kriti: good morning and welcome to "daybreak: europe" i'm kriti gupta in london. let's get to the top stories. a shakeup at the iowa caucus. former president donald trump wins by a record of, ron desantis comes in second and vivek ramaswamy dropping out of the race altogether. houthi militants hit a u.s.-owned commercial vessel with a ballistic missile, as shippers warned the red sea is still too dangerous to navigate. we're live at the world economic orem in davos switzerland, we speak to the south african finance minister later this hour. the future of not only the united states, but europe, and what does it look like in an environment where we're still

navigating rate cuts getting priced into this market. nevertheless, when you look at markets on an intraday basis, you are seeing red across the screen. euro stoxx 50 futures down about 0.6%. the 5100 down 0.3%. that geopolitical risk seems to get more priced in lately. we're seeing risk off sentiment. january is known to be seasonally weak on both sides of the atlantic you are seeing that. s&p futures down about 0.4%. the underperformance in tech is interesting because it is dragging the entire index down, perhaps setting the precedent for the equity story around the world. nasdaq 100 futures down 0.6%. i want to go to go the cross you will be seeing a lot of bond market movement. this is crucial, when we talk about what the levels actually are. yesterday u.s. markets were closed. you had cash trading and the equity market and bond market, both not actually seeing trade, so a little catching up today when it comes in the treasury market. the 10-year yield at 3.99, it

keeps bouncing up against that keep her percent level, higher by about six basis points overnight. dollar weakness -- euro-dollar 1.0 nine. cable at 1.26. both seeing weakness but more a function of the greenback than a european story. brent crude a function of dollar strength. not attentive action, $78 handle despite geopolitical tensions in the middle east. i want to get a quick check on how asian markets are faring. avril hong standing by in singapore. avril: the dollar strength reflected in this part of the world as well. stocks, a gauge of them, snapping the three-session winning streak. it is feeling the heat from those ecb comments. even the yields in australia and japan are following european counterparts. but the market i want to talk about is that in china. the hang seng is leading losses in the region today. headed for its lowest close

since november 22. if we can take a look at this next page, you will see that the drag is coming through from the chinese and hong kong lenders. a gauge of them slipped further into negative territory after a report that major lender paying on bank is -- ping an bank is drafting a list where builders will be put on. these are among dozens that will be eligible for funding support. this is part of a directive from the government from an economic work conference last month. it seems like ping an as adjusted criteria to extend lines of credit to the builders. the worry is that it will increasingly be put on chinese lenders' balance sheets and that is why the market is reacting the way it is. it's not just about the real estate prices, it is also about geopolitics, as we saw baidu really in the crosshairs yesterday sinking 11 plus percent. it struggled to recoup losses

today. this is linked to its potential link with the chinese military ai research, which to be clear, it has strongly denied. but still, the seeds of doubt seem to have been planted. and u.s.-china tensions figuring into the list of worries for investors today. kriti: avril hong in singapore, thank you so much. at the core of what she is talking about is simply this worry around what they geopolitics look like, despite that military of the equation for baidu is important. as we speak about added scrutiny, i want to bring headlines across the terminal. it looks like chinese banks are tightening curbs on russia. after a u.s. sanctions order according to a bloomberg's screw. you are seeing at least two banks ordering a review of their russian businesses in recent weeks. specifically, focusing on cross-border deals according to people familiar with the matter. they are stepping up to diligence on clients, this

includes checks on business registrations, authorized beneficiaries and controllers from russia. if you look at russian foreign reserves, de-dollarization has been a key part, instead favoring the yuan. those ties getting broken down on the financial level. we will bring you more as we get that coming out of our bloomberg team in asia. i want to go to the united states. donald trump has cruised to victory in the iowa caucuses, cementing his status as the republican front-runner, at least for now. ron desantis finishing a distant second. news organizations calling the contest just 30 minutes after the caucuses opened. >> i really think this is time now for everybody, our country to come together. we want to come together, whether it is republican or democrat, or liberal or conservative. it would be so nice if we could come together and straighten out the world, and straighten out the problems and all of the death and destruction we're

witnessing that's practically never been like this. it's just so important. i want to make that a big part of our message. we will come together. it's going to happen soon too. kriti: bloomberg's derek wallbank joins me now. a pleasure to have you on the program this morning. interesting comments from president trump. uniting both sides of the aisle when somewhat argue he is a key part of distancing both sides of the aisle. i think the margin of victory is pretty notable. derek, your initial take on president trump's landslide victory in iowa. >> landslide is exactly the word for it. look, the iowa caucuses have been a fang among republican voters going first since about 1980. this is the largest margin of victory anybody has had in iowa on the republican side, full stop. donald trump won 98 out of 99 counties and missed the last one by one vote.

