♪ >> the big risk i think for markets is that inflation effectively gets stuck. >> we are getting inflation points that are a bit hot. >> we know the consumer at some point is going to get squeezed a little bit. >> you run the fine line of potentially keeping inflation underpinned at a trajectory that is uncomfortable if policy, if psychology doesn't moderate it. >> this notion that immaculate

disinflation is going to continue is something that i find very hard to reconcile with actual data. announcer: this is "bloomberg surveillance" live from the world economic forum in davos. jonathan: i've got one question, is it good morning or good afternoon? this matters. lisa: it's good afternoon, sorry to say. jonathan: good afternoon, this is "bloomberg serveillance" alongside lisa abramowicz. i'm jonathan ferro. to get us through the week with annmarie hordern. bramo on iowa. lisa: everyone focusing a donald trump, no one really wants to talk about it when you are in front of a group, but this is the awkward elephant in the room when you talk in front of a panel, but it is definitely everything that everyone is analyzing and frankly, unprepared for as the villa discussed. jonathan: in many ways, davos started last week on friday with

christine lagarde took french tv. that set the tone for conversations through all of this week. annmarie: trump is not just dominating in iowa, he's dominating the conversations here because europe, even though they had for years to prepare for potentially another trump 2. 0 administration, they are running on -- around almost panicked. >> talk about the substance. president lagarde is essentially saying that the former president if he becomes the next president is going to be a threat to european goals. climate, nato, etc. what has europe done for america recently? what has europe done for the united states and the white house? i'm thinking of several key areas. we could talk about china, we could talk about nato. what happens to military spending for europe across the last 10 years? to your point, they had four years to meet that task. lisa: feels like you are buying into the message of rebuilding

trust which is the theme of this year's meeting. are we seeing a splintering in that order that is really highlighting some of the tensions that are underpinning this particular meeting? that is what is coming to the floor with some anxiety around trump. annmarie: when it comes to nato, president zelenskyy is here and he is making his pitch to business leaders, tour leaders that they need more support. but if you look at the warsaw security form that happened a few months ago, a number of u.k. defense said you are not hitting a 2% target. this is something trump lambasted germany and the others for in this defense minister said if we are not hitting the 2% target now when there is a war in europe, what else do you need to wake up to these risks? jonathan: this is going to be a massive focal point for the weekend that was, switzerland. let's start with the price action and the equity market just a little bit softer to start the week, a touch negative on the s&p. down by about 0.6%. yelp shifting higher on the 10-year.

lisa: everyone is trying to push back. every single person seems to be saying the same thing. we have an incredible lineup today and verse we are going to start off with ken, former imf chief economist, we are going to be speaking with the head of moderna, south african reserve bank governor, that is all coming up in the next 90 minutes or so as we are here in the beautiful swiss alps. jonathan: let's be very clear, we got lucky. you are european-based anchor working for bloomberg tv, you have to do this in the freezing cold. u.s. hours, by midday swiss time, the sun starts to come out. lisa: we could reconsider that. jonathan: let's kick off the situation with a harvard professor and former imf chief economist. good morning, professor. for good afternoon. let's go with good afternoon and let's talk about what is happening in the global economy. you wrote a fantastic piece just before christmas and pulled up

with a piece in project syndicate about the global economy not being down with the words. >> there seems to be this consensus in davos but i would also say more broadly in the states that it's not going to be as good as 2023, which was surprisingly good. but it's not going to be bad. inflation is going to come down, soft landing, and there seems to be very little understanding that there's a lot of volatility around that. you look at the geopolitical situation, forget about trump which we were talking about, but the geopolitical situation is like nothing i've seen in my professional lifetime. i mean, exactly where we are in cold war two, but we are in cold war two. pick it up to be hotter cold war to than it was. and that is very destabilizing. think with the 70's for life. part of that was once, but it was also geopolitical instability.

i think there's a lot of volatility. it is not all bad. we could have a good year, but that is really hanging over our head. >> what do you do with you don't know what you don't know? what you do with hey, president trump coming in 2.0? >> those are two separate questions, one is a lot of volatility another is extreme volatility. [applause] i think but -- [laughter] i think volatility is probably not good for risky assets in general. that is what we teach in economics. if there is a chance that the red sea gets close down for six months and it adds to inflation and the prices of everything, even if you believe on the other cited might be smooth, ai kicks in early and growth is good, our models say that prices should be lower in that case. i mean, i have no idea how to interpret the market. it seems very sanguine. even when i look at things like

oil prices, i don't get it. why isn't there more of a premium built-in? they just think this is going to be over a week? at least the political scientists i talked to say if you look at ukraine, if you look at what is going on in the middle east, if it is the same next year, that is the good outcome, that is very risky. >> so far, oil vessels have been able to get to the red sea. and a lot of it has been consumer goods, those vessels. is it hitting someone's bottom line at this point to increase inflation? >> the question is what is next. if it picks up, where is it going? certainly shipping rates have gone way up that eventually hits on the component of what you pay. but we are sort of in a volatile stage. it is not that what is happening is going to make inflation go to the roof, it is sort of what happens. you same thing about russia and ukraine.

i support ukraine, i've worked with ukrainians, but it has not been a good year, i don't know what else to say about it. there are risks of something getting worse and how that feeds into markets and how that feeds into prices and everything. >> so you don't buy that the sort of lull of 13 million plus barrels of oil per day in the u.s. being pumped could be offset all that geopolitical risk? >> well it has, it has been a factor, but up to a point. it doesn't offset all the geopolitical risk because it is not just about oil prices, it is about other commodities, it is about vestment, is that many global supply chains, many things. jonathan: we started the program this afternoon by talking about what was about to happen in the united states and how europe as a continent with respond to it. what strikes me early on in the absence of a conversation about what on earth your itself, how broken the german growth model is, how it has been totally

exposed over the last two years, energy with russia, the fraction china, and maybe the willingness of the united states to provide defense support if we do get the former president back in the white house. what is the european growth model going to be, and what does that discussion sound like to you? >> it is a really good question. a conversation i've had with many europeans is are you planning to do anything for your own defense? do you realize that even if biden wins, it is not clear we are going to be able to project defense spending at the same level if there's two theaters, much less three theaters? as far as i understand, europe is depleted its stocks of munitions. russia has built up his war machine. europe, not really. that is just one example. i think you are asking about the european growth model and especially germany. maybe my perception of watching this for a long time is that

germany was the sick man of europe. when i was with the imf, that with the line. that was the headline of the economist. jonathan: well, it was the 90's. >> it was the early 2000's. and then they reinvented themselves with the reforms that they did that made it a little bit easier to fire workers and things like that, and then they have undone everything with pensions and everything. they've gone to a much more french-style model, and they are getting french style growth rates. and at the same time, china may not be the export destination that was. the electric vehicles are coming from china instead of the other way around. i mean, i'm a believer in germany that east germany was successful under the russians, the most successful of the soviet bloc. they will reinvent themselves, but it's not happening in the

current administration. so more broadly in europe, you know, there's definitely a question of what the growth model is and is a little bit like a deer in the headlights year of russia on one side, the u.s. probably in retreat from europe if it is trump because he is retreating from everything. if it is biden, because he is trying to spread himself too thin. one way or the other, lesson europe. what are you doing about it? and i just get blank stares. >> what about the u.s. growth model in the deficit in the united states that they are running in the 10 years or so? are we paying more on interest payments then defense bills? >> i believe, and they said this last year when i visited, that the era where interest rates are zero and everything is free is over we never should have thought everything was free. interest rates off a cliff after the financial crisis. if you look at a long history of interest rate and real interest

rates as i have, we had periods where it has been low before, but then we had periods where it is high before. i think we are much more on trend now in where interest rates are. if that is case, there's a lot more adjusting to do, and there seems to be zero political appetite in washington. the only time they can kind of get things under control is when there is a divided government and they can't agree on anything. but certainly if you've got the democrats weaving into office in a bigger way than last time, you know what is going to happen. and trump will run deficits. i hate to predict anything he's going to do because the whole problem is he is completely unpredictable, but there's no appetite for that. and what is the endgame to that? the endgame is we are going to get these doubts of inflation like we had. and that is not an end in itself because then the bout of inflation eventually feed into interest rates, and we don't believe that inflation is going

back to 2%, and that is a bad cycle. we've seen this movie before. >> given the fact that everyone is expecting the fed to cut rates, possibly six times this year, what do you think sort of the end place for this rate cutting cycle could be? >> i mean, i think we end up at 3.5% at the very end of this cycle. something like that. long-term rates at 4%, five percent, something like that in the very long run. but i think what happened in the next year, the six rate cuts, that is a pipe dream. that is not happening. there is a chance. the one thing we could possibly be sure of is that whatever the consensus is here, and not just here, it is going to be long, that if we get a deep recession and definitely could happen. how, i don't know. 25% chance it happens.

they will cut rates a lot. not six times. they could cut rates 15 times, i'm not doing the math right, but a lot of times, and that could drive interest rates to 1%. that could be built into that six rate cuts possibly. jonathan: this was great, fantastic to start the week with you. i think we can all agree that this form often turns out to be a highlight reel of that forecast, isn't that what often happens? lisa: it is often when everyone says it is going to be an amazing year and then you get a pandemic or everything is terrible. jonathan: the comments are europe -- on your are absolutely critical for the conversation. when europeans started to become fearful about the future of u.s. policy. i think the europeans need to focus on themselves a little bit more, about what they are doing next up next, libby canceled is coming up to break down the politics. the front runner in the republican party is about to run away with it all.

