back if they invest with us. But that's an equity issue I think still because a lot of asset management is leveraged on the financing from the bank side. Which is an issue. A lot happened in the banking sector. Look we have done a major overhaul of our strategy and nowadays if you're in banking we move to asset management. We're the largest wealth management global and we have a very good asset management business and we're the largest universal bank in Switzerland. So you gotta move to the core of your competences and where you compete you gotta be top of the league. And I think many banks are looking at their strategy and trying to devise a strategy where they actually serve their clients best and we're the best capitalized bank in the world and actually I don't see the capital regime that was introduced after the crisis as a problem because if you're managing wealth your clients don't wanna have sleepless nights because they're worried about your capital ratios. So having high capital ratios and a very good leverage ratio that is prudent funding helps you in the eyes of your business model if it's about managing assets and if it's about wealthy clients and managing their money. Jean Jean Penn. Well recently we have been in China we've been encouraged by the government to go out outside of China to invest. So I had an opportunity to look at an asset in Europe and we bid it like many other bidders and in the end we all backed off because we see that because of the monetary policy in Europe that making the borrowing so cheap, so low, right? Like if you buy a building then your long-term borrowing is probably gonna cost you 3% but then the future of the building, the growth of the economy which is gonna be led by the growth of the economy is not there. So while yes you have this cheap borrowing rate that everybody rushes in to borrow and to buy and yet on the demand side you really don't know. Like this is what Drew mean talked about because of the lack of an investment. Then so Europe is becoming another place that is deflation, like Japan, deflation driven and return on asset are really, really low. But that only applies to certain assets, so take Europe. Real estate, I'm talking about buildings. Well but exactly, so what you've seen in China you talked about China is the real estate market boom for a long period of time, it's now correcting. There's a big inventory overhang. We've seen a price correction last year. We're probably gonna see another 10% decline of housing starts this year but what has happened is there was a big rotation. Investors that were real estate and property related investments rotated these investments into the equity markets. There's a big influx of overseas monies into China and so there was a rotation from the property markets to the equity markets, so a major rally which will continue given these conditions in China. The same is happening in Europe. It happens always when QE starts. Look at the Fed, you have a very low interest rate pass for years to come, a balance sheet that is expanding. You don't get a return on fixed income assets in particular, sovereign debt. You move to equities and in the US, the equity boom happened with a relatively stable dollar. In Japan, the equity moves happened with a depreciation of the yen and what you've seen in Europe is a depreciation of the currency but we're now overweight European equities because there will be a pickup in the equity markets and it's not right that European equity is dependent on European demand. Many of the European corporates are global companies that export, their main export markets now are the US and is China. So you buy in European governance but actually global demand and that's why I think you really need to look very closely and we're helping investors to make these choices which companies you invest in. In generalizing the equity markets will pick up in Europe as a result of these policies for quite a period of time but you have to exactly do an analysis of what you're investing in. Like always, not every European company is the same but I think we see things improving. But from your standpoint, you're a long-term real estate investor, you're not ready to even look at valuations that have come down so much in Europe. Well, in fixed asset in real estate, the price not only has not come down, has gone up because of the monetary policy because so cheap to borrow, right? So these buildings, you cannot all use equity, you have to borrow. So if half of your money is borrowed at the very low interest rate, you will borrow. So that makes the buying, the price of the building very expensive. Now, you'll buy the price of the building expensive if you know that the growth will be there, the rent will go up. But if you are not confident about the economy's growth, if you're not confident that the rent will go up, you won't do it. Yeah, years ago, I remember inflation was a big problem in the West, particularly in the United States for a number of years. Now deflation is a much more serious problem in Europe, certainly, it has been in Japan. And the United States, I wouldn't say, has a deflation problem, but we certainly don't have an inflation problem. We had inflation at 1.4% last year, and it's probably not gonna get much higher this year. So deflation is a much more pernicious problem because economists and central bankers are much better at solving inflation than they are in deflation. Deflation is a much more pernicious problem, and it takes much longer time to get out of it, and it gets to be a vicious cycle, and it takes a long time to get out of deflationary cycles. John Rice. So this point to zoom in and David, we're talking about before, about the significance of the non-bank banking system, the shadow banking, I think when you get back to a comment I made early about the importance of infrastructure investments, it's a pivotal point. There's no bank in Europe that's investing in infrastructure today like they were before the financial crisis, and few banks in the United States. So if you're gonna get capital to flow to these infrastructure projects, you need sovereign wealth funds and private equity, and lots of other investors beyond the traditional banks, and if you don't have them, this stuff isn't gonna get built. Yes, I agree with that. Government historically built infrastructure, and now government isn't going to do it as much, so it's gonna be dependent on private sector, maybe with public-private partnerships doing it, and if you have reasonable expectations for your rates of return in infrastructure, you can be pretty happy with what you're gonna get out of good infrastructure projects. I think a mid-team to upper-team rate of return on infrastructure equity was probably a reasonable rate of return, and you're gonna see more and more projects done this way, I think in the United States and in Europe, but there's no doubt that, as you mentioned, that private equity is the solution to all problems in the world, and if there's more private equity, I think the world would be a better place. We're gonna open it up to a question shortly, but Axel, let me ask you ahead of this important announcement tomorrow from the ECB, can you tell us what you think in terms of the size? Do you think this will be a very large number, and what is already priced into the market? There's already a very high expectation priced into the market, so... So if it's not a large number? Well, I think the ECB would definitely not try and disappoint, and they're making compromises to get to such a number that is more or less in the market, but if you really look deeper down, the unorthodox policies we're seeing everywhere now require central banks to do things that are usually not associated. I mean, you just said that. They don't really have an easy way to bring inflation up. Central banks saying inflation is too low, doesn't sound right