everybody else was way, way back. ron desantis made his whole campaign about iowa and finished with less support than he started the presidential campaign with in that state and a polls. let me put that underline to say how big donald trump's vote was here. he won among everybody. among our been voters and rural voters, evangelicals, college educated and noncollege educated, swept the board. iowa is much more friendly territory than the next estates coming up, new hampshire and especially, haley's home state of south carolina. if there is a way to stop donald trump, somewhere in there, somebody has got to beat him, somewhere, right? and haley is somewhere in the ballpark of down 10 points in new hampshire. if you are governor of south carolina, that is a good place to make a stand. that is what she is looking at right here. we have seen a little bit of an uptick in haley's support in new

hampshire. i saw one poll recently that had her as close as seven points away. but trump, again, clearly leads there. ramaswamy was never going to win this. he was never going to get close to winning this. but he was eating into some of trump's support. you see him in iowa getting about 7% support. most of those voters are probably heavily overlapped with trump. so you would expect a phone for him. in summation, there were probably three tickets out of iowa. trump got one. ron desantis got one. nikki haley got one. the next turf we're moving to little bit more favorable for nikki haley. can she make something happen there? if not, if we get through south carolina and trump goes three for three, that is a pretty short primary campaign. what i really think trump was talking about in that opening message is, it's not that

everybody needs to get on board, is that the other people need to get out, and get on board. you might hear his campaign making that case even more explicitly in the days ahead. kriti: vivek ramaswamy doing exactly that with his endorsement of president trump. despite being attacked by the former president. let's talk about the number two position. expectation was widely that nikki haley was going to come out on top of ron desantis. especially around the urban, college-educated demographic area the exact opposite is what happened. what went wrong, derek? >> part of the problem haley had in iowa, she didn't invest into it a lot. desantis as i said it moved his whole campaign to iowa. he had a big national operation. that stopped working. haley didn't go as hard on iowa because she has better states coming up later. the demographics of iowa don't necessarily fit as well with the campaign she is trying to run. that is part of the difficulty

for her. but as i'm looking through those results, when i was looking at the really rural counties, i'm talking about really evangelical voters -- she didn't do as well there. for as well as she might have done among college educated voters close to some of iowa's bigger cities and in his college towns, i didn't see a lot on the others' line of the spectrum. she did okay in some places, she just had honestly pretty bad results in some other parts, and that really dragged her down overall. the other thing worth mentioning here, the weather in iowa was absolutely frightful. you're talking about below freezing conditions. he really had to want to be there. that emphasizes your motivated support. that's something i'm looking at going into new hampshire. who has that motivated support?

the weather could be better in new hampshire. it's easier to vote in new hampshire that it is in iowa. but that motivated support is really critical. a lot of her support has been a little soft. kriti: the turnout dropping below levels we saw in 2016 back when that was a concern at the iowa caucus. i think ted cruz came out in that primary and we know how that turned out. derek wallbank, thank you for your analysis around the iowa caucuses. i want to stick with the united states but in the context of the middle east. a u.s. owned merchant vessel has been hit by a anti-ship ballistic missile fired by houthi fighters in the red sea. yesterday the u.s. department of transportation issued a warning to merchant ships to avoid the area. paula wallace joining us from dubai. it feels like the news flow around this keeps getting worse. there is no real end in terms of when the situation might ease. why are we not seeing a bigger reaction in markets? >> hi, kriti.