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♪ >> talk about organic, which of course is the court. people talk about m&a, but sort of not as much is talked about how much enterprise value gets created by properly affecting. that is the spirit with which i think about openai. we just want to have a good commercial partnership be in one of the investors in the entity, even in the way they are structured. so when i would like is good governance and real stability. jonathan: that was microsoft's chairman and ceo discussing the latest investment and partnership openai. talking of artificial intelligence dominating discussion to the world economic forum. here in switzerland, going to the market open in the later on this morning. equity futures on the s&p 500 pulling back just a touch. negative by 0.5%. a busy week again really for earnings. we hear from goldman and morgan stanley a little bit later.

lisa: and love that we are not really mentioning it, even though it should be front and center. we had the big simile from the morgan stanley-goldman sachs competition. jonathan: we will hear from sonali a little bit later. a arrange of events happening on the sidelines. always the sidelines, a range of events happening on the sidelines of this summit including this one. bill gates, the cochairmen of the bill and melinda gates foundation speaking to francine lacqua at bloomberg house in dallas. let's take a listen. >> which is very high impact to make sure that as well-spend and that feel good about, ok, you're responsible for this result with only a tiny, tiny portion of your budget, and there are not only humanitarian benefits, stability, economy, environment, huge benefits because as we make the world healthy, that is where you get population growth to a

steady state. >> so want to focus on in health? we have some pretty incredible gadgets that you use, also ai to scan for example when emails are pregnant, whether the baby is ok. but in the next few years, what with your priorities? bill: i've been amazed at the speed of innovation. that's even before now we will use ai tools to design new vaccine and get at the very toughest problems like getting a grade a vaccine. this is a device that will cost $1000 or less, and we connected to ai software, so the cost per delivery is left at one dollar. where you scan and you see is there anything about the cord for the amniotic sac that that woman is likely going to need a c-section? and so we funded looking at tens

of thousands of pregnancies and showed the ai here, this one came out normal, this one came out normal so it is even better than the best human at doing that prediction, and so even in rural africa, you connect this to a cell phone, into the scan, it tells you what you need to know. and that would cut maternal deaths in half if we made it broadly available. >> so what if the challenge -- i've seen pictures and it's incredible, you could really hook it up to an ipad and see even when there is a nurse in a village of like 10 females, what is the challenge in getting that to the right place at scale? >> we have to spend hundreds of millions of dollars to invent this and now it is going to the regulatory process, and that is also very expensive. sadly, there is no natural market for this. the people who benefit from it have very little money, so the normal market mechanism of this

a priority for the innovation agenda, without governments being generous with philanthropy, it just never happens. but it's coming together. i was in kenya seeing the work and we will get it out there. we have partnerships with lots of the ultrasound companies including phillips who, if we fund it, they work with us very well. francine: and this is an hpv single dose. jonathan: francine lacqua sitting down with bill gates. you can watch more of that interview when it is uploaded to bloomberg.com. without doubt, top of the agenda for us i think today is what happened overnight in iowa. anne-marie, just another stunning victory, but widely predicted. dr. donald trump coming in number one. what was left predicted with who is coming in number two, but desantis was able to pull it out. he spent so much capital, did the full chuck grassley, 99 ounces. nikki haley coming in third. what was so interesting and

probably is really demoralizing for the desantis campaign, within 30 minutes ap, cnn, cbs were all ready to call it for the former president. jonathan: let's get your reaction, your first thoughts following what happened overnight. >> hello and good morning. three thoughts really. four, let me say. firstly, the iowa turnout was very much down. that shouldn't be surprised anybody given the weather, but it was barely half of what the 2016 turnout was. so what is going to happen is these results are going to get sly state diced but i think a little bit denigrated, frankly, by the fact that there were so few caucus-goers out there, comparatively speaking. how i tend to look at it is trump against not trump because that is what the street wants to know. and what we come away with i think are three things.

half of early primary voters don't want trump to be the nominee. secondly, there is a not trump republican nomination path that remains viable, and it probably gets pumped up from new hampshire a little bit, and then nothing happens for a month, in this race will be very much at loose ends, which is good for challengers. and thirdly,. in the morning registry polls, trump is at nearly 30% of likely i will republican caucus voters for the general election. so what you're seeing is a looming republican party split should trump become the nominee. >> it didn't seem like this was a split. we were just talking about how quickly all of the networks call this for trump. who is going to be number two, can we learn that at least? >> is a split because he got 51% of violins voting for trump, so roughly 50% weren't.

secondly, i don't think we did because what you got was a situation going into new hampshire where nikki haley is strong but there is going to be month where there won't be any votes, and not until the 24th of february in south carolina does voting resume. desantis is already on his way, so it is anybody's game for the opposition at this point. i do think you are seeing trump's ceiling here. >> when you look at new hampshire, all the ads trump are putting it is attacking nikki haley because he views her at the permissive challenger right now, the hardest beat. but with the santos coming in second in iowa it looks like he going to stick around. how difficult is that for the haley campaign? >> very difficult for them, but i doubt they are surprised by that. i doubt they thought they were going to get a clear path regardless. i think the nini was burying desantis in iowa a lot more than the votes were going to come out.

he got about 2500 votes more than haley did in iowa. so both of those are going to look like viable candidates. in continuing to run, frankly. i think you will see them all up in midtown manhattan very soon because there's going to be a lot of fundraising taking place over the next couple of weeks. jonathan: let's finish year, can anything stop the former president? >> >> that, i'm sorry? jonathan: can anything stop the former president from running away with this? >> oh, i think so. if desantis or haley continues to consolidate votes. in very different situation from 2016 when you had 10 not-trump candidates as opposed to effectively two, if they consolidate around one of those candidates, frankly, and trump's margins don't get any bigger,

you're going to have a protracted fight here. so yeah, this is not over for trump by any means. jonathan: thanks for jumping on the phone. their public and primary well and truly underway. want to talk about policy and we're just not talking about policy at all, are we? >> the biggest question about trump is that nobody knows what he is going to do. no debates, no policy prescriptions, it has all been vindictive saying they stole the election so we have a situation we have to reset. >> when you're in europe and dabbles, what they are so worried about is that tariff. when they thought tariffs were bad, the next round is going to get a lot worse. jonathan: lisa has questions. everyone is sick. the moderna co up next. -- ceo, up next.

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jonathan: we are live at the world economic forum. your price action this afternoon, this morning depending on which part of the world were in looks like this. yet we market on the s&p 500, equity futures shaping up as follows. negative by 0.5%. on the nasdaq, down by 0.6. earnings season well underway.

early february at the end of this month, we started talking eltek as well. >> which is really the same -- main theme in dabbles, we don't know what is going to happen but let's all talk about it because that seems to be the theme right now. >> another theme is u.s. debt. budget deficits in america, trying to confront them. is anyone going to confront them? two years, 10 years, 30 years, treasuries looking like this. that's how it six or seven basis points. what is unusual is that we have got a consensus. but is on federal reserve interest rates. the pipedream of a soft landing in fixed rate cut this year. lisa: basically saying there is no way they get more than two rate cuts. and we have heard pushback after pushback by fed official, imf chief economist came out earlier today -- market is not buying it. jonathan: you wonder without

leave the president of the united states. >> there in on a soft landing. the economy of the number one issue when it comes to american voters. jonathan: let's have a quick look at the euro, lisa can guess where this is. >> that is basically where we are at right now. real question, you mentioned europe and what their growth is going to be and i don't see that being priced in. jonathan: data comes out of europe, dated is bad. where does that leave the ecb, never mind having a single mandate. the growth model in europe is broken. shocking to me that every time we sit here in europe, there isn't a bigger conversation about the growth is going to look like. let's talk about everything will issue we talk about at the moment. where is your on ai? they are unregulated, we all understand that, but who is driving? lisa: which is the reason a lot of people are just shrugging when you have officials say we are not even going to cut rates

in the market is basically laughing at them, that first energy to russia that blew up in their faces, and they're still trying to do almost different plans depending on who you talk to, and then outsource their defense to the united states america. jonathan: president of the left-leaning into this approach, the next president not be leaning in the same direction. donald trump trump moving a step closer to a rematch with joe biden, 2051% of the vote in the iowa caucus with ron desantis a distant second and the haley word. the former president has another chance to tighten his grip on the republican nomination and the new hampshire primary next week. if the outcome going to be any different? annmarie: potentially it could be only because new hampshire you do have nikki haley the trailing trump. conceal his and spending is against haley, but poll after poll continues to show trump is just nominating -- dominating the republican party. he's almost incumbent.

lisa: which is the reason why it is shocking to see people as shocked as they are for it to be in their face. to me, they didn't think about it until he thought about it. this is the first reality shock. even if it is no surprise, it still a sort of igniting a conversation everyone had been both the parent long. jonathan: we talked about how annoyed you might be. we need to talk about bank policy and regulation. we could see a real shift in approach. the thank earnings continue with morgan stanley and goldman expected in around about an hour. bloomberg intelligence expecting golden net revenue to return to growth after seven straight quarters of decline. for morgan stanley, the first earnings call for a new ceo and you will be leading the conversation a little bit later this week. lisa: this is the key question for someone cutting into the helm after the story career of james gorman. how do you shave a narrative were morgan stanley essentially won against goldman sachs.

now he has it to lose. a set of slow grind from the economy this year. jonathan: perhaps unfairly but accurately i described dabbles as a highlight reel of bad forecasts. last year, the forecast was u.s. economic growth, we could different recession. china's going to reopen, it's going to be fantastic. lipid on its head, here we are twelve-month later talking about this. more stimulus on the way for china's economy. senior policy makers considering 139 billion dollars of new debt issuance under a so-called special sovereign bond plan according to bloomberg reporting. the sale be the fourth in the past 26 years and would fund projects related to food, energy, supply chains, and organization. lisa: this comes as china sends the largest delegation to davos 2017. there is a real feeling that the concern about slow growth in china is superseding a lot of the ideological rhetoric that referred from xi jinping.

whether the follow-through on that remains to be seen. people don't know what it would take for companies, international companies to get confidence to go back to china right now. annmarie: i think it would take what is going on geopolitically and also depending on who the next president is, joe biden didn't pivot away from of the former president did what he came to tariffs, and even doubled down when it comes to china. jonathan: let's get to the next conversation with the ceo of moderna alongside us. good afternoon to you. rebuilding trust if the title of this form. we know through your industry we need to be build some trust with the vaccine industry. how do we go about doing that? >> i think we go using the data and try to work with people who need it most. if you think about it, a lot of people are getting a flu shot, especially the elderly, which is great, and then something like a covid shot. five to seven times more people

are being hospitalized with covid then flew. so we have a lot of work to do across the industry to go back the fact that scientists science. if you look at our lives today, you guys talk about ai, all our lives are based on science. there has so much misinformation and we need to get back to it. jonathan: science as you know is a process of discovery. i think after we talk about it as if it is definitive, that we found something, and that is the rule now. the general public listening to the scientist over the last three years i think what they've heard is this is the science, and the follow-up six months later is we got it wrong, we learn something new. how do we change that? >> is a challenge in some countries were a people horrid -- people brca2 dramatic, trying

to communicate in very simple terms public because you had to communicate very complex signs to the public and sometimes they were a bit too in the absolute. nobody had seen this virus before. the rate at which it mutated surprised everybody. being shocked with my team looking at the sequence and saying when they do expect this would happen, maybe your two from now. a lot of humility comes with science and communicating. early in the pandemic, officials said you don't need to wear a mask. and watching this on tv and saying how can you say that because it is a respiratory virus, of course he to wear a mask. i understand what they were trying to do, to protect the supply for people working in hospitals, but by making such a blank statement you lose credibility. >> to that point, a lot of

people here are sick, a lot of people here have canceled. are you wear a mask? >> know, but i'm vaccinated. >> a lot of people are frustrated that when you get vaccinated, you still get sick, just sick. are we getting closer to not getting the flu, or covid, or rsv? talk to our immune system is the way it is, we can't change that. the question is when you get infected vs when you got the vaccine. if you think about it, we should all think about this a protective against very that outcomes, like insurance. you don't want them to get hospitalized. for people our age, it is not getting along covid. i have coworkers about long covid, and it is really bad.