to the general public. Central banks, like in Japan, supporting unions to have wage increases towards 2% isn't usually the thing you associate with central bank policy, but what they're trying to do is anchor inflation expectations, and wage increases and price increases at the target rate, and if you're below that target, and I think that's where we are, I wouldn't subscribe to the view that we're in a deflation scenario, we're with sub-target inflation, and bringing inflation back to target haven't made this credible announcement that we have certain inflation targets. The central banks will have to do some work, and really the usual way inflation comes around is by a pickup of the economy. I don't think that's gonna happen in Europe any time soon. However much Mario Draghi will buy, you will not see inflation readings close to their target for the next years to come, and therefore they need to resort to other policies in Europe to bring inflation up, and getting lower unemployment, getting the economy going, doing more labor market reforms and product markets reform, opening up for competition, that will get the economy going, and with a more vibrant economy, you will get inflation pick up, and prices pick up, and wages pick up. We touched on Japan, and I wanna get the panel's take on Japan in a moment, and this other program that we're seeing from Abenomics, but first, hearing from all of you, the audience, we have microphones walking around, questions from the audience for our esteemed panel. Right there, yes sir. If you could just state where you're from, and ask the question please. Thanks, my name is Ivan from Algebra's Investments. I was wondering if anyone on the panel feels like giving us their insight on the topic of currency wars more broadly. What their take on it is, and do they see any particular risks that they can cost central banks to lose credibility later on this year? That's a tough question, you go first. I think we have a problem, and Minjoo can add to that. I think the international monetary system at the moment is seriously unanchored. Most central banks are pursuing policy that is exclusively focused on their own economy and what they need, and there is a massive QE in Japan, there will be strong QE in Europe, China is easing policies as well, so they'll reduce interest rate. The rest of the world is on an easing pass, and the US has announced that they'll tighten policy. We've seen major movements in the exchange rate as a result of that. I wouldn't say it's currency wars, it's market adjustments to reasonable economic perspectives going forward, but along the same line. I don't think the Fed will continue on the pass that is currently priced in, or that they've announced, because really there is very little reasons in the US economy why the Fed, in addition to maybe just turning interest rates around and moving to 25 basis points for their rates, will have a series of rate hikes that is already pre-announced. They'll become very data-driven, and the data will look good, some of the data will look weaker, and I don't really expect the Fed to be on autopilot as many in the market believe, because that would create additional repercussions in the global economy and on the currency front with an appreciating dollar continuing on its pass, and with all the kind of fallout you will see with the US policy turnaround on emerging markets, or more risky asset classes, or US high yield. So I think we'll see a more muted policy response going forward than what is priced in, and probably for overall stability, that's probably a better development than a strong policy reaction that is at the moment priced in. Let me just add before you speak that historically the Fed's job was to worry about inflation and the value of the currency, and the Fed has taken on the job of stirring the economy a bit by worrying about unemployment, and they still worry a lot about that, but they're also now saying that they're gonna worry about the impact on currencies, and they're gonna look at the impact on currency or whatever they might do, so I think that will probably be a change for the Fed to really take it into account what the impact they might do would be on the euro, or the dollar, or other currencies, and that's a relatively novel. It's a new coming. The answer for your question is a short answer, so yes and no. Yes, that's a concern, because you see the divergence between the amount central bank's market policies. The U.S. and the U.K. is about to tighten it, and the ECB and the BUJ are still on the losing side, and that's just right. All the emerging market central bank is on the losing side now, so you will see the different policy orientation change, not only aggregate size of the liquidity, but also change the structure of the liquidity. I think the question is a quite a long question, because when the Fed pumping money into the systems where the dollar goes is quite clear, but all other central banks are doing the same thing, so where those currencies go is not all clear at all. So I think that there is a concern about that, and we see the currency market volatility already, but whether there's a currency wall, we don't see that. I think it's very important for the international community to work together very hard to prevent the currency wall, which is absolutely no winner at all for the whole world. Does everyone on the panel believe that the dollar stays strong in the coming couple of years? Yeah, I think the dollar was the strongest in you to go through. I do think so, though. You'll never get a secretary of the treasury to really tell you anything about where he thinks the dollar will go. They're not allowed to talk about it. I'm asking all of you questions from the audience, yes, sir. But they always will say they're interested in a strong dollar. Yes, but the action is what we really care about. Jacob Frankel, and then Lucky Azaba. Thank you, Jacob Frankel, JP Morgan. The subject of the session is growth, and there seems to be a consensus that central banks are the only game in town and that it is not sustainable. There is also seems to be a consensus that the solution is unemployment, dealing with unemployment, education, infrastructure, tax policies, all the things that are not in the territory of central banks. If we had here on the panel policymakers for whom it is in their territory to deal with these matters and you ask them, why hasn't it been done yet? What would they answer? Can anyone simulate such a conversation? John Rice. I think it's because you've got to have the stomach for the fight. And with all of these reforms, you have a dislocation that goes with them. And I'm talking about reforming state-owned enterprises in China. You end up having sometimes people out of work in one area so you can employ more in another area. And I think we live in a world where the policymakers, you can come up with the theory of the case, but actually doing it and living through that dislocation and ending up with a better state at some point, you just don't have enough people with the stomach for the fight. I wouldn't say that years ago, a century ago, politicians were enormously courageous all the time. But today, politicians have everything they do known by everybody around the world every second. And as a result, they're afraid to do anything that might upset anybody. So the Federal Reserve in our country has taken on the role of basically being the person or the entity that's going to strengthen the economy. A Congress has been unwilling to thoroughly adopt any new physical policies, do anything for years. And I think you're going to see that pattern continue for quite a while. If you want to look, and Jacob is right, before I moved to the central bank, I was actually on the Council of Economic Advisors for the German government. And this was in 2002. Germany was the sick man of Europe. And any discussion in Davos, it was Germany's the taillight of developments. We had a number of reforms called the Agenda 2010 under the Schroeder government that the Council at the time, and many proposed labor market reform, pension reform, Medicare, all of this stuff. We made a joke on the Council that it was Agenda 2010 because the 20 suggestions we made to the government, they did only 10. But at least they did those 10. And the result of that, the German economy improved vastly, but it was not re-elected. Now, not being re-elected. People did not want it. It was unpopular. This hurts. But 10 years later, that's why Germany is so strong because of these reforms.  