that's a good question. if you are talking about muted reaction, you don't have to look much further than oil and gas markets. they really aren't showing they are in a panic mode or anything like that at all. brent remains below $80 a barrel. traders seem more focused on what's going on with demand in china. and the interest-rate environment in the u.s. and europe, than with what's going on in the red sea. in europe, you saw gas prices fall below 30 euros per megawatt hour yesterday. as far as energy markets are concerned, people are pretty relaxed. freight markets are different. freight costs have soared in the past couple of weeks. particularly when it comes to sending containers between europe and china. most of those would go through the southern red sea where we're seeing these attacks and attention to the suez and onto

europe. now a lot of these ships are having to go around the southern part of africa, which takes much longer. i think the existence of that route around the cape of good hope, even if it is longer and adds fuel costs, is the main reason markets aren't in panic mode. yes, the southern red sea is dangerous at the moment or ships, but it doesn't mean goods can't get between europe and asia right now. the other thing to note is there are still a lot of ships, whether it is bulk carriers, energy tankers, going through that route. yes, traffic has dropped but bloomberg analysis has shown that even since friday, when the u.s. and u.k. struck yemen with missiles, there are still ships doing it. so some companies feel it is safe enough to continue with that journey. kriti: i want to ask greatly

about some other regions seeing attacks. iran is also attacked iraq and syria as well, retaliation for deadly bombings earlier this month. what do we know in regards to that? is this simply a tit-for-tat, or should we be paying more attention? >> it is possibly just a tit-for-tat, but it is something markets will be looking at closely to see if there is escalation. iran has hinted that these targets were used by israeli intelligence services. these are facilities in northern iraq. we know that israel has in the past used parts of kurdish iraq for intelligence gathering on iran. it is the type of thing that is possibly escalatory, but we will have to watch and see. kriti: it's interesting we're talking about regional escalation one already of the united states and its allies

seem to be fighting on multiple fronts already. paula wallace in dubai, thank you for your reporting this morning. i want to stick with a war story except go to ukraine, where it says it has downed two russian planes in the cf as of which is controlled by russian forces. long-range and an air control plane were hit. president zelenskyy is due at the world economic forum, where he is trying to maintain western support for his military campaign. a meeting of national security advisor focused on ukraine's peace plan in davos earlier with no clear path forward. we will speak with ukraine's first epi-prime minister at davos later. do not miss that and other big interviews today, including the nasdaq ceo and the nato secretary-general. under the world of the macro, let's go to the micro. earnings from goldman sachs and morgan stanley due out today.

jennifer ceraintly, local wall street expert, joins me now this morning. what do we need to know here? >> some of the big takeaways from last week were really that 2023 was the last really bumper year for net interest income. you had a lot of banks revising things down, talking about the fed, if they are on pause or start to cut rates, that is not good for interest income. we will probably hear more of that. the banks tomorrow, like you said, are much more focused on trading and investment banking. we're going to hear more of the same in terms of we didn't see that revival in investment banking these ceos had been calling for. trading was softer in the fourth quarter. the pressure will be on the ceos to answer for that. if that doesn't materialize, where does the earnings power come from this year? kriti: jenny will be back to dive into more of the nitty-gritty later in the hour.

coming up on the show, we got from the united states to the continent of africa. nigeria's inflation hitting a near three-decade high with a ninth consecutive rate hike on the cards. stick with us. this is bloomberg. ♪

kriti: consumer prices in nigeria rose at their fastest rate in three decades in december. as a halt to fuel subsidies led to fuel costs soaring. nduka, pleasure to have you on the show this morning. does this mean a rate hike when it comes to monetary policy? >> the central bank governor said that late last year when he spoke in lagos. he said that was going to happen

in the first half of this year. however what we don't know is when that is going to happen. the cbn held a committee meeting last year in july, when the rate was 10.7 five. we are expecting a new decision. they are supposed to meet next week. we don't know if that meeting will happen because the schedule has not been released by the central bank yet. we expect it will raise rates this year. kriti: talk to us about the fiscal side of it. what are the president's plans to boost revenue? >> the president wants to raise revenue through a combination of tax. he wants to plug the holes, he wants to automate the system. the government [indiscernible] the minister of finance has announced that repeatedly.