those are healthy people in the mid-40's. i spent six months, and these are things we need to prevent. lisa: we are trying to move into the post-covid era, trying really hard. i'm wondering from your vantage point how you get moderna to be a company other than a vaccine company, which isn't as profitable, isn't as lucrative as others. >> i want to change that a little bit. innovative vaccine is a very good business. what you don't want to be is a vaccine where you are 50 meters and the cost is very --. look what they've done with hpv. they own the franchise around the world. so i think it is highly possible. a lot of innovation coming in, also product launch this year when it happens, because the product has exactly the same chemistry with the same

technology, and then we have products, the number one cause of birth defect in the u.k., and the u.s., and europe. and there is no vaccine that exists. everybody else tried, they all broke their teeth. this is very lucrative because those viruses are not going away. and then if you think about just before christmas, we announced 50% reduction of debt or diseased vs. the best drug market for skin cancer and we believe is going to be extended. and then genetic diseases. we have a day profound clinical impact on kids. the dna from mom and dad will provide instruction to give them the product that we make.

instead of getting a liver transplant, and that is what is happening. you are going to see this year an amazing number of clinical data coming out of new product launches as we move into a post-covid world. jonathan: you've launched an rsv vaccine. >> we are launching, we have not launched yet. jonathan: you will be third to market. how do you plan to compete? >> we have the best profile. the two on the market a very complicated to prepare. as you know, there's a big shortage of arm sees and technicians, with people on strike. our product is very simple. the many steps of preparation and potential medical -- trip product. another thing the people of set's moderna, you are a smart company, you can't compete with established things. look at we need to market

despite having a much smaller team than the other mrna player. we use a lot of technology. getting the facts in front of the medical professional as shown time and time again for big studies, having less hospitalization than the mrna vaccine. the science and our product is what is going to drive us. >> such distribution, will it be carried by places like cvs? >> of course, retail pharmacies. one of the thing covid has done is to accelerate the role of pharmacy in the vaccination. flu, covid. which can take capacity out and prevent the doctors from being able to do things that are more specializing, so i think it is good for more patients. jonathan: good to catch up, good to see you. lisa, the title of this form we will keep revisiting, it is really trust. there is an industry that is

trying to rebuild trust. lisa: and it goes deep, we were talking about is very political feeling around vaccines, partly because of some of the mandates and the changing understanding of the drug. but how do you get people to take something if they cannot be hospitalized as a result with science that is evolving in real time? >> if we don't want long covid, we need to get those vaccines. but to the politicalization of this and to his point, when you have an official it comes to the podium and says you don't need to wear a mask because they are just trying to hoard them, you just have to be honest with people where you lose trust and you lose credibility. jonathan: i'd argue they've lost credibly over the last few years. do you remember when crypto was the rebel charge of finance and now it is kind of institutional. >> it has been institutional at davos for a while. jonathan: that's coming up next. this is bloomberg. urkey!

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♪ >> 80% of the g20 countries have crypto regulation. you see that in japan, you see that in singapore, see that in many countries around the world. the financial centers. the problem is the -- optimists say the u.s. jumps into this and get this right but we are seeing a lot of regulation in many countries. jonathan: that was the coinbase ceo speaking to francine on the optimism of crypto as bitcoin gained etf approval just last week in the united states. alongside lisa abramowicz, i'm jonathan ferro, this is bloomberg surveillance live from davos, switzerland. just a check in the price action, of course we need to talk about earnings this morning from goldman sachs and morgan stanley. equities pulling back just a little bit, down about 0.5%. i've said it a few times, highlight a burning season for me and think for many others as well will be apple in early february, given the two downgrade we saw in early

january following acid year and for that stock. lisa: what is it, 30% of the s&p 500 at market cap? a certain point, they already indexed so you could talk about banks and some to the bellwether, but ultimately it resides this question whether tech can continue to rescue the u.s. economy in some sort of sluggish growth and sluggish performance. jonathan: a series of panels of the world economic forum earlier on this morning about private markets. you think about what has changed more recently, the public markets have been reduced to one region, seven names. ultimately if you want diversification, you got to go elsewhere. we talked to the bankers and ask them about regulation the prospect of heart capital rules, you're going to see a lot of unhappy faces. u.s. the asset managers, you're going to see a lot of happy faces. regulation this year is a big deal. >> that has been the issue any complaint from the big banks is that private capital to stealing our lunch. they are capturing everything we can't do because we can't invest

in the same way without holding a lot of capital, which is interesting and something i want to ask about private arc it's. how do you get in as a big bank regulator as a bank but be profitable in the same way as private equity? jonathan: brian moynihan at bank of america as well, catching up with a whole financial sector through this morning and the week. for the regulations getting better for the world of crypto? let's have that conversation right now. jeremy, good afternoon. we mentioned in the previous segment, and i don't know if you heard this, do you remember when crypto and everything you do was like rebel child of finance, and now it just feels institutional. is that a good thing? >> i do think it is a good thing in the sense that when we set out to do what we're doing over 10 years ago, i think the vision was that you could integrate the traditional financial system with this new technology, and that this new technology could really change the possibilities for how money moved in the world

and how different types of financial services could work. the only way to do that is by connecting them together, doing it any regulatory-compliant way. this obviously different dimensions of this industry and so they are certainly a part of the industry that seeks to have nothing to do with the traditional financial industry or government for anything like that, and i think the mainstream phase of this is one in which you've brought together regulation, traditional finance, and blockchain technology, and leading crypto players that can kind of connect those worlds together. lisa: talking about institutionalization, bitcoin etf. does that make your job easier or harder because you try to get people to adapt to stablecoins which are different when everyone associates crypto with bitcoin? >> it makes it easier. i think a couple ways to think about that, the first is that this is a watershed moment. you have a signaling from all

the major participants in the financial sector. the exchanges, the biggest trading houses, the biggest asset managers that they are moving into the space and that is a kind of validation. and i think to the average person or institution or large internet firm, this sends a signal that this is now connecting to the global financial system, and i think people will begin to say ok, what are the filler technologies of this? and there is no question that the killer app of blockchain's today are stablecoins. it leads more people into the path of discovery and it leads more people to begin actively trying to apply this technology, so that is really very positive for us. >> so is this the perfect moment to do an initial public offering? >> i can't comment on any kind of rigell tory filings. we've always said we want to build one of the most trusted, transparent-compliant companies in the world and ultimately becoming a u.s.-listed public company as part of that strategy

, but i can't make any comments about any specific filings. lisa: is there a sense of a timeline and evaluation that you would be targeting? >> again, i can't make any comments. jonathan: i can sense the hesitancy, so how about we frame it a third way. you try to go public before. it has changed between then and now, how different is your company, what kind of position are you in vs. previously? >> i could certainly talk about the evolution of the states and the company as well. our business went through a. of very significant growth, and we've gone through a lot of growth in terms of its economic potential for us. we just came out this week with the state of the usdc economy, a report for 2024, and it is an incredible story about hugely increasing type of applications, international applications,

major payments and financial companies that are connecting and using this. so we are seeing this tremendous international expansion and progress, and we are seeing at the usdc is in fact the least speculatively used digital currency that is out there. so that is really tremendous progress, and that progress has happened significantly over the past couple years despite the turmoil. >> talk about the turmoil. how important is it. you talked about regulation, the importance of getting regulation. how important is it to have things like audits to understand how much capital will have put behind poythress was to be pegged to the dollar? >> it is critical and that is why from the very inception we've always provided public accounting firms the reserves for circle reserve fund is in fact in sec-registered fund structure that has daily transparency into all of the

instruments undermined about 90% of the reserves. so there is that transparency and there is that kind of more and more protections around that. that is being codified in the laws around the world meeting regulars everywhere are saying you have to have these reserves, you have to have these audits, you have to have the relevant anti-money laundering, all those things. i think the model we've developed is also becoming the norm around the world regulators. jonathan: thank you for the update and to visit your home following this conversation, don't ask about the ipo, asked about the party because crypto party, he will be talking about no money in crypto. the crypto party is where it is at. lisa: it has been that way for a couple of years. you can get the sense that there is still quite a bit of muscle. jonathan: you've got to send out the invites. good to see you. plenty going on in the world economic forum.

here's another conversation for you. the alphabet ceo speaking with david rubenstein of the carlyle group at bloomberg house in davos. >> degree financial cars -- crisis, it is said that people thought that morgan stanley and goldman sachs and everybody else was going to go under. you think morgan stanley was going to make it at that time? >> there were days i did not. it was bad. so i was running financial institutions, banking at the time. the most meaningful part of my career was what hank paulson called and said i needed ice, i need some bankers here. and so i let a team that worked on fannie freddie and then aig, and those were very, very challenging days. and coming out of it, we did aig, put them into conservatorship, john mack was ceo at the time, and he said you are in charge of liquidity. figure out liquidity.

and of course, days before what very much was running out of energy, there was no way to get ready. in fact, one day when we were trying to figure out what to do on the trading floor, we did this whole series of different teams, and it worked. they came in, they were any credible partner. the government came in and we became a federally related bank, there was a very scary times and a lot of important lessons. >> one of the big with that mitsubishi agreed to invest $23. jonathan: that was out of its ceo speaking with david rubenstein. you can watch more of that conversation will be uploaded to bloomberg.com and for liver terminal usage, you can find that at live go. they feature this week. lisa: what they say definitively other than we want to own it and we want to capitalize on?

jonathan: i spoke to the -- present this morning about confronting an era of misinformation and how difficult that is going to be for capital markets. we will catch up with lynn martin later this week. up next, donald street win in iowa. -- donald trump's big win in iowa.