If you don't get re-elected, so be it. But policymakers nowadays are too exclusively focused on being re-elected. And therefore, they don't do the things that risk not being re-elected. Well, that's called politics versus governing. I think you see that now in the United States a bit. President Obama is not running for election again, as he reminded everybody last night. And he's got two years, and I think he feels very liberated to do the kind of things he thinks are necessary. And I think that is probably a good thing for our economy because I think generally he'll take stands that might be tougher than the ones he might have taken before if he's worrying about political concerns. And I think generally, sometimes you get the best things done in lame duck sessions of Congress or politicians can't run for election again. Yeah, I, Jacob, you have a good point, but I don't think you have the right answer. I'm sorry to say that. The Central Bank was the game in the town in the past few years, but not today. I think today, restructuring the political leadership is the game of the town. Because we don't have very much space for the monetary policy. So we have to move to surprise sides. So we need a structural reform. We need infrastructure investments. So we need smart investments into all those knowledge economy assumptions, into innovative SMEs. And we need to do the reform on the labor market and all those things that require the political leadership. I think a political leadership is the game of the town today. Do you have a time frame? What if it's not done in the next few years? So how long should the market wait for these structural reforms? Market have no time to wait at all because the growth is at the right weight. We need the politicians to act strongly today. And you can't wait because you can only do these things in your first year of government. Because then you need three years with a usual four-year election cycle for these reforms to work out for the economy improve because it's a slow pickup. Now, if you miss the first year, largely all governments do that because the main focus in the first year is to undo all the things the predecessor has done that got out of government and that were unpopular. They're wasting the first year to do the undoing and then they're in year two. They start thinking about reforms before they do the reforms, it's year three. And whenever they then look at the election cycle, they say, we'll do that in the next cycle. Well, we're in a second. I don't think that everything is so election driven. We in China, we don't have election. Okay. And we should be having reforms every day and we don't. After the people party congress and the plenary. We had a lot of talks about the reforms. We still don't see enough reforms. Jin, what does the market, what do the people not understand about China in your view? I mean, we see so many headlines, so much speculation about this slow move toward becoming a consumption economy from an export led economy. Tell us something that we don't know. What I think people expect this new government come in with a huge reforms. And again, this is not election driven. It's not because they worried about being not reelected. But still, there's a lot of talks about the reforms. There's been very little action really implemented. People generally been hoping that more reforms would come. Now, why there hasn't been more reforms? And what would the economy go? Where is it heading to? Frankly, people don't really know. Because if you have a very clear agenda on reforms, that even though if we're urbanization coming to an end, people will quickly form what will be the next. But if you don't have a clear roadmap to the future, then nobody really knows. Companies don't know how to form a future policy. What country have you been investing the most in in the last two years? United States? United States. Yeah, but I think in general, we should give Chinese government credit. They are doing a lot of reforms. Not enough. Not enough, that's true. Because China's emerging market transitioning and changing every day, right? I mean, if you're looking for the last year's number, it's quite impressive. China is doing slower, but doing better. Because the first time you will see the consumption contributing more than investment to the growth. First time you see the service sector is bigger than industry. So you see the structure is changing. When you change the structure, the growth will slow down, which is very much welcome. Yeah, expectation. A question here from Lucky Izawa, Japan. Lucky Izawa from Japan Pulse Bank. Thank you very much for the whole of the issues. Now we are facing Euro and 25th I'm looking for. And oil issue, we are so interesting. And regulation and central bank's role. Everything I'm interested in. My concern this year, I'd like to ask you where we should invest. Because we are the bank, but kind of the institutional investor. We have a huge money of it, but we are not allowed to invest the asset, a real estate. Mostly they are fixed income and a little bit of equity. So where and we should invest this year and what we should do? Private equity everywhere. David, where are you investing right now? Well, we are investing in Japan. For example, we think Japan is a very attractive place. That Japan does have demographic issues that we can probably talk about later. We do think the United States is attractive. We still are very bullish on China. On China, people have to have obsessed over a Chinese growth rate. Because it grew 10% a year for 30 years in a row, people think China should grow with 10% a year every year. It's not realistic at its size. If it's about a $10 trillion economy, growing at 6% a year, 6.5% is still spectacular at that size of economy. The United States cannot grow at 6.5% a year. We're happy at 3.5% or so. So I think China doesn't get the credit it deserves for growing at the rate that it's growing. Oh, it does have some issues and disequilibriums. But I'd say generally, we do think that private equity or private investments are probably gonna outperform public investments in the next couple of years. We do think that Japan and lots of other places in Asia are very attractive places to invest right now. John, guys, where are you investing right now? I'm probably with the whole knowledge of economy. Take it off now. And you see how many of this new industry in Germany and in the United States. And this is a whole new area with technology support, very innovative, not necessarily being big size on the rest of the future. And the productivity is way high and returns very good. So in that sense, I would say the financial sector should take more risk to move into this new area. Finances, John. I'm sorry. Lucky, what did you say? Until last year, we invested US and Europe. US and Europe until last year. Well, you did okay. Yeah, that was good. That was the trade. Look, you gotta invest in gross. If you look at where the US is growing, three and a half percent. And you overweight equities in the US. We're overweight equities in the US. We just moved to an overweight of equities in Europe because we think the same thing will play out as in many other countries. And we're overweight