he has not made it clear which assets. the government is looking at ramping up oil production. a huge chunk of nigeria's revenue comes from sales of crude. he is thinking of ramping up that production. however he has to curtail a oil theft. in the region where most of the oil is produced. they need to lure investors to upgrade their infrastructure if they want to boost oil production. kriti: it's an interesting dynamic as you see emerging, frontier markets tackle the same issues as g10 currencies are facing. we thank you so much for joining us from abujja. plenty more ahead. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe" i'm kriti gupta in london. i want to break some news from around the world. the financial times reporting that the barclays ceo has called for the u.k. to create an economic development agency. in a letter, the ceo said the new agency would harness the private sector to drive long-term growth and de-politici ze industrial policymaking. he added that the u.k. badly needs a development agency similar to those in singapore, france and ireland. it's been reported that the city of london broker panmure gordon and liberum agreed to merge in an all stock deal. the panmure ceo will lead the combined firm. the latest combination of stockbrokers looking to survive

a dry spell when it comes to dealmaking. apple will remove the blood oxygen feature from its latest watches to get around a u.s. ban, if it's appeal in a patent infringement case fails. masimo has been locked in a feud with apple over the technology. saying that u.s. customs and border protection approved the move last week, which would allow apple to keep its watches on the market. sticking with technology. elon musk says he would prefer to have greater control of tesla before building out its ai and robotics capabilities. in a post on x, the tesla chief executive said he would be uncomfortable growing the automaker into an ai leader without at least 25% of voting rights. musk currently owns about 12% of tesla stock. we will bring you live coverage from the world economic forum in davos all week, where tech will be front and center. let me bring you some of the conversation you can look forward to. 7:30 a.m. london time, we will hear from microsoft ceo satya

nadella, among a slew of other names. on the markets today program at 8:10 a.m. u.k. time, an interview with charlie nunn, lloyds banking group ceo. and don't miss our interview with the deutsche bank cfo at 9 a.m. u.k. time. francine as well speaking to be ukraine's first of deputy minister of the economy, don't miss that interview at 9:30 a.m. u.k. time. there's a lot to digest. a lot of major speakers all talking about the aid going to ukraine, as well as the other dynamics that reign true at davos. talking about technology, ai and regulation, and about geopolitics, not to mention all the monetary policy that is expected to happen in 2024. a lot of that driven by the labor market. at 7 a.m. u.k. time, u.k. jobs data. 1:00 p.m., german cpi also on board. both pieces of data will speak

to that strength in the european economy. but it's a similar story when it comes to the u.s. economy. at about 4 p.m. u.k. time, this is what a lot of eyes are on, the fed's waller speaking on this idea that does the fomc start to see more divergence in some of their rate cut talks that we haven't seen in the last couple of years? there has been this consensus of higher for longer rates. do you see that crack just a little bit? 4 p.m. u.k. time. remember, the current treasury secretary of the united states janet yellen has said she thanks as inflation comes down, rate cuts should be part of the agenda. keep that in mind as we go live to davos, as we go to the finance minister of south africa. that conversation coming up next. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds

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kriti: good morning and welcome to "daybreak: europe," i'm pretty good to in london. a shakeup at the iowa caucus. former president donald trump wins by a record margin, while ron desantis comes in second and vivek ramaswamy drops out of the race. in the middle east, houthi militants hit a u.s.-owned commercial vessel with a ballistic missile, underscoring warnings that the red sea is too dangerous for shipping. we're live at the world economic forum in davos switzerland. we speak to the south african finance minister in a couple of minutes. a lot going on at davos, but a quick check on markets because you are seeing risk off sentiment takeover. euro stoxx 50 future is down

0.5%. it is going global, a lot of it attributed to perhaps geopolitical risk you are seeing. markets do not like uncertainty and right now there is a ton of it when it comes to not only geopolitics, but how corporations are navigating the deepening tensions in the middle east. ftse 100 futures down 0.3%. a similar story across the atlantic. s&p futures down 0.4%. 4796 on those contracts. notable underperformance from tech names. nasdaq 100 futures down about 0.6%. quick check on the cross asset story because the bond market is front and center. yesterday for mlk day the treasury market was closed. the 10-year is higher five basis points overnight as the markets play a little catch-up. dollar strength however seems to be the story, in line with that yield the move, euro-dollar 1.09, cable hovering at about 1.26. weakness in european currency markets as a function of what