>> the big risk for markets is inflation get stuck. >> we are getting inflation prints that are a bit hot. >> we know the consumer will get squeezed. >> you run the fine line of

keeping inflation underpinned at a trajectory that is uncomfortable if psychology does not moderate. >> this notion that immaculate disinflation will continue is something i find hard to reconcile with actual data. >> this is "bloomberg surveillance" live from the world economic forum in davos. jonathan: lisa made the rules. it is good afternoon. it is not good morning. this is bloomberg surveillance. alongside lisa abramowicz i am jonathan ferro together with annmarie hordern. equity features are slightly negative. it is our two of our coverage. what an hour behind us. we have to reflect on ken rogoff, the harvard professor calling a soft landing in six rate cuts a pipe dream. lisa: maybe it reflects the

nervousness you are feeling in markets. you have heard so many different officials push back on the market pricing in the market keep saying we have got it right and you've got it wrong. let's go. to me that is what sticks out given the over indebted structure we have had. jonathan: but does it mean for this white house going into an election campaign this year? annmarie: a headache. this is their base case. how may times have we seen janet yellen say it looks like we are going to have a soft landing? the president of the united states thinks that. that is setting up for a decent timeline ahead of november. the most important issue is the economy that plays into how trump won in such a massive way in iowa. jonathan: the big thing we woke up to was not anything to do with the world economic forum. we were talking about the results in iowa. when you ask people repeatedly,

you ask them on the record or off the record, they do not want to discuss the prospect of the former president coming back into power. lisa: you can hear them say americans will choose who they will. basically no one wants to talk about it. at the same time, why haven't people been dealing with this? he has been the front runner for a while. i'm curious to see how people plan to adjust their business plans and their policies in response to something that is more than just a probability. jonathan: the so-called globalists that come to a forum like this one and the prospect of embracing the former president and what that might mean for the future, it is amazing they have not prepared. it is amazing we are waking up and having the same conversation. the united states is a threat to globalization regardless of who is in the white house.

at the same time there is an absence of conversation about european growth models and the failure of the last 10 years in places like germany. annmarie: that is why you turned it on its head when you heard from christine lagarde talking about what trump would mean for europe. in the last few years should europe have been looking more introspectively about themselves? there dependence on russia? on china? their defense dependence on the united states. we are struggling to get nato members to increase their defense budget by 2%. at the warsaw forum a defense minister said what more will it take? there's a war on european soil. you cannot rely on americans. lisa: where is the european ai push given everyone here is talking about ai? everyone is talking about this will rule the world. that is what we are talking about microsoft and apple and amazon and what they will do. we can talk geopolitics all we

want but if money talks that has been the biggest speaker. jonathan: what is the saying come america innovates, china imitates, and europe tries to regulate. isn't that what is happening across a range of things? jonathan: i do not think it will change anytime soon. every year we come here it is the same. i do not think the attitude has shifted whatsoever. annmarie: there is one individual i am looking out for because he says he is here to read the right act. that is the heritage foundation ceo. he says he was invited and he wants to, and talk about where they've gone wrong. jonathan: is he coming on with us? let's make that happen. we will round up earnings season in the last 24 hours. goldman sachs and morgan stanley just round the corner. equity futures -.4%.

lisa: we have another incredible lineup. a lot of people who will give a view forward including howard lutnick, fantastic timing. intel's pat gelsinger, does he rule the world? and chevron's mike worth. we were talking with ken rogoff, wire oil prices not responding to this geopolitical turmoil? how do people respond to that? you give a stimulus and try to predict the market outcome. jonathan: i was speaking to a pension fund manager at we were talking about doing business in america and we try to bring up the topic of u.s. politics. he talked about the ease of doing business in some states versus others. i said name them. reluctant to do so, he mentioned texas. mike worth, talk to him about doing business in california.

lisa: i believe they are not refining and pulling back from certain california activities. there is a question of can states take the helm given the national uncertainty. jonathan: we will start this hour with this conversation on iowa. the front runner for the republican is running away with that very early on. libby cantrill joins us. head of public policy at pimco. great to get your perspective on all of this. let's start with results overnight. where do we go from here? libby: hardly shocking. good morning from a very snowy new york. the big question was is this going to be a coronation of donald trump? he has obviously been the clear front runner in polls for months. i think last night underscores the narrative that this is very much his nomination to lose.

not only did he clear that 50%, which was something that was symbolically important for the trump campaign. in terms of the alternatives to a trump candidacy, there was no real clear alternative that emerged. ron desantis came in a distant second. nikki haley a close third to that. in terms of separating the field , separating that alternative and consolidating that anti-trump vote, that did not happen last night. this was a good night for former president trump. it will likely corroborate the narrative in the market that this is very much trump's nomination to lose. lisa: he wrote one of the most interesting and quotable things in your notes. you wrote to will not be president, oprah winfrey will

not be president. i ask you why because people are saying they will swoop in and end up running. what do you tell clients as they realize it is probably going to be another donald trump and joe biden matchup. what you tell them about what a donald trump presidency would look like? libby: we have gotten some questions, particulate from our for urban -- particulate from our foreign clients who are a bit befuddled by the american political situation in are saying that out of hope. what we tell them is, practically speaking, there will be no other democratic candidate. joe biden will be the democratic nominee. at this point it does look -- it is not for sure. as it relates to the republican primary, new hampshire will be critical. if donald trump wins new hampshire it is basically over. if he does not in nikki haley

does win, that it is more of an open question. it does look like it is going to be a 2020 redux. in terms of the policies, i think if we saw a second trump administration it would be very similar to the first trump administration. later regulation, more tax cuts and things the market would like. in terms of the global landscape and the global posture, much more of a retrenchment. much more protectionism, which as we know, as we saw in the first trump administration will keep the market on its toes. it is unusual in that we would have two incumbents, joe biden and donald trump running against each other. in some ways it is less uncertain because we know these gentlemen very well. annmarie: it is the gentleman the americans do not want to see going up head-to-head if you

look at the polls. i want to ask you about the political timeline. nikki haley just behind the former president in new hampshire. with ron desantis having a decent showing in iowa, he will stick around. how does she chase the top and defend herself from the bottom? libby: that is why last night was such a good night for donald trump. there was no clear alternative to trump. there was no precipitating factor that would lead to a consolidation of that vote. as a result, desantis will stay in this, potentially until south carolina, and that is particularly bad for nikki haley. she has much more of a ground game and investment in new hampshire. as we know, this is a nuanced point but it is an important open primary in new hampshire so unaffiliated voters can vote, not just republicans. that will help her.

i think we need to see something definitive out of new hampshire in terms of her momentum. if we do not, i think it is likely this republican nomination could be over before it begins. it would be donald trump again as the likely nominee. annmarie: are we going to all going home to a government shutdown or do you think speaker johnson can get this prolonged approach done with a continuing resolution? libby: it is the same menu and a different waiter. it is the same dynamics that elected former speaker mccarthy in the fall. it is the reason we needed another temporary funding bill late last year. we have seen this movie before. it looks very likely we see and other so-called continuing

resolution. march first and march 8, the bottom line from a market perspective is it is basically noise and it looks like we will avoid a government shutdown yet again. it looks likely we avoid a government shutdown. in march when the rubber will finally meet the road and the need to pass these appropriations bills to fund the government through the end of fiscal year 2024, that may be a different story. at least for this month we have avoided a government shutdown yet again. tom: we have sit -- jonathan: we have seen this movie quite a few times. the wonderful libby cantrill on iowa and the market shut down. everybody has been conditioned by seeing this story on repeat and seeing the same ending. lisa: that they will eventually get a deal done.

we talk about political dysfunction and inability to get things done. no one in markets tears. we are dealing with markets looking past all of these things, and why shouldn't they, because it has not come to fruition again and again. jonathan: is it different this time? annmarie: it is not different. the government will remain open. they are doing a laddered approach. there are now two dates for the government to shut down. my question is does speaker johnson hold his gavel? mccarthy lost it with the same movie. jonathan: that is a big question. tom keene would look out into the distance and say you can see italy from here and people would believe him. he would say it with such authority that you can see italy. coming up next, the governor of

the south african central bank. ♪

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>> we don't think the rates will come back down to levels we saw pre-covid just because of the level of government debt and spending and the state of the economy across the world. lower mortgages and we see that continuing going forward. jonathan: that was the lloyds banking group ceo speaking to francine lacqua on his outlook for the u.k. economy and rates. big conversation about global rates in davos, switzerland. we were talking to 10 rogoff of harvard. higher for longer is his mantra. lisa: basically saying 3.5% is the ending rate for this fed because we do get the soft landing. then going up to 4% and 5% thereafter because of the deficit. nobody is talking about the deficit. jonathan: greg jensen of

bridgewater to talk about the deficit. at some point will get to that wall. what does that day look like? i always ask that, what does the day look like when we start to care about it. lisa: that is why we have to focus on the options. -- on the auctions. the day where there is a true lack of buyers were a feeling of frustration, a feeling of a lack of a bid. jonathan: that is the day the frog dies but for now keep spoiling. equity futures -- but for now it keeps boiling. equity futures. at 7:30 it will get numbers from goldman sachs and morgan stanley. sonali basak will break that down in new york city. lisa: we kind of got a bleak look from some of the ceos. citigroup coming out with the kitchen sink, saying they will be cutting dramatically. what did you hear from morgan stanley and goldman sachs, now

that they are jettisoning consumer facing businesses, now that the interest-bearing parts of the business are the boom for the other banks. jonathan: we will catch up with one of my favorites right now. he does not like the cold. it is the governor of the south african reserve bank. good afternoon. how are you. >> i am good, thanks. how are you? jonathan: are you enjoying this weather? >> after coming from 38 degrees celsius this is something. jonathan: we saw you in jackson hole in late august and we still do not get the nice weather. i want to pick up on the conversation we started in jackson hole. we talked about the federal reserve frontloading interest rate hikes and every time you and i catch up it is worth reminding everybody who follows the story the original front loaders were not the federal reserve and the ecb and the bank of england. the original front loaders came from emerging markets. are you going to be the first as

well? >> this is a discussion that fascinates me. earlier in your conversation you are talking about -- the harvard professor was talking about interest rates being higher for longer and one of the things i want to start my conversation with is we look and say how -- that is the point of departure. so far inflation has been more persistent than we had thought. we have had a few -- inflation yielded a low of 4.7. it turned again before it went down. inflation is more persistent. if we want to look at which central events will cut first it is those that had succeeded in bringing inflation down to target, or at the least, the

ones with a lot more policy room. you have seen that. the cutters this time around have been the latin american central banks that had very high real interest rates. that is what you should be looking at. because of south africa our real rates are not particularly high. inflation is within a target. it is not quite where we would like to see it if we are to make any policy adjustments we would have to see inflation has declined to our anchor, which is 4.5%. jonathan: has something changed domestically or in the international economy with the guards to inflation since the pandemic? >> it is going to be an interesting call. i think that globally central banks have underestimated the extent of the constraints that we face in the supply chains.

those have eased to an extent. inflation is still stubbornly high and that for rates to be anchored we will have to keep rates higher for longer. we are faced with something that in the case of south africa we have not seen. a public that is increasingly intolerant of high inflation. that is what -- central banks, which questioned about wire you so aggressive, wiry frontloading , you are not being criticized for not getting done enough to rein in inflation. lisa: we say a lot of times jerome powell is banker to the world and i feel bad for everybody else in the world who is doing policy for those countries. is that the truth that until jerome powell cuts rates you will not get the all clear to

cut rates because of the currency differential and the fear of devaluation? >> a great central banker he is. he is the chairman of the reserve bank of the united states, not the federal reserve of the world. i have no doubt when he makes decisions, they make decisions based on the dynamics and the outlook of the united states economy. that is very important. in our case the u.s. is a beat economy. we are a small economy. we watch what the u.s. does but we do not necessarily follow the u.s. in every move. the case in point that jonathan was raising was in 2021, when we saw inflation was creeping up and there was a notion among the advanced economies that it was a temporary phenomenon, we took the view that emerging markets

have been there and seen it before and it is time for action and we are glad we acted because we are able to start move towards target much earlier than the advanced economies. lisa: the fact that you are an earlier seer of what was going to come makes it interesting to me you are more reluctant to signal cuts than the united states. do you agree that because of higher inflation and stickier inflation that rates have to remain higher for a longer time? >> i would take it further. it is not just deficits. look at the levels of public debt across the world. these levels have got to be brought down. one of the things that had happened historically was we allowed inflation to erode the debt, but you have a public intolerant of high inflation. that is not an option that is available.

two, you have treasuries globally that have been addicted to cheap money. the air of cheap money is gone and many treasuries are finding their boring at rates significantly higher than what they were borrowing at before the pandemic and during the pandemic. third is that even in that space, what you are having is you have a whole generation of the public that had known only low inflation and low interest rates. now inflation has risen and interest rates had to rise. there intolerant of inflation. you see interest rates being higher for longer until the battle of the inflation front has been won. jonathan: let's do something provocative. you introduce the topics. sometimes governments make life harder for monetary policy officials. there is a budget coming up and

i wonder domestically what you will be looking for that budget? >> if the minister of finance was sitting here and you asked him what he expects of the central bank he was going to say he does not venture into that. i do not venture into that. jonathan: why not? [laughter] >> some of the central bankers might've been politicians before. i happen to be. there has been a pronouncement from the south african national treasury to said the fiscal policy on a sustainable part. i've no reason to second-guess them in every reason if they had major commitment they will meet this commitment. fiscal policy is not good easy this year. there more than 60 countries going for elections. jonathan: is a massive year. >> it not going to be easy. jonathan: that was the diplomatic response i expected.