on emerging markets and China, the market. So look, you gotta invest in gross because you gotta participate in that gross dividend. If you're located in a no gross area, and some of the course of Europe and some of the more challenged economies have that, you gotta have an exposure to gross. And you can only get it through equity exposures because fixed income is very low everywhere. And you gotta get it from the gross regions. The US is less than twice the size of GDP of China. But with China growing at roughly seven percent, it's still contributing to most to global growth at the moment. So China exposures are very important to have for non-Chinese investors. I understand that Chinese companies are sort of impatient with a set of reforms, but I can tell you for our China investments, it's very, very important. The anti-corruption campaign, the rule of law, the establishment of solid institutions, that really is something that induces consumer and investor trust in the region. And therefore it don't underestimate that what the current government is doing to build these institutions because one reason why everyone is invested in the US, safe investments, rule of law, institutional, reliable framework, and that is really something that outside investors value a lot. Jin, is the anti-corruption campaign working? Working very well. And I think that it's true that if you look at equity, China's equity is really cheap. And if you compare Chinese equity versus US equity. Volatile though. Volatile, very volatile. Job 7.7 percent two days ago. Correct. So running the anti-corruption campaign is a very talented individual Wang Qishan. He used to be in charge of the economy. He's now running the anti-corruption campaign. One of the unfortunate side effects though is that some Chinese business people and others are, and government officials are afraid to spend money because hotels and restaurants and so forth, that might be seen as expensive. They don't want to be seen as going there. So it has slowed down a bit some spending, but overall it's a possibility. Sean Rice, your investments right now. Well, we're looking at the growth markets, the developing markets. If you look at market size, the growth of the middle class, this incoming equality, the demand for infrastructure. There's no country that's off limits. Well, there's a few that are off limits. What's off limits? Well, the legally sanctioned ones that we're not allowed to participate in. But that leaves us 170 or 180 or 190 to work with. And when you add it up for us, we've got to take a long-term view so we can't be swayed by short-term moves in raw material prices or currency. And we look at the growth of the middle class and the demand for basic forms of infrastructure and that guides where we invest. And that's Southeast Asia, it's Africa, it's Latin America, the places you would expect. Final question, Axel, for you. Do you think Abenomics will work in Japan? Same issue. The monetary and the fiscal, that's traditional policy and we know how to align it, even the unconventional monetary policy. The big discussion in Japan is about will the reform part work, the third arrow. And there we're seeing some challenges. And again, it's a bit like the same is true in Europe. If the reforms don't work, then basically the monetary and the fiscal start a bushfire that eventually disappears. So you've got to have the structural. And therefore I'm always surprised that policy makers continue to start from the monetary and fiscal and don't really start from the structural because the monetary and fiscal can buy you the time and smooth the transition. If you do the structural, if you really don't embark on the structure in a credible way on the reform agendas, the rest will not deliver on its own. And so Japan faces the same problem as in Europe at the buying time, but governments are not using that time wisely. I have a bigger demographic problem. The biggest problem in Japan is people need to reproduce more because they're not enough people who are younger. I want to thank our esteemed panel. A couple of comments that I wrote down, Zheng Jin, the real estate market in China has gone from red hot to deep cold. All of our panelists said that the dollar will continue stronger in the next couple of years. David Rubenstein said that there was opportunity in distressed debt in energy. And Axel Weber made the call that oil prices are likely to go back to $50 to $70 a barrel. Thank you very much for joining us, everybody. And thank you for joining us in the audience. We wish you a successful Davos and we appreciate you joining us at home as well and we wish you a successful year. Good night from Davos. Thank you, I think that went really well. Okay, thank you.


Thanks, Ashkan, and it's great to be here again this year. This is my third float conference, and it seems like every year it just gets better and better. And for me in particular, I think this year is probably my favorite conference yet, because we have some real data to show you today. So I know that we've already seen a lot of data earlier in Justin's talk. I hope you'll get sort of strapped in, and we're going to sort of surf some data together. I'll try to take a pause at, you know, some opportune times to kind of contextualize things. But I'm really excited to show you today the results of the first clinical trial involving eating disorders. So the outline for today's talk, I'm going to talk first and foremost about why would we study floating and eating disorders, sort of outline some methods for the study that we ran recently at the Laureate Institute for Brain Research, we'll talk about the results of the study, and then sort of the implications. And first and foremost, I think that as a clinician, motivation for doing any study, for trying to explore the potential clinical benefits of any intervention, really starts with the patient, with the individual who is experiencing suffering, who's experiencing symptoms. And specifically with eating disorders, I think that most of you are probably aware of a very prominent experience of somebody who had an eating disorder, Emily Noren, who wrote a book about this. And this is just some comments from her book about the positive benefit that she derived as an individual affected by an eating disorder. So she said, floating literally quieted the constant noise and chaos, allowed my body to rest and my mind to wander through the caves and tunnels of my unconscious, my most valuable tool for recovery, happiness, and health. And with respect to some of the specific symptoms of eating disorders, particularly the aspects of eating food, really for her she emphasized that the most difficult part about eating food was sitting with this feeling of fullness. And since the feeling of emptiness was my normal and it felt soothing and safe, this feeling of fullness was extremely uncomfortable. So much so that it was impossible to distract myself from how fat I felt. If I followed a meal with a float, however, I could allow my food to digest without the discomfort of fullness. So in previous years, we've talked a lot about how floating alters the balance of external and internal environmental stimuli, sensory stimuli. Here was an anecdotal example of how the interceptive experience of eating was quieted and was made more tolerable with floating. So here's how we think about floating in the brain. So you have a cerebral cortex, which processes lots and lots of information from outside and inside the body. And when you enter a float environment, you are attenuating visual input. Here's some general areas of the brain that are involved. You attenuate auditory, proprioceptive, tactile sensation, movement, and speech. And the question really here is, as a consequence, how does being in this environment, both individually and then after repeated sessions, how does floating potentially modulate some of these sensations and some of these symptoms in a way that could be relevant for eating disorders? So I'll try to make that case for you a little bit more. We focus a lot on interoception because in the absence of a lot of these other sensory stimuli, it seems in most of the unaffected individuals that we've studied, the interoceptive sense is enhanced. So the study that I'm going to talk about is really a study of anorexia nervosa, which is one of numerous eating disorders that are available to be diagnosed in an individual. We started with anorexia nervosa because it's a fairly homogenous. People who come in with a disorder have a lot of the same symptoms. And it's a disorder that I've personally studied for a number of years now and have a lot of experience with. But let's look at some of the symptoms of anorexia nervosa. So first thing you have to know is that it's a rare but deadly disease. So it affects less than 1% of the population, approximately 10 to 1 female to male. But it's deadly. It has a mortality rate over the long term of almost 20%. So that puts it on an even playing field with disorders like schizophrenia, with disorders like bipolar disorder.  