the greenback is doing. as well as brent crude which is moving at all, but a $78 handle, as investors figure out how much exposure they want to be oil story given the geopolitical tensions. i want to go to davos, where all of this is top of mind. it's also a cold and crisp morning. but bundled up and hopefully very warm, is francine lacqua, at bloomberg house this morning with a every interesting interview. fran, over to you. francine: it is crisp and cold. it is -13 celsius, so i let the imagination wonder in how many layers we're wearing right now. this is our first interview at bloomberg house. we're excited for having a great lineup. to kick this off, i'm delighted to be joined by the south african finance minister. he is enoch godongwana. minister, thank you so much for joining us. there is a number of challenges the world is facing. kriti was talking about trade. how difficult will it be for you and south africa to balance your budget? enoch: it is already difficult.

at the beginning of the year, we presented a budget in february. first quarter of that budget, we had to revise it downwards because of revenue shortfalls. we're in a tight fiscal space at the moment. both as a result of the global challenges and domestic challenges. francine: what does that mean for taxes? enoch: that's also a challenge. raising taxes in an environment like that becomes difficult. in 2022, we reduced company tax by 1%. is going to be difficult to go back and raise that. consumers and south africans are in a tight space now for personal income tax. that's also a of gold area to go into. -- difficult area to go into. francine: the possibility of

raising taxes is off the table. enoch: i can't say it's off the table, but i am just outlining the difficulties even of raising taxes in the current environment. francine: something else people are intently watching for south africa, is there is talk about you taking half of the reserves of the central bank. is that still on the table? or have you seen a lot of resistance? enoch: i have known that our reserves have increased. the act requires that myself and the governor of the central bank agree, if there is ever going to be anything. but that's a difficult issue because it also raises challenges about the impact on the balance sheet of the central bank, and so on. we have to take a lot of those things into account. francine: so for the moment, no deal? enoch: for the moment, there is

no deal. and there is no pressure on us or the central bank. we have got to be very careful. more prudent on both sides of the equation. francine: what would make the central bank say yes to this agreement because it does weaken them? enoch: at the moment, i'm not saying they are disagreeing. all i'm saying, it's a matter which has been raised. there has been reluctance to take that route. francine: what would you do with that money if you had it? enoch: there is an argument that we should avoid inflationary impact, in other words, you must use it for debt instead of

finance and consumption. those are some of the discussion. i'm not saying at the moment we are. francine: this is a state logistics company. you are optimistic that it can turn itself around. enoch: there are two things we should avoid. is to use the template we did in eskom. investing more money in fixing the utility. and not in fixing the grid. those are two distinct things. same thing with trans net, when we are fixing transnet, we must keep our eyes on making sure logistic framework operates. what that means, it doesn't have to rely on transnet alone. we will bring in private sector participants. francine: are you willing to put

more money if they ask for additional requests? enoch: in some circumstances, it may not be easy to say no money. but the question is under which conditions, and if we do, we will have to take into account that it must be structured in a way that there will be some efficiency gains for the country. francine: i think the guarantee at the moment is up until march. do you expect them to ask for more money? how do you make sure you are not throwing money into a bottomless pit? enoch: they have already done that. francine: asked for money? enoch: our teams are working with transnet. as i've indicated, they really have to be quid pro quo in the sense that what are they going to deliver in exchange? francine: have you had any responses to that, anything

concrete? enoch: my team and transnet teams are working on some of those issues. francine: how worried are you about 2024? there is a lot of geopolitics. south africa has been part of some of the concerns over ukraine. you have made your intent clear with israel and gaza. there is trade concerns. we're not sure if inflation is fully under control. it could be much more entrenched. enoch: on the inflationary front, global inflation will still be a challenge. at a domestic level, the central bank has been able to tame it a bit. as a result now there is optimism that we are getting into a phase of interest-rate rate cuts. in that sense, there is a possibility. the global conditions are of

great concern, the impact on us. let me give you the russian one. we table the budget on the 23rd of february. when we wake up on the 24th, russia has invaded ukraine. with all its implications on food prices and so on. today impact. -- they impact. we searched for peaceful resolution of all these complex. francine: thank you, the minister of finance. i will send it back to you in london. this is our kickoff from bloomberg house. kriti: francine lacqua speaking to the south african finance minister. talking about what south african finances really look like. the highlight saying that the transnet request for money will not be an easy one to deny. there are plenty more big ones coming from davos. market moving, i imagine. look forward to conversations with the governor of the bank of france, the deutsche bank cfo,

as well as nato secretary-general, not to mention the nasdaq ceo all ahead from the world economic forum in davos switzerland. donald trump cruising to victory in the iowa caucuses. maybe that makes him the republican front-runner. the latest developments, next. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe," i'm kriti gupta in london. donald trump cruising to victory in the iowa caucuses, cementing his status as the republican front-runner. ron desantis finishing a bissen to seco -- distant second. u.s. news organizations calling the contest only 30 minutes.