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jonathan: let's head over to new york city and catch up with sonali basak. sonali: we have goldman sachs numbers out and we have been beating on a number of key metrics, beating on revenue, beating handily on equities trading as well. they are mixed on fixed income trading but we know the market was softer when it came to interest rates and credit.

one thing we know about goldman sachs as they are pushing hard to win on financing and there is where you see record numbers in their financing business. when i am telling you they beat on equities we are telling you they came in meaningfully about any other competitor on wall street for the quarter and the full year. when we see morgan stanley's number come out, it is the case they have also beat morgan stanley on equities sales and trading figures as well. morgan stanley figures out as well. goldman has beat them once again for the quarter in equities trading. as we watch morgan stanley's numbers across the wire, the numbers look strong. you also have morgan stanley wealth management revenue beating expectations. they had one-time charges on other matters. from morgan stanley we know it was a provision for legal expenses as well. we are looking at strong numbers

across the board. you are seeing stocks reacting. morgan stanley up 1.6%. for morgan stanley this is the final quarter of james tanner and their passing the reins over. lisa: we are hearing from david solomon calling 20 for the year of execution. what is the year of execution? sonali: you have to remember last year there were a lot of quarters where they had returns that were muted, below expectations, and sometimes the worst they have seen in years. what you are seeing now is them turning around the story, not only beating on key metrics. they are the only bank that brought in one more than $1 million in a bad year for deals. last year. they are bringing in still more than a billion in fees and buys meant. they are having their acid wealth manager beat

expectations. last year they took a lot of churches tied assets tied to charges of the consumer unit they were offloading or when it came to their historical principal investments. these are balance sheets heavy investments they are trying to reduce reliance on. in their most recent quarter they announced they have beat their fundraising but tatian's and brought in more third-party running than they set out to do as well as beating net revenues. they are showing progress. they still of the table with one-time items they have had the last couple quarters. if you look at the hits they have been taken, the scope of those losses are much lower in that we have seen in prior quarters and they are being prided for being conservative on the onset. when it comes to their loan portfolios, and the losses are becoming more muted david

solomon is coming out and saying this is goldman strategy, we have made some mistakes in consumer before but we are moving on and focusing on the core business, which is where you are seeing somewhere in. -- which is where you are seeing some wins. lisa: you will be analyzing this for hours to come. we are seeing credit losses much lighter than previously expected. for goldman sachs expected losses 537 million versus an estimate of 621 million. for morgan stanley the numbers 3 million versus 133 million you think it is clear economists are saying the economy is better and people will pay their bills. sonali: you did see the biggest banks on the chart offerings come in higher and guide for the year the charge operates would start to increase through the year. for jp morgan that is less than

3.5% adversity group it is between 3.5% and 4%. goldman sachs and morgan stanley , they are weighted to the wealthier consumer and institutions. you've not seen the type of stress in those markets that were initially invested from many investors. should rate start to go down, that distress, those losses on credit books could be less pronounced than expected. was interesting is we are seeing weakness in underwriting fees. goldman had missed on both forms. however, you are seeing a jump back -- perhaps to burling to take on more risk and credit markets which bodes well for morgan stanley who is rated take on such risk. jonathan: let's get to the early

moves in the premarket. goldman sachs up .1%. similar story for morgan stanley. that doesn't. we have had all of the big earnings from morgan stanley, from goldman, the likes of jp morgan as well. let's think about regulation. that will be a big feature of the conversation in davos. we know they are unhappy about the prospect of higher capital requirement. where's that conversation headed? sonali: is headed in a direction that is getting quite ugly because you have the banks pushing back hard and sing to lawmakers that not only will it constrain lending to have these were fireman's, but remember -- to have these requirements, but remember they have constraints they are beholden to as well as other constraints on their trading activity they argue would be a pain to the treasury market. certainly there fighting back hard. none of these bankers, it was a

staunch person to advocate against those rules, they do not think they will pass this forum. another thing to consider is what does this look at into the election cycle. to these banks have the same sort of difficult regulatory environments here they had had in the last four years? is not just capital constraints, these banks have faced record finds through agreements and settlements they have major different regulators. regulation will be a big part of the story. the trading books are what i am watching. a lot of these firms have made large windfalls from trading activities in recent years and that can be more constrained when you see the likes of jane street and citadel securities starting to rake in record numbers as the bank regulation. jonathan: great work is always breaking down the numbers on wall street. morgan stanley positive 2%.

goldman sachs positive almost 1%. we will talk about the earnings in just a moment. let's talk about the regulatory regime. the pendulum could swing the other way around. super early days. if you get a change in the white house could we get a change in regime? lisa: that is what we heard from libby cantrill. what we could expect from a presidency 2.0 is similar to what we have seen before. yet i do not think the bankers are backing donald trump. the banking -- everyone is so full we can turn the volume down. isn't that the ultimate hope? lisa: that is certainly the hope here and everyone is it feeling the same which is why -- the outcome has become an inevitability. jonathan: for cassidy joins us now.

numbers from morgan stanley and goldman. your first reaction? gerard: numbers were very similar to what we saw on friday with jp morgan and citigroup. the investment banking numbers for the numbers better-than-expected in advisory but generally ecm and dcm were on the light side relative to expectations. when you go into the trading side, we saw mixed results. equity trading was strong, not so much against expectations. that is what we saw on friday. the quarters in capital markets were decent quarters but they were not real problems, either. the key question is what is yellow for 2024? lisa: we heard that from jp morgan and citigroup and bank of america and it was not that positive. do you expect to hear the same kind of cold water from the ceos

of morgan stanley and goldman sachs? gerard: it is going to be market dependent. as you know, during volatile markets, trading goes quite well. first quarter 2022 is a good example when sadly russia invaded ukraine. it is not good for investment banking results. investment banking needs stability and central markets. now the fed looking like -- if we have a pause or steadiness in the markets and rates do not go up higher, i think investment banking, particularly in the ecm and advisory business could be stands out in 2024, but we may not see strong trading numbers in equities. lisa: who is winning in the banking earnings race? gerard: i would say they are altogether. in terms of the capital markets business come as you pointed out

earlier in the program, goldman sachs is a dominant player in capital markets, as is jp morgan. those guys go in and night -- goat can. and then you have morgan stanley, bank of america and city. i would say there was no real standout out where someone was head and shoulders above the others. they all had decent numbers in the quarter. jonathan: we are at the world economic forum in dabo's so we can push out the timeline. what do you think the banking industry will look like in the next five years? what are the business lines these companies will have to pull back from because of the regulatory environment? gerard: it is very interesting. we should expect a number of comments coming from of the big banks pointing out why they should peel back the basel

regulations. the worst is priced in. there will be higher capital requirements, particularly within the higher capital business, -- this will be interesting when you have the longer-term outlook. after this is finally said and done. lovely this year we get the final proposal. what will it look like for the next five years. is this it? imagine the banks having the opportunity to know these are the final regulations of the last five years and is a positive outcome. profitability will be lower. knowing what the goalpost is in not having a move is a positive. lisa: does it enable ceos to travel more heavily into private capital. we have been discussing how that has taken a lot of the business out of the traditional

bread-and-butter of banking 20 years ago. gerard: you're right, it has made big inroads in the last 12 to 24 months. the banks will look to get more involved. whenever we see rapid growth in credit extension which is what is going on in the private capital area, you have to be careful because we know from history whenever you see that in an economic slowdown or recession, that comes back and gives you a hard time. they will get more involved and do it or cautiously but that is line of business the big banks will pursue over the next 12 to trade for months. jonathan: great to catch up as always. gerard cassidy of rbc. numbers out from morgan's tax and -- from goldman sachs and morgan stanley. in the first 15 minutes, responding to those numbers as

they drop. the regulatory regime, let's think about what gerard just told us. if we get a rush to private markets is moody's right to warn you could get a race to the bottom? lisa: this has been something people have raised for a long time. have we seen it yet? warren buffett said when the titles out there is a sense of who is swimming naked. jonathan: and we do not want to see anyone swimming naked, either. we do not. lisa: it is a metaphor. coming up, robert vince, president and ceo of bny mellon. equity futures pulling back most of this morning. we are -.3%. ♪

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>> the resilience of the economies and financial markets to the geopolitical crises going on to the rise of interest rates and the fight against inflation has been remarkably strong. whether that continues, think we are hopeful, the overall sentiment for 2024 is positive. jonathan: the overall sentiment for 2023 was dreadful and 2023 was decent. 2024 is positive. we'll see how that turns out. that was the deutsche bank cfo. you get the feeling anything said at davos needs to be pushed back on, because it is like a highlight reel of bad forecast. lisa: it has been every forecast heading into every year, everything is wrong. everyone seems pretty optimistic about 2024. the last 12 months is absently phenomenal we have seen the federal reserve go from 0% to

5.5%. unemployment is still below 4% in gdp in the fourth quarter of something close to a five handle. we should be reflecting on the resilience of the economy. the fact that credit spreads are as tight as they are that way markets already whisper from all-time high. that is not where we thought we would be 12 months ago and i would say even six. lisa: have you heard any explanation for that that seems definitive? there is resiliency and the fact that people got gobs of cash and ported it and companies got gobs of cash. if rates stay at these elevated levels will we see the same resiliency. jonathan: it is the hope we are going back to the old word and rates are going down. there is a phrase in credit, survive until 2025.