Another challenge is that current treatments really only have moderate efficacy. So there's not a single treatment out there right now that shows a preponderance of clinical benefit. Usually you try one treatment. If that doesn't work, you try another or you try combinations of medication and psychotherapy. Unfortunately, medications are fairly unhelpful. Even medications that are helpful for other kinds of psychiatric disorders, anxiety and depression, don't seem to work very well with anorexia nervosa. So there's really sort of a need to investigate new interventions. Some of the clinical features that we see in the clinic all the time, the first one that's the most obvious is severe food restriction, causing distinct weight loss. So these aren't people who skip one meal here and there or who are going on a diet and sort of cutting back on their calories a little bit. These are people who rigidly adhere to a very, very limited amount of food that they will eat and it makes them lose weight and it's readily apparent to anyone even on the street. Accompanied by that, they have an intense fear of weight gain. So the idea of eating food is often assumed to immediately result in the deposition of the fat and the deposition of an increase in body size. And accompanying that, these individuals often have a substantial disturbance in how they see themselves. Literally, when they look in the mirror, when everybody else sees somebody who's slender, this is what they see. They see a larger image of themselves and that appears to be connected with how they represent their own body image in the brain. Other symptoms that are not necessarily linked to the diagnosis of the disorder but are very common are anxiety, obsessionality and perfectionism. These are sort of trait-like characteristics. There are certainly lots of people who have more anxiety or more obsessionality but don't have anorexia nervosa or don't have any other kind of disorder. But these three typically are highly elevated in patients with AN. And emerging research in my lab and in other labs is really starting to show that these individuals seem to have a difficulty recognizing both their own internal body sensations as well as emotional states. So why floating and why anorexia nervosa? Well, these are the clinical features. This is the clinical problem. And floating seems to possibly modulate or operate on several of these symptoms. So Justin just finished giving a very nice illustration of how floating attenuates anxiety, how a single float session can do that. But I'm interested in sort of this idea of body image disturbance. This is actually one of the last things to change in treatment as well as how floating might alter internal body sensations and emotional experience. And so that's what we'll go through today. This is a clinical trial, but one thing that you have to understand about clinical trials is that they're fairly slow. It takes a long time to do it right. And you usually don't start by hitting a home run. So when Justin was talking about conducting a randomized controlled trial, oftentimes there are several studies that lead up to that point where you learn more about the intervention, you learn more about the population. If you think about testing a new treatment, like he was saying earlier, we want to know is floating safe? Do people have adverse side effects, et cetera? So this study that I'm going to present to you today is more of a safety study. And our basic hypothesis, I talked about this study a little bit last year, is that floating is safe for individuals with anorexia nervosa. So the idea of floating in a reduced environment is not going to make the symptoms of the disorder worse. And I'll show you several ways that we examine this. So the methods for the current study, there are several sort of predictions that drive the methods. So the first thing is that we really are interested in seeing whether there are any adverse physical effects of floating. It turns out that these patients, when they're very underweight, can feel dizzy. They can have lots of blood pressure changes when they go from lying down to sitting or standing.  So we want to make sure that they don't have any effects like that. But then we're also interested in seeing whether there is an impact of floating on symptoms of anxiety, on stress, on mood, and of course on body image. We don't rule out the possibility of positive effects, but this study was not specifically designed to test the presence of positive effects. So if you think of a clinical trial as a trumped up hypothesis test, you can really only test one hypothesis, so you can only have what's called one primary outcome. So our outcome in this is really more about physical effects and safety, whereas we have some other secondary outcomes that I'll explore and I'll show to you today. Within this range of physical effects of floating, we really are going to focus very, very closely on blood pressure and specifically blood pressure drops. And I'll explain that next. So what we're really looking for in this study is this floating and do something called orthostatic hypotension. What that really means is simply a fall in your blood pressure when you stand up. So if you imagine that this is your body and this blue level here indicates your total blood volume, right? If your total blood volume is low, when you stand up, the volume drops.  Patients with eating disorders, especially who are underweight, are notoriously at risk for this and they can actually fall and hurt themselves. They can break bones, etc. So this is the physiology of orthostatic hypotension. So when you stand up, the blood literally is pulled away from your heart by gravity. It pools in your veins and your abdomen. You have sensors in your arteries, in your carotid arteries, which are on the neck, and also in the aorta, which is right next to the heart right here, which don't respond to the fall in blood pressure, to the fall in your blood volume away from the heart. And this is really a problem of the autonomic nervous system where the heart fails to beat faster to compensate. So the autonomic nervous system doesn't really tell the body, hey, you know, there's something changing. You've got to adjust to this. And the consequence is this lightheadedness or dizziness, literally because blood is not flowing to the brain at high enough of a level. So in the context of this study, and sort of a standard way that in the hospital we assess for orthostatic hypotension, is a very concrete measurement. So a drop of 20 millimeters of mercury in systolic blood pressure, kind of that top number, if you've seen like the patient has 120 over 60, right? Or something like that. That's the top