>> former president donald trump has been declared the winner of the 2024 iowa republican caucus, as the presidential nominating season kicks off. this outcome was widely expected, with the former president leading handily in the polls. it was a decisive win for the former president and called just 32 minutes after voting started. a caucus is different from a primary because you have to go in person. that meant concerns about turnout as iowa experienced record low temperatures. it was the former president earlier thanking supporters for coming out in the cold. >> most importantly, we want to thank the great people of iowa. we love you all. what a turnout. what a crowd. i really think this is time now for our country to come together. >> the race then became all about the margin. florida governor ron desantis came in second.

former u.n. ambassador nikki haley came in third. all eyes now turn to the new hampshire primary next week which could be make or break for those trying to narrow trump's lead. businessman vivek ramaswamy decided to drop out midway through the caucus, but desantis will look to get a boost out of iowa, while haley will try to regain ground. in des moines, iowa tyler kendall bloomberg news. kriti: the surprise turnaround tyler alluded to is this lead from ron desantis, from the expectation going into this iowa caucus was that nikki haley was going to be second-place. distant, but second place nonetheless. there are a couple of factors to keep in mind when you look at the demographics of i. this is relevant to the global audience because iowa is farming heartland of the united states. your major export are in line with the united states major exports. think soybeans, corn and pork, for example.

these are the pillars of the u.s.-china trade agreement that president trump founded under his presidency. to appeal to voters in that specific arena really speaks to the power that president trump had. remember, nikki haley was expected to earn a lot of support from the more college-educated and urban population, and it did not pan out. derek wallbank, one of our managing editor's recovers government around the world, pointing out the fact that it was a function of just how much effort and funding was put in iowa. ron desantis really putting his best foot forward. voter turnout was at one of the lowest in history, even lower than what you saw in 2016. a lot of that a function of the weather but also speaking to the idea that if you did actually go brave the vote, you are really showing the momentum, and how passionately you feel for the

cause. that is the kind of demographic and the amount of people that president trump garners a lot of support from paris to not only see trump copper out as the front runner, but with a record margin of victory, sets the tone for these other caucuses. i want to push ahead into next week. we have the new hampshire caucus and following that, the south carolina caucus. south carolina is the home state of nikki haley. new hampshire is where nikki haley is expected to do well also. she is branding herself as a fiscal conservative. when we talk about the global readthrough, any concerns about the fiscal deficit and monetary policy, any concerns about the stability and the full faith of the united states government, nikki haley is branding herself as that candidate. that is something that is top of mind for some of the major leaders around the world when it comes to the banking sector. this is something we talk about with the likes of jamie dimon and james gorman, even david solomon have all talked about concerns around the reputation

of the united states government. also be some of the commentaries we're watching in 2024 when it comes to the election. and when it comes to the banking sector. i want to make that pivot as smoothly as i possibly can because they are interrelated, although i will imagine we will see more readout from the earnings, and terry we get today. goldman sachs and morgan stanley due out today with results expected to reveal a continued lull in investment banking activity but a time of hire borrowing costs and recession risks. jenny, some major names following on the heels of j.p. morgan last week. what is going to be the standout for you? >> a lot of it will be about the outlook these guys deliver. just like you said, we have heard from some of the biggest u.s. banks that dealmaking did not come back in that fourth quarter. trading was a lot softer. we're expecting to hear a lot of the same in terms of the fourth-quarter results.