rates coming down will be ok. lisa: as long as rates are coming down. that is one of the questions underpinning the soft cream of -- jonathan: robert vince, good afternoon. i did not realize hold your bank was. robin: 240 years old this year. jonathan: let's talk about the resilience of your institution and the last 12 months. how impressed have you been by that from an economic perspective and a market perspective? robin: at the beginning of the year you are talking about this in your intro. 20% -- 2023 was not the year we were expecting. we saw our clients are looking for a partner like us to navigate the ups and downs. we have platforms that have

spent the financial world. we saw in the spring with asset and liability management. we saw through the course of the year. at the end of the day you do not get to be 240 years old unless you are resilient in helping your clients. jonathan: it seems to be a different here in financial services. we saw jobs cut last year from you? robin: we saw job cuts. last year was also the year we doubled our analyst intake of new graduates out of college and we will double it again this year. jonathan: are you happy with the size of the workforce? robin: our workforce is reflective of the we are trying to do for our clients. there are tailwinds associated with more efficiency there is also new businesses.

we launched new products with innovation at their core and are focused on being able to extended trading, we have extended it to our clients. there are bits and takes in their equation for sure. lisa: how much is the work from home model died? jonathan: our view -- robin: our view is we want to be flexible. we have three pillars of strategy. we are wanting to be more for our clients and we also want to power our culture. what we said to our people is there are puts and takes with that. we need to give to them. flexibility is an example. we did a program where we've made every person at bny mellon a shareholder of the company. we have also improved our mental health benefits. we also asked more from our people and we ask them to be

here at least three days a week driving our clients forward, contributing to pushing forward knowledge which i just talked about at our analyst program. you cannot have new analysts unless you have people to teach them. lisa: one huge component of income for a lot of banks has been the fact that interest rates have been high and they do not have to pay as much interest to a lot of deposit accounts and that has been a tail wind for profitability. how much does that go away this year robin:? it has been a part of our growth this year. we did not change our guidance. we have a lot of sophisticated clients. our clients expect good pay of interest from us and that is what we have delivered to them. our prediction is nii soft and this year.

that is where the fee in the innovation from our new products and services, that is what will drive us forward that is what we sent to the market we announced earnings last week. jonathan: through we focus on the specific banks that went under? it felt like the financial system was under threat and we moved on quickly. any lessons from last year? robin: there were a lot of lessons we put into practice. you talked about resilience. asset and liability management is a core concept for a bank. you have to do it really well. we were reminded of that but i would not call it a lesson. it did depend who you were. as we went through the year we had other examples of importance of resiliency. we talk about ai a lot at bloomberg. ai will be important.

at the end of the day it needs to have guardrails. if we do not those things well -- lisa: how excited are you about crypto? you are the first major bank to offer custody services for crypto related assets. are you expending that in going to all of parties held in dabo's at the crypto space? robin: i am skipping the parties. jonathan: that is the right answer. robin: it sounds like you've been having a lot of fun at them. lisa: absolutely not. robin: we have focused on the technology. blockchain is important for markets. digital assets, tokenization, assets into the mainstream financial system. we touched when a percent of all of the investable assets in the world so when there are ways to take assets that have not been easy to handle as part of the financial system and make them

more mainstream in their operations, tokenization is an example of that, we are all for that. jonathan: faith in humanity. i wonder how much you have? every time we make a technological advancement we end up working more. ai, do you think we do even more, or will we work less? robin: ai will change the future of jobs. i will give you two examples. we play a very important role in the u.s. treasury market and that allows us to see things. ai helps us see them more clearly and provide insights to our clients and our clients are interested in that. an example of improving quality of life. we have had ai start to do draft writing of some of the research reports and it is not replace the person writing it.

the used have to get up at 4:00 in the morning to write the report, now they can get up at 5:00 because they have a first draft courtesy of ai. that is improvement. jonathan: and now they work until 9:00 or 10:00 at night. i am joking. that is my lack of faith in humanity. we will all just work more. lisa: it will happen for the people in positions that they can do that. jonathan: human nature is human nature. fantastic to catch up. robin vince of bny mellon. coming up, we'll catch up with the chairman and ceo of cantor fitzgerald and also need to talk about equity markets. futures on the s&p looking like this. equity futures still negative on the s&p. down about one third. lisa: we are watching the bond market as well with yields inflected a touch higher.

the possibility the fed will not cut rates as much. jonathan: more on the politics. the results from iowa. bloomberg's in reordered on the set with a -- bloomberg's annmarie hordern on the set with us in switzerland. ♪

>> under the hood, there is some indication that the labor market is more balance. >> labor market at some point in our view will have not necessarily an incredible drop off but a more normalized progression. >> we have the labor market, we have high labor costs coming through the piling my -- the pipeline. >> the market will have more of a pullback than we have seen. >> market will stay choppy for the next few weeks. >> this is bloomberg surveillance live from the world economic forum in davos. jonathan: live from davos, switzerland for our audience worldwide, good afternoon, this is bloomberg surveillance. we talked about the economic

forum being a highlight reel of people forecasting and a highlight reel of people complaining about the cop and sitting in the sun which never makes sense. in the previous hour, we concluded talking about risk in the economy and financial markets. the resilience has supplies all and the fact that the fed has gone from qe to qt in the space of two years yet here we are. unemployment is south of 4%, gdp and the third cortical something close to 5%, equity markets it whisper from all-time highs and spreads incredibly tight. that resilience can lead to confidence, misplaced confidence and maybe even complacency. you are leaning on that word pretty hard as we kick off this forum. can we turn to stability this year? lisa: you have the election situation with many -- which many people are talking about and yet the potential for shocks in many different conflicts that have been heating up and it big

way. they say we can deal with high interest rates if they are stable or stronger regulations if they are steady. that's a big if in a year when everyone is talking about the potential volatility and these elections and misinformation and other concerns. jonathan: is politics predictable this year? it looks like annmarie: donald trump is the individual that will carry the republican party but this is the election americans don't want. they don't want a rematch. these two are married politically and it looks like we will get that in november. jonathan: is i way in indication of the rest of the year? annmarie: things can change in a caucus room. you don't just stop by and decide you want to vote and put in test put it in the ballot box. you have to discuss it with people but the whole projected trump won within 30 minutes

before people got in the caucus room to have this discussion. it's infuriating. but i would to the side. trump wanted to make a statement to desantis and haley but new hampshire is what will come down to. lisa: can we take 100,000 people and judge this thing? it was so cold outside that nobody wanted to go. they don't have to count them, its inevitability and i think it strikes me, the shock of the inevitability internationally and that's what we have heard here in davos. annmarie: this is going to be an election of two incumbents. trump is an incumbent running in a primary were people chasing him but he's an incumbent president and wants that spot back. jonathan: ask someone on the record about the former president becoming the present again, no one wants to talk about it. i understand why at a forum like this. if you believe in multilateralism come i understand where you might be fearful about the former

president getting back in control of the white house. i think that's an important topic where we need to push this -- push the policymakers under it what will your do and why is it highly dependent on what is happening in america and what will happen in the elections of this year? annmarie: even when it's on their doorstep, you look at europe outsourcing defense from the united states. you saw countries unable to reach the 2% target. i just saw secretary of state and jamie dimon sitting down with president zelenskyy. he's here to get the ammunition and that aid to ukraine. at the moment it has stalled not just in washington but also stalled in brussels. jonathan: i believe there is a meeting with president zelenskyy later this week. there is plenty of coverage of financial services the week in davos. let's turn to the price action on the s&p 500, big earnings

from goldman sachs and morgan stanley. it's lower by a third of 1%. lisa: people are trying to game out what they don't know. what we will get today is some of the ceos and executives shaping those decisions. we had the ceo of nasdaq and but coming up right now, i'm curious to hear about the road ahead. jonathan: howard, good afternoon. it's good to see you. we were talking about resilience in the u.s. economy and u.s. financial markets. we typically talk about risk and vulnerabilities. can we start with resilience before we start with risk? are you impressed with how resilient the economy is? >> the economy is hanging tough and -- and inflation is not going away. people think interest rates at zero or normal. you know that's a manufactured nonsense.

steady eddie is my view. the market is not calling for 175 basis point cut by the fed. really? no way. no way at all. that is nonsense. if they get it wrong, they will get it wrong by staying higher for longer. i think that is likely to occur. lisa: if they stay where they are at 5% right now, do you see capital markets activity coming back because of the stability? >> stability is fine. 5% is like a normal rate. we have a $34 trillion deficit, should we be a 2%? of course not. 5% sounds reasonable and i think the world can deal with it. inflation is still too high and it's coming down. it's coming down but it's not done. you go to the supermarket and

you have to be kidding me, inflation is not in the rearview mirror and therefore, we are going to stay higher for longer. it's going to be here and maybe a little lower to show off but 175 basis points, that i think is actually funny. lisa: that's what we heard from kent rogoff as well that it seems like a pipe dream. given that backdrop of the soft landing and no fed rate cuts are few of them, can you give a quantity or some sort of qualification of helm much ipo's, m&a, high yield debt issuance can pick up in an environment like that? >> for the banks, trading markets are back. zero interest rates were boring. we owned the largest most successful home sale market. stock was up last year and is only trading seven point five times earnings.

bgc is doing well so the banks will trade well. they will have really good numbers all year long because now there is reasons to trade. when interest rates are zero, bring a pillow with you, it's boring. now we can sell a and buy b. financial services will do well and we should talk about crypto as well before we finish. jonathan: what would you like to say? >> remember when gold etf started. they were exciting into thousand four and it stayed steady. there was this hype that everyone would buy gold. bitcoin ran up and it has been steady. it will start to rally and grow. there a company i like called tether which is a stablecoin. i manage many of their assets. the tether holdings is the name of the group and from what we've

seen and we did a lot of work, they have the money they say they have. they said they had $86 billion of assets and $83 billion of liabilities. i've seen a whole lot and they have the money. there has always been talk if they have it or not. jonathan: so spot bitcoin etf, will that restore confidence? >> no. that's just a way for americans to buy. why are americans having anything to do with bitcoin anyway? why do they have anything to do with stablecoin? it's not an american thing. this is americans buying tesla stock. this is a speculative asset for us but for countries like argentina or venezuela or turkey, these crypto assets matter.

it's a way to hold onto the dollar. tether stablecoin in argentina and venezuela and turkey, imagine you are in turkey. you don't want to hold the turkish lira. it will go down 50% this year so you want to hold the dollar and hold it in a token. holding your dollar in the token is amazing. that's why tether is doing well. they have $95 billion in issuance. lisa: i know you called the cme group the extraordinary monopoly in america and have tried to figure out ways to compete more directly. how do you plan to take them on this year? >> it's coming. it's calledfmx. we are extraordinary in the markets for treasuries who have an electronic market place for u.s. treasuries. it's been growing 2% sequentially each quarter.