number. So you look for a drop of 20 beats or 20 millimeters of mercury or more. Or you look for a drop in the diastolic blood pressure of 10 millimeters of mercury or more. So what you look for is when the person goes from lying to standing or sitting to standing, a drop in that level. And at the Laureate Institute of Brain Research, we have an adolescent and an adult inpatient eating disorders unit two floors above us. And this is a very real concern that the clinicians have with the patients. So frequently I will see patients being wheeled around in a wheelchair. And the reason is that they are, that day, they're orthostatic and they're considered at an increased fall risk if they were to be walking around and getting up. So this is really a key safety variable that is something we wanted to measure, clinically relevant. So here's how the study was set up. Participants came in and they consented. They did a psychiatric evaluation with myself or Dr. Scott Mosman who is the director of the Laureate Eating Disorders Program. And then they did a behavioral assessment. They filled out a lot of questionnaires, etc. And then they came in for a float. And the first float that we had them do was float in this zero gravity chair that we've presented to you in the past at the float conference. And we did that for a very specific reason because we wanted to see, first of all, could people tolerate being supine for 90 minutes? Our floats were 90 minutes. We also used it as an opportunity to measure their orthostatic blood pressure while they were clothed and while we had my research coordinator who's a nurse with them so that we could make sure that they did not show evidence of orthostasis before we put them into a float tank without anybody in the room. So that was the first float. Our second float was in the open pool. And as Justin has mentioned before, we have psychiatric patients start in the open pool in case they have claustrophobia. But we have also this enclosed or this domed pool at Liber. And many of you know that you can change the humidity and you have a little bit finer control over some of the environmental aspects. So we wanted to make sure that we also used sort of more of a standard setting. And we wanted to do it twice so we could really get a good sense as to what would the effects be. So this was not a randomized clinical trial or RCT. This was a fixed order. This was also not blinded. There's no treatment condition. This is a sequential open label where everybody in the study started in the chair. Then they went to the open pool and then to the enclosed pool. And again what we're looking at are measures of physical safety. So what we measured was orthostatic blood pressure. We also measured heart rate and EEG. We did the same thing in the open pool. And you know by this point in the study design we were thinking to ourselves you know we don't really have we haven't really given somebody a normal experience of floating because this blood pressure cuff is going off every 10 minutes. So we thought let's give everybody just sort of a float without any sensors attached so that it would be a little bit more comparable to something that you might experience in the community. And then finally with the fourth float we measured these devices again. I'm not going to show or discuss any data related to heart rate or EEG but we will talk about the blood pressure which was the primary outcome of the study. So it turns out measuring these variables is very important. You have to do it in a standardized way. We had people where we measured everybody from lying to sitting to standing in that order and we waited exactly three minutes in between so that we could allow the person's autonomic nervous system to adjust to the positional constraints. This is sort of a standard approach in the clinic. And then we measured blood pressure before and after the float. And when I say after the float I mean literally while they were still in the pool. So in order to do that we had to use a couple different devices. So this is an example of the device that we used. This is sort of what you'll see in the hospital if you ever have a loved one who's there and they're getting their vital signs measured. This is obviously not compatible with a float tank. You can't take it into the water. So we used the same Bluetooth waterproof device that Justin has been using and we measured blood pressure before the float using the standard clinical device and then using the float compatible device. And so then we can compare the two. This is sort of the timeline for our study. It took our participants about three and a half hours from start to finish. So this was kind of a long intensive data collection. But these are the procedures. So they came in, they filled out some questionnaires to assess their baseline state. They took a shower. Then we measured their pre-float orthostatics with both the clinical standard and then the float compatible device. We applied our sensors and then we had them float. Again, all floats were 90 minutes. Immediately afterwards we measured their orthostatic vital signs again. They took a shower and then they filled out some questions and they completed an interview. So here's the results. Are you guys all with me? All right. So let's get to the data. Four floats in 10 minutes. All right. So first of all, this study was approved by the Western Institutional Review Board. We also registered the study on clinicaltrials.gov. So if you go to that website, you can look up sort of all the variables that I've just described for you. This is a standard way of ensuring quality. And so that when you submit these results for publication, the reviewers can look back and say, oh, okay, well, what did you actually say you were going to do at the beginning of the study and how did that relate to what you actually found and what you actually measured? So you can find it there. And this was who completed the study. So with the help of the Laureate Eating Disorders Program, we contacted over 55 people. And over the course of a little more than a year, we consented 23 and completed four floats in 21 individuals. We had two people who dropped out after their second float. So each of them did have an experience of floating in the open pool. But 21 individuals. Okay. So what are their characteristics? They're on average 26 years old. As you can see, the majority of them are female, which is consistent with what you find epidemiologically. Nearly a college education. Importantly, they all had a normal current body mass index. So we recruited people specifically who were not on the inpatient unit, but people who were in the community, who we were sure were unlikely to have orthostatic hypotension and who sort of you could think of as like the walking well, just to get an initial sense of floating in this population. Nevertheless, they had elevated eating disorder symptoms. They also had elevated trait anxiety. And they also had evidence of residual body image disturbance, which as I said before, is probably the last thing that changes even after people normalize their weight. So before I show you the results of the primary outcome measure, just a reliability check. So we're going to really rely on the float-compatible wireless Bluetooth blood pressure device that you won't see in the hospital, but we're going to look for the reliability between that and the clinical standard to see whether it's even reasonable to try and trust this device in making any conclusions. And the good news is, is I think that we can. So when you look at systolic blood pressure, this shows literally every float session where we measured orthostatics. This is actually lying down. This is sitting. And this is standing. And these are the two devices. And what you can see is that overall, there's a very high degree of correlation between the values. Anything above 0.7 is