then it's all about the outlook. what do these banks say about how ceos are talking to them now? do they feel like clients are ready to come back into the dealmaking arena, and if not, what will provide the earnings boost they will need this year? kriti: there is a different strategy per bank. we have some major revamps coming from citigroup which you are a long veteran in covering, but morgan stanley is about to deal with the change of leadership. >> you have ted pick, their new ceo coming in. obviously during a quarter where results will not be what morgan stanley is used to talking about. for many years now, they have been investing in wealth and asset management. you might see him tried to fitbit towards those sides of the business because it is more reliable and less catering to the whims of whatever dealmaking your capital markets activity might be seeing. it's definitely a tough quarter for him to come in on, but lots

of room for growth from here. it will be interesting because we're expecting a lot of bank ceos to be descending on davos this week. they have this nice period where it is both earnings and what are you seeing on the geopolitical front? where you seeing in terms of the politics and the economy? we are expecting a lot from these guys. kriti: it is coming at a time where they have to make that pivot. where a lot of revenue is coming from net interest income, a function of the higher rates dynamic, but that is likely to change. six or seven rate cuts priced in. let's talk about the revamp over at citi. i imagine morgan stanley won't see a jane fraser-esque revamp. but 20,000 jobs are getting cut in the coming year. >> that is what they telegraphed on friday. jane has been ceo for about two years and is trying to put this bank on better footing. trying to make it look more like a morgan stanley. investing in their wealth business. trying to pivot away from stuff

that doesn't quite make sense or give them the returns they need. and as part of that they will be cutting 20,000 jobs. while it will be interesting to hear if other banks need to take such drastic measures. if dealmaking and trading will be software for much of this year, does that mean more job cuts on wall street? maybe not 20,000 a la citigroup, but will several thousand more heads have to go? kriti: you pointed out earlier this week that citigroup has a blessing and curse in terms of international exposure. it can be a occurs when they have exposure to the likes of argentina or russia. when there is so much volatility in the united states, do you think citigroup might be able to make some sort of 180? >> that certainly the hope. they have a challenging course ahead of them paid when you

compare the returns to morgan stanley, they really pale. there is lots of reasons for that. international exposure is one of them. i don't think they are shying away from being an international bank. even though you see them getting out of retail banking in mexico, china, or india they are still committed to the idea that they are the bank for big global corporates. they are not shying away from the fact that when things go wrong in argentina, we will have to take a nearly $1 billion charge against revenues. that's not what they want to be saying, but they are not shying away from the fact that they still want to be the bank that if a big u.s. bank was to go to argentina, citigroup is their first port of call. they are not shying away from a lot of it, but still having to deal with a lot of the ramifications. kriti: you mentioned the wealth management aspect. morgan stanley already has proud west in this department. can citigroup catch up? >> that is one of her key hopes.

it was interesting last week, she was really hard on that business. she acknowledged it was not where they wanted it to be. it has not produced the returns they expected. they came out with some interesting data where, when jane fraser took the reins, that business was one of their best returns. now it has really gone down. they did bring in a senior person from bank of america. he led merrill lynch for many years. that's a good hire for jane fraser, but it remains to be seen whether or not a hire is enough. does citigroup have the goods to produce what morgan stanley and bank of america have long had? kriti: their price-to-book ratio has long been suffering, so they have a long way to improve. some might argue being at the bottom means you only have up to go. we appreciate that analysis this morning. stick with us. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe." it is a question yet again between the markets and the federal reserve. take a look at what markets are pricing right now, six to seven rate cuts for this year. almost hitting seven. it is a one-way path lower when you talk about what the market is pricing in. are the economists really on the same page? i want to bring you a chart measuring what that fed speak looks like. it is dominated in hawkish fed speak. this is an interesting dynamic because when you look at the green versus red, you can see how much some of these speakers are doubling down. we do hear comments about 4 p.m. u.k. time from the feds waller

perhaps continuing that message that market pricing is ahead of itself. five rate cuts created a lot of that narrative. six to seven, how much more pushback from the federal reserve, when the bond market is actively affecting real-time prices? that is a conversation at davos as well. where does monetary and fiscal policy both butt heads and come together? interviews today starting with the governor of the bank of france. it's not just u.s., we are going global. we have the ukraine economy minister, the nato secretary-general and the ceo over the nasdaq as well. first, an interview with north volt's ceo at a time when we're talking about batteries and funding. that interview just a couple of minutes away with our "markets today" team. stick with us. this is bloomberg. ♪

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