last quarter was 25 so we will probably hit 27 this order. sequentially quarter by quarter, we will partner with all the major banks, they will be partners with us because they want to create a competitor to that awesome cme to keep someone honest with a little competition. we expect to get cftc full approval we will announce our partners and banks as to who is in. we will roll out a competitor to the cme in 2024. lisa: great to have you back on with another pitch. you said fixed income trading. his been maybe a little too exciting with results coming in from some of the banks a little lighter than people had expected. what is optimal in terms of yield swings and what's good and bad for traders? >> traders like volatility, they like movement. it will not a was go their way

but they are in the game of making transactions with their clients and if interest rates were zero this year and next year and the year after, it's kind of boring. this market is excellent whether it goes up, it will not go up anymore. interest rates are not going up it would be horrific area how much are they coming down and the answer is a little bit, less than people think and i think you will see the banks do extremely well through this, 2024 will be wonderful. the jp morgan results were great but citibank is on the back end of things. i think you will see the banks do really well. they will be a wonderful performing asset this year. jonathan: we have to do more morning breakfast meetings with you. rate energy. >> great to see you. jonathan: where do you want to

start with that one? let's start with rate cuts that are priced in which are laughable. lisa: that's what everyone is saying and yet the market is pricing an insane we are not buying it and we are still doing this. who is buying it? can there be a soft landing in this type of rate cutting forecast? right now, that is the dissonance. optimistic people are saying this is a pipe dream that we will get these cuts. jonathan: coming up later this hour, the conversation will continue from davos, switzerland. we will catch up with adina friedman, the nasdaq ceo. on the s&p 500, equity futures are pulling back by one third of 1% and yields are higher by six basis points. from davos, switzerland, this is bloomberg. ♪ how am i going to find a doctor when i'm hallucinating?

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>> it's not going to be as good as 2023 but it won't be bad. inflation will come down, soft landing, six rate cuts, that's a pipe dream if we have a soft landing. we will have two or three. jonathan: that was ken rogoff earlier in the program saying it was a pipe dream to have a soft landing and the six rate that's priced by this market. he is not alone. howard said it was laughable what's priced into financial markets. people are not listening. they are saying what we see is commensurate with this type of rate cutting cycle. we are talking about a soft landing and this is what the president wants. can you have the goldilocks scenario if you have rates staying where they are? that's the tension right now.

jonathan: let's talk about the tension in financial markets. equity futures -- earnings in the rearview mirror from goldman sachs and morgan stanley. futures are negative by 0.4%. yields are up by about six basis points. the coverage of financial services continues. joining us on set in davos is the ceo ofnivik. let's talk about the future of investing. i don't think enough people realize you are the number one investor in farmland worldwide. >> natural resources in general but farmland, we are by far the largest investor in its conviction we built over 10 years ago. today, we are approximately $20 billion in that space. there is one built for today's times. you may want less volatility in

your portfolio and you may want more yield and here we are today, people come to us. jonathan: things have changed a lot in the 60-40. can you help me understand what the future of investing looks like? there was a fantastic piece in the financial times. it was forecast that ultimately investing and investor flows would polarize into this ultimate barbell with one side, super passive exchange traded funds, cheap, convenient access to benchmark returns and on the other side flows into specialized managers, private markets etc. have we arrived? is that process changing? >> it's always changing but i think that's been going on for a while. it made sense at the time. we three or four years ago, we said people understood stuff academically. you will have more volatility going forward.

returns will be lower in the next decade and inflation may show up so are you protected and yields will be important. people understood the academics of it but it wasn't an urgency. you can go out and invest passively. i look to these opportunistic exposures but today, that was more of an urgency. you are seeing more creativity around solutions, products and innovation to try to get mainstream investors more access to alternatives to be more diversified. lisa: what is the catch with financial creativity? some people are saying when will bc if underwriting standards are going down or there are pitfalls within the five it markets that are less transparent? >> the catch is liquidity. people get their capital locked up versus getting it cheaply in a liquid way than an etf which is still a very viable vehicle.

yet what is the valuable or premium put on liquidity versus 10 years ago and today? the additional return you get for taking illiquidity is very valuable. that's been the catch but the perception of the risk behind liquidity has changed as well. lisa: we think about sticky money and we saw that real estate crisis in the u.k. within the past two years or so with respect to outflows and what happened. we haven't really seen the forced selling of some of these funds that cater to individuals. are you worried about that that we will see the pressure of losses we haven't seen in private markets? >> i don't because what you've seen is the sophistication of investing in private markets and who is invested. it's very well-balanced. people love talking about real estate and its around the issue you see. 3% of the reit exposure is

offices. things like life-sciences, storage, logistics, they are doing fine. people are more diversified than you would thank and liquidity will be felt or the lack of liquidity will be felt differently. jonathan: have we really paid the price for taking interest rates to 5.5% from zero? >> i don't know the answer to that. we've been in the camp of a soft landing going into 2024. i think that seems more likely the case more and more. the idea of the fed taking up points this much is unheard of but we are in different times. on the believer that we are going into a soft landing. i think there is a lot of cash on the sidelines today that even at these rates will him back into the system as well. the uncertainty will be present

there for the rest of my career. whether it's a geopolitical issue or whether it's a policy mistake, the risk of this thing going the wrong way is there and it will continue to be there in the foreseeable future. jonathan: you cut the end of the panel i had on private markets and i tried to talk about politics. how are you thinking about the elections in 2024? >> i take lessons from the previous election. i've been through many different cycles on the trump election, the first time around. we all looked around and thought about putting in hedges and what we would do differently. i can control elections for the markets but we can control the fundamentals and how we pick good management teams in good company so i've learned to move away from that noise and focus on the fundamentals of what we do well and anticipate

volatility. lisa: i have to bring up china. xi jin ping's coalition to davos hasn't been since 2016. >> i've been a big part of the global economy for some time and if you are not open to global investments from the international community like switzerland or germany but they are still an important part of the globalized economy. people talk about globalization and we are going the opposite way. we are not but the pendulum swung a little too far. it takes decades to change things. i still think china will be a big part of the equation albeit people have learned some lessons and will be more careful in terms of how they interact or make investments around that. we started a policy some years back of going along with china and do it in places like australia. you can do that for some time

but i think the world will continue globalizing. jonathan: this has been great, thank you. plenty to think about. particularly on the elections in 2024, the future of politics, i find it amazing we sit here and you listen to the western investor casually talks about china being on investable. then we just move on straight afterwards and we don't dig deeper. it's stunning we are look at the world's second-largest economy in their group of very large investors particularly in the united states who have decided that china's capital markets is un investable. lisa: it's stunning except when people have been burned for long enough, they don't want to get burned again. if you are a very large organization come you cannot simply avoid the world's second-biggest economy and that's the struggle. it's not un investable but how do you invest.

jonathan: you not come to get the policy certainty you want at this point. the pushback is been pretty aggressive so far this morning. lisa: you can't have your cake and eat it too. you either have a soft landing and not many rate that's or a hard landing and a whole host of rate cuts that are more than what we are seeing priced into the market. they think you get one or the other and people are not grappling with that properly. jonathan: the dot plot has to be reconciled one way or another through this year. coming up, we will catch up with adena friedman of nasdaq. your equity market is slightly softer. ♪

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jonathan: there is economic data just around the corner. live from davos, switzerland at the world economic forum, i am jonathan ferro. equity futures on the s&p 500 look down by zero .4% on the s&p 500. small caps are a little softer,

down by 0.8. let's get to michael mckee. mike: it's tertiary data but it's what we got to day. there is a big drop. the empire manufactory server very just survey covering new york mainly went down, new orders fall to negative 49.4. those of the worst numbers since may of 2020 which was in the teeth of the pandemic, the worst numbers anybody had gotten. prices paid go up, 23.2 and employment drops -6.9 percent from -8.4. you look at the headline numbers and it says cut rates sooner and it says not so fast but they are big numbers in any case. jonathan: how unusual is it to

see those swings in those numbers? mike: we've never seen anything of this magnitude. is it because of the weather or winter? is this an outlier or not? we will see when we get the additional numbers like the philly fed coming up later this week. lisa: are we seeing any patterns in terms of deterioration or negative so prizes and some of the economic data is more real time since this is the first read on january? mike: we really haven't yet. the numbers we get tomorrow should be interesting because we will get the retail sales figures of industrial production and that will give us an idea of how both sides of the economy are going at this point. we will see if there's any real drop-off or not area jonathan: michael mckee, thank you for the latest data which was pretty dreadful. lisa: did wished shockingly

dreadful. you are seeing a bit of a reaction in markets but you wonder if it's cold and people didn't go out? it could've been a strike stryker this particular thing. you can't really get to jazz with one number. jonathan: what was the northstar of last year, jobless claims? lisa: was it jolts or some of the others? jonathan: more jobless claims data coming this thursday. on the s&p 500, equity futures are negative but 0.35%, the nasdaq down by 0.4. yields are higher on the bond market. we have kind of been here for a month, in and around four

percent on the 10 year. lisa: the tension between the buyers and sellers in the bond market, the idea of a soft landing and you get higher rates are you get a hard landing and you get lower rate and people aren't willing to resolve that and i think that's the tension that's with us for now. jonathan: the euro against the dollar, where is it? lisa: probably $1.08. jonathan: exciting stuff. lisa: it doesn't reflect any major diversion. you will hear from christine lagarde a lot this week but i wonder if her tone has switched. she had a different tone than jerome powell. lisa: a lot of the ecb hawks say they will test say there will be no rate cuts. jonathan: we've heard that this morning on the federal reserve. let's continue the conversation with adena friedman from the

nasdaq, good afternoon. let's talk about the transformation of your business, a lot of work has been done and a lot of our audience typically think of you as listings in exchange. let's talk about what you are about to become. >> our markets are the foundation they always will be. they are incredible part of our business but what we been able to do is expand our relationships with their clients across liquidity. how do we bring liquidity to markets around the world to make sure liquidity is greater? how do we help our clients manage risk so they can bring more to markets. transparency in terms of helping investors manage their investment strategies and integrity and that's where we have our anti-financial crime suite so we can help the banks and brokers manage the integrity within the financial system. we've gone all in across those three pillars including our position last year but we been on this journey for about seven years. lisa: you took over in 2017 and

you've had about a dozen acquisitions since then. in the next five years, what proportion of your business will be on the listings side and what proportion will come from some of the other fintech aspects you've acquired and build out? >> we look at it in terms of the trading business and that's between 20 and 25% of our business today and then we have our solutions businesses which is data and analytics and software solutions and that's 70-75% of her business today. we are pleased we have a complete suite of solutions we offer corporate's and investors and banks and other exchanges that help them navigate the complexity the capital markets and the banking system have introduced. lisa: i've been struck by how much discussion there is around artificial intelligence and how people are trying to figure out what to make of it. the imf said one of the big

concerns is financial stability. they are concerned that people are not moving quickly enough to adapt to the financial system to how quickly some of these systematic learning systems can catch up. is that entering into your calculus? >> i think the financial industry in many respects is on the forefront of a lot of technological innovation but it has a lot of regulation that underpins this so it has to move with the speed of regulation in some cases. we try to bring as much innovation as we can to the solutions that help manage the regulatory environment. how do we bring ai into the tools that can be brought into marcus to have a better experience in the markets? we have our first ai driven order type coming into the market this quarter. how do we help them as a more advanced technology provider so they can adapt more ugly to the risks happening around them? jonathan: help me understand how

we could confront a new era of misinformation. it looks like we are very close to producing a very lifelike video of you releasing your earnings a day ahead of time and people believe it. how close are we to that moment and how concerned are you? >> ai brings opportunity and risk and that is a major risk of thinking about the regulatory environment on the use of ai and trading decisions and investing decisions is an area we are focused on, protecting against what we call deepfakes that could provide misinformation to investors. we have some blunt instruments that protect the investors today but what you want to do is prevent that type of deepfake from filtering into financial decisions. we are still working on the answer to that. there is a regulatory framework but it's more of a technical russian of how you validate the videos.