traditionally considered to be acceptable. And the same is true for the diastolic blood pressure. So everything that I'll show you from now on is using the wireless Bluetooth device. If you remember our criteria for orthostasis is that 20 millimeter mercury drop. So again, you're looking for whether the blood pressure dropped. The systolic blood pressure by 20. These are the individual float sessions, the chair and the pool one and pool three where we collected blood pressure during the float and afterwards. And what you're looking for is, does anybody show a drop of more than 20? So these are each of the individual 21 participants. So minus 20 would be kind of down here. And does anybody see any dots sort of falling off the graph? No. So we saw no evidence of orthostatic hypotension in this sample using the systolic blood pressure as the criteria. So again, that's our primary outcome measure. How about diastolic blood pressure? We see the same thing. So here we're looking for 10 millimeters of mercury. We don't see any drop of less than 10 millimeters of mercury. In fact, what we tend to see if anything is in the pool, the blood pressure actually tends to rise a little bit when people stand up. If we go back and we look at the groups, here's the group blood pressure for systolic blood pressure. So this is pre from lying to sitting to standing in the chair, lying, sitting, standing, post chair. You can see that it actually stays pretty level. Whereas in the two pool conditions, here's post pool one and post pool two. You can see that actually rather than dropping, which is what we would be concerned about, we see a very healthy and vigorous increase in blood pressure. So this, again, is an indication that the autonomic nervous system is doing what it needs to be doing. And we see the same thing in the systolic blood pressure. So the difference in the diastolic, I'm sorry, so you can see diastolic increasing from lying to sitting to standing. So that's good news, right? So we have kind of initial evidence that across multiple floats, this patient population is not showing evidence of orthostasis. How about during the float? So we have multiple conditions that we can look at. We can look at the zero gravity chair condition, and this is what you would see. So blood pressure starts out a little bit on the lower side compared to what you would expect from the normal population. Normal blood pressures tend to be around 120 over 70-ish. That would be kind of considered normal. Whereas here you can see that this patient population is starting somewhat low, about 102. And this is just the average blood pressure. And these vertical lines just show, reflect the standard error. So it's a measure of the variability. It's not the same as the confidence interval that Justin talked about. But it just gives you a sense of how much wiggle room there is from the mean. And overall what you can see is that with floating and systolic blood pressure, the blood pressure is about the same. In the pool, however, we see that before their first float, their patient's blood pressure was actually somewhat elevated. And then it takes about 20 minutes or so before it starts to decrease. It kind of changes a little bit, goes back down. Whereas in the third float, you can see that it just pretty much immediately levels out. And that looks a lot more similar, I think, to the graph that you saw with the anxiety patients. We see a very similar thing with diastolic blood pressure. So again, their diastolic is a little bit lower. If anything, it kind of increases across the float itself and the chair. Starts out a little bit higher in the first pool and then comes down. And maybe decreases even a little bit more in the third pool. So if I had to characterize overall the similarities between the anxious patients and the eating disorder patients, I would say that the direction of the autonomic change in terms of blood pressure is similar. But what you see is sort of evidence of an accumulation over time in this population. Okay. So those are all the primary outcome measures. But we do have these other secondary outcome measures which are fairly exploratory. And I'm going to race through these at lightning speed. But before I do that, are you guys ready? All right. So in order to interpret these graphs, you just really need to know two things.  Justin already did a very nice job of introducing this idea of the POMP score, the percentage of maximum possible change on the scale. It's a way of equating the degree of change that's possible and comparing it across measures. So what you're going to look for in these graphs is the change going above zero or is it going below zero? Okay. So let's go. And remember, we have four floats. So the first is the chair, open pool, and then the two closed pools over time. Okay. First thing is negative affect seems to decrease slightly across the board. Okay. These are statistically significant. Positive affect doesn't seem to change much with the chair, but you see this sort of linear effect where it increases statistically significantly by the fourth float. Okay. Positive affect gets better. Joviality doesn't change a whole lot early on, but you see it changes the most at the end. Fatigue sort of decreases across the board. And serenity increases both with the chair and the two pool conditions, but you see the largest effect, almost 30%, with the final float. The largest effect with the final float. How about stress and anxiety? It's the same sort of graph. You can see that energy increases kind of across the board. Relaxation also increases across the board, but again you see this finding where with the fourth float, the final float, you have the most accumulation of effect over time. Same with feelings of refreshment. And stress, again, seems to show the greatest decrease by the fourth float in these patients. How about interoceptive sensation changes? We've talked a lot about that over the years. Well, in this population, you get about a 10% increase in the feeling of the heartbeat, as well as the breath, but the stomach interestingly doesn't seem to show as much of a change. So this, if anything, it decreases a little bit in the chair, but doesn't really seem to show a change in the intensity of the sensations over time, which I thought is kind of interesting. It may match up somewhat with Emily Noren's findings from her own personal experience. We also looked at the affect. So this is a little bit different. We didn't have a pre and post to look at a change. This is sort of, 50 would be them indicating that a neutral level of pleasantness or unpleasantness across the float. So you can see that the pleasantness of the heart doesn't increase from the float, whereas breathing sensations actually seem to increase somewhat, although not a clear pattern. And again, you see this sort of odd, not a clear linear pattern, but you see a hint at some decreases in the pleasantness of affect, but this is on a range from zero to 100. So some decrease with some of the floats, but not a clear substantial decrease across all the floats. All right. Getting towards the end. Are you guys with me? All right. So body image disturbance. So again, black line. You're looking for things that increase or decrease. So we had several different measures of body image. The first one related more to feelings of attractiveness, self ratings of attractiveness called the body image state scale. You can see that across the board, there's a tendency to maybe report feeling a little bit less attractive, but this is not statistically significant. We had another scale where people were rating their physical body size, called the photographic figure rating scale. And here, and the first thing we found is that when they looked at a series of silhouettes and they rated out of these different silhouettes from underweight to overweight, which one represents most closely your ideal body image? There's actually a tendency to, a small tendency to choose the body that was a little bit larger than they had before the float. That was their ideal body image. When you look at their current body image, so they looked at the same pictures and they said, pick the figure that best shows what your body looks like right now. This is what they picked. So you can see that they actually across all the floats picked a more slender body. And when you combine the two scores into something called a body image dissatisfaction, sort of the subtraction of the two, you can see that body dissatisfaction actually decreases across all the conditions. And you can see this sort of linear trend where with the pool, it's continuing to decrease. What does that look like from the perspective of a single person? Well, these are the actual images. So this is a hypothetical example of a patient whose body actually looks like this. And in the pre-float state, you can think of this more as sort of like what somebody who's acutely experiencing the symptoms of the disorder would say that even though their body actually looks like this, they think their body looks more like this. This would be the image that they would pick. And then if you ask them to rate what they think their body should look like, this is what they would pick. So they would pick a more overweight body relative to what their current body looks like and think that their ideal body should look even more emaciated. And so the kind of change in body image dissatisfaction I'll illustrate right here, this is what they looked like before the float and this would be more like what they looked like after the float. So you can see that after the float, the person's body, their actual body hasn't changed shape, but they're picking a current body that is more closely similar to their own body and also rating an ideal body that is closer to their own body and less emaciated. In terms of effect sizes, right? Justin talked about this and showed you the comparison of effect sizes across the different conditions. So now we want to see how much do our results in the eating disorder population relate to patients with anxiety. So this is a subset of the effect sizes that he showed you before. Again, anything in red or blue is considered very large. So this is the anxious group. This is the first chair float and you can see that with a lot of these variables we're seeing similar effect sizes. And then this is all three pools. And so there's sort of two things that I would like to emphasize here. The first is look at the similarity between these two patient populations across all the different floats. We're seeing very large effect sizes, very large reductions in state anxiety and stress, very large increases in refreshment, serenity and relaxation. Here is the body dissatisfaction. You can see that on the final float you get the largest effect. But the other thing that we really have to acknowledge here is that we have this chair condition. And some of you may not agree that this is floating, but these are people who were lying supine in a room with the lights dimmed and with less sound. Not to the same extent as the float pool, but you can see that there are some effects that are similar on some of these variables. And so I think that future research is going to need to evaluate what are the relative influences of modulating the environment. And if you can't get access to a float pool, are there other ways that you could temporarily alter your environment to get some of the effects? Clearly we see that the effects increase over time. You can see over here energy, happiness and positive affect continue to build. But again, just thinking about what is this reduced environment that we're talking about. Just to finish up, in the participants' own words, here are what some of them said. So we asked them after each float what did you experience. This is just a sampling. This person said, I didn't feel my outer body for a good amount of time, so that felt really refreshing. And I noticed that even my view of my physical appearance before and after had changed a bit. So this would certainly go in line with some of the body image changes that I showed you. Another person said, I could feel my breath and hear my breath and hear my heartbeat. And then I experienced not being able to feel my outer body for like not the entire time, but a majority of the time and then just feeling relaxed. Another person said they felt relaxed, a little more focused than before. My mind is not quite as loud as it was before. And another subject said, my back quit hurting. I was in no pain and that was the best part. I was in so much pain when I came in and the pain was just gone for the rest. I think many of you have probably seen these reports and heard these reports from individuals before, but to see it in the context of a research study in a clinical population that's so severely affected, I think is quite positive. Now, this was a safety study, so we want to know what are some of the negative effects of floating or the potential negative effects. So here, this was actually the first question we asked people. Any negative experiences during the float? And this is all 21 subjects' responses. Not regarding the float, not at all. Nope. No. Not really. I'm not really. No. Not applicable.  There's just salt everywhere. I think something you guys can all relate to. I would say that we do still see some evidence of people experiencing anxiety in the float, like Justin talked about. This person said they felt a short time of panic. They were in the dark. They felt like I can't communicate with the research coordinator for some reason, but that was my only negative experience. And this was not enough to get the person out of the pool. But again, this is likely to happen at times, and you really want to be vigilant for when it happens and how you'll respond. So the implications of the study are very simple. This is an initial clinical trial. It's not a randomized clinical trial, but it is a study that suggests that individuals with anorexia nervosa can safely tolerate the physical effects of floating, and they may experience improvements in some of the symptoms of anxiety, mood, and body image as a result of floating. So a lot further than where we were a year ago. And what does this indicate? That floating, in my opinion, should be studied for clinical benefit in eating disorders, particularly in people who are more acutely affected. So this was a study of the walking well, and it's a great first step. But most of those people weren't orthostatic to begin with. Their symptom severity was lower. We have seen evidence that some of the more recalcitrant symptoms appear to budge somewhat, like the body image disturbance. But what we really want to do is we really want to follow this up with a study in more acutely ill populations and see how we can integrate this with other forms of treatment for eating disorders. So I'd just like to acknowledge all of my colleagues, especially Justin, Henry Yeh, who's our biostatistician, Scott Mosman, who's the director of the eating disorders program, Valerie Upshaw, who's my research coordinator who we could not have done the study without her. She's a nurse. She was there for safety monitoring in my entire lab and the funding from the William K. Warren Foundation. And especially to Ashkan Graham and Jake for inviting me. Thank you.


Recent advancements in bioprocessing have enabled the production of recombinant proteins on a larger scale, making them more accessible and affordable. These advancements include the use of disposable systems, continuous upstream processing, continuous chromatography, integrated continuous bioprocessing, quality by design, and process analytical technologies. This article was authored by Nagesh K. Tripathi and Unbud Shrivastava.