you could use blockchain technology to do that so how do you create most a validation mechanism? i think media has a big role to play down the -- to play on that. jonathan: there was a basic pack we so with the sec account on twitter a week or so ago. lisa: it's ironic considering they are supposed to regulated and they came out and they said they approved a bitcoin etf. jonathan: have you seen more of that recently? >> not more than what you've seen. whatever has happened has going out to the media area that would be one of the few examples we have seen so not yet. you have to think about security every minute of every day and it's not just the responsibility to manage security in your business, it's everybody's responsibility. we do a ton of education and that was a wake-up call to focus

on authentication for your accounts. there is a lot of self-help but there is also a collective action that's needed across companies to make sure you are maintaining security. that's a huge area of focus for us. lisa: you are talking about investing in technology on one side and people think of the nasdaq index is so dependent on few of the major technological companies. doesn't make the market more or less fragile to have a greater dominance of a couple of key companies? >> in general, the economy is moving toward having some really leading technological institutions that are driving economic growth and prosperity. the indices tend to focus on where the economy is going and they are a reflection on that and how was market cap evolving toward the larger technology companies. we are in a global competitive situation. you have to look at this in the

context of maintaining the u.s. is a global technological powerhouse and enabling businesses to grow and expand innovate and making sure the innovation ecosystem remain super robust. new companies are always coming into challenge them and allowing for every company to have liquidity with strong investor protection. that's kind of what we focus on but i think what you see in the index is a reflection of the economy. lisa: we've seen a real drop-off in ipo's. people have been talking about interest rates coming down before they can invest in those. is that a reality that this year will be more he bust or are companies realizing is better for them to finance themselves in private markets and do it that way in perpetuity? >> we have about 85 companies that have filed publicly on the nasdaq so that means they are ready. they are ready for the markets to be open. it's really all about the investor. are the investors ready to put

risk capital to work and investors predict the future so if they believe and are confident we won't have higher rates and we likely will have lower rates over time, than they can underwrite that. thank and put that into their model and the big unknown is more known and inflation has come down so the cost of doing business has come down. i think that gives them more confidence to underwrite risk capital which means more ipo's. that's a long way of saying i believe there is the opportunity for more ipo's this year. jonathan: are we struggling to interpret the private market valuations this year? >> i think public and private markets are always calculated differently. investors take small bites early on in the vc business tends to make 10 year bed so they will have a different view of value than a public investor. i think the private and public

markets will never be perfectly synchronized. private investors will bet on the longer-term future so they might be able to wait longer to grow into the valuation and public investors want to have more liquid options. they looked more to what the valuation will look like in four years but not 5-10. jonathan: you made it $10.5 billion bet. are we happy where we are now? >> we are excited and we close the deal in november and we are integrating and the team is incredibly energized and the solutions are amazing we have conversation with the banks, we can now solve their most complex challenges. the biggest challenges they face as operators, we are excited to be their partner. jonathan: thanks for catching up with us. that's on the future. remodeling the company from the company we all knew 10 years

ago, exchanges, listings and all of that to something different. lisa: to a financial technology company. we were asking about the idea of moving to having a bite of index funds and then something else and how the financial market is getting more complicated. in terms of private markets but also financial technology services, it's an interesting moment for a lot of different firms how to orchestrate that. jonathan: because of the concentration, there is a belief that you have to go elsewhere for opportunities for diversification which is why you see this push in private markets. lisa: that raises a lot of questions. jonathan: we will also have questions with pat gelsainger. live from davos, good afternoon. ♪

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>> 60% of jobs in advanced economies over a foreseeable future are going to be impacted by artificial intelligence. if you are lucky, artificial intelligence will enhance your productivity, make your job more enjoyable and very likely better paid. if you are unlucky >> it's an ugly environment. jonathan: the imf managing director there sitting down with bloomberg's lisa abramowicz earlier today. lisa: it was interesting. she had some wonderful worlds about bloomberg. jonathan: did she? lisa: she was joking about how artificial intelligence made it sound like bloomberg is terrible. she was joking around.

i think it was interesting to hear what she had to say and about what christine lagarde had said. they set american people can do whatever they want but if you look at policies, there might be serious concerns. that was an undertone as people tried to sift through the uncertainty of donald trump being president. jonathan: what are those concerns for the international monetary fund? lisa: i think the more inward looking tariffs and things of that nature, the less globalized view of the world. jonathan: have things changed under this administration from the previous administration? the rhetoric is different but the bedside manner is expected but has the policy changed? lisa: they've gotten rid of nato. are we still on this trajectory of nationalist measures. jonathan: i want to touch base with the price action going into the opening bell.

earnings from the bid -- big banks are behind us now, goldman and morgan stanley this morning. were there any chakras? lisa: the biggest shocker was howard coming on and saying it's going to be a great year so ignore the noise. jonathan: and the aggressive push back against rate cut calls as the dominant theme this morning. lisa: people are saying we either get a soft landing and very few rate cuts are a hard landing and many more rate cuts. jonathan: pat gelsinger is with us. >> it's great to be with you today. jonathan: no questions on chairman powell. talk to me about de globalization. how compatible is it with the chip industry? >> ever since we started this journey of bringing u.s. chips in the eu chips back in place, it was about building supply chains.

i ask all the time -- what aspect of your life is not becoming more digital? everything is in everything digital runs on semi conductors. we saw the fragility of our supply chain through covid. because we are one island, we said we need a balanced supply chain for the world and that's what we are off to do metoo rebuild the american and european supply chains for semiconductors. we are all better off, better jobs, better national security, better economics and we are ready for a turbulent world. with two wars active today and -- in different countries and different geopolitical concerns, this is critical for the future. jonathan: walk our audience through the chips act and how big it is and whether you received anything from it yet? >> it's $2 billion in some of it was capital offsets and some of it was long-term r and d.

it's a very similar construct to the european chips act. we never voted to get rid of this industry for the future but asian economies voted to get it area as a result, we are no longer competitive. so let's create a leveling and long-term incentives to invest in this industry and that's with the chips act is doing. commerce set up their department for the eu commission which is now underway and we have projects in the u.s. and projects in europe to take advantage of that. they are in the latter stages. they say we are building factories today so let's go. lisa: can you quantify how much intel is receiving from the chips act? can you quantify how much cheaper it would make manufacturing in the u.s.? >> industry analysis like the

semiconductor industry association in the u.s. with similar studies done have said it's 30-40% cheaper to build in asia because of taxes, tariffs, incentives, labor, the supply chains. the chips act is designed to close that gap. if you are building a 20 billion dollar facility, your 30-40% un competitive without these capabilities being put in place and that's with the u.s. and european chips act is doing, so that when we make enormous facilities like the one we are building in germany, it's well over 30 billion euros. this is huge and i cannot be uncompetitive and compete in the world market. lisa: when you talk about the supply chains and who will be building the chips with you, it's not just about your chips anymore. have you had real conversations with the amazons in the world and apple and nvidia about

manufacturing there chips? >> we've had lots of conversations with them and we start to close design gaps with different ones. it's not the industry practice for them to say their name because they already have relationships with others and that card. it's competitive intelligence. we now have three major foundry customers for our most advanced processed technology. we have announced multiple advanced packaging customers as well. my earnings call is next week we will update those as we come up with earnings calls and we are making solid progress for industry engagement. we have test chips that will be going into the factories in the next few months for different potential customers. momentum is building for us to become that western foundry for the world. jonathan: the political attention this industry has gotten has been phenomenal. i remember when the state

department changed because it was said the head of the department was the ultimate diplomat. have you had to become a politician over the last few years? >> my day job is running intel and making sure we rebuild processed leadership or project engineering and rebuilding our customer relationships. i have had to spend more time in brussels and the capitol hill on these topics but i certainly would not have envisioned when i took the job. it's been fulfilling as well because i think we've created the two most significant pieces on industrial policy since world war ii. we've accomplished that in the last couple of years and fundamentally, we are rebuilding the supply chains of the west and i'm proud of that. lisa: you mentioned building in the u.s. and you threw in europe and i wonder where the european chips act is. how much cheaper is it to develop in the u.s. then europe?

do they lack that competitive edge? >> the gaps between u.s. and asia and europe and asia are similar. the 30-40% is a good thumb in the air for that competitiveness. it's not u.s. versus europe, it u.s. and europe to be competitive with asia. we were in 1990, 80% was built in the u.s. and europe and now it's 20%. lisa: but europe doesn't have a chips act. >> they do. lisa: does it encompass enough? >> we feel good with that and our proposals for poland and germany, the two big projects we've announced will soon be going through the dg comp process. i met -- i met with the commissioner last week and we discussed those proposals from germany and bring it forward and poland bringing forward. we expect those to come to fruition quickly and get the big project underway.

we are quite excited and it builds on what we are doing already in ireland. we are already doing it in israel. jonathan: it's good to see you and thank you for catching up with us. >> always a pleasure to be on bloomberg. jonathan: the ceo of intel and the ultimate politician. that's what's happened to that industry over the last few days. lisa: this is the new arms race and has to do with the hardware and the software. jonathan: i believe manus cranny will take it to the opening bell in the next hour. we will be back and catch up with chevron and talk about politics and policy but not in the white house but from state to state. lisa: we have seen that in massive ways, talking about leaving california because of some practices that make it less profitable. interesting dynamics. jonathan: i would go for the

taxes. lisa: yeah? jonathan: coming up, mike werth, ceo of chevron. from davos, switzerland, good afternoon as we wrap up day one. ♪ chances of a plane crash -- 1 in 11 million. you're not gonna finish those salted nuts, right? never waking up from anesthesia -- 1 in 185,000. validate your parking or just see how it goes? what? why stress about the unlikely? does a killer clown worry about being struck by lightning -while winning the lottery? -sure don't. but your odds of falling victim to online crime are 1 in 4.

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>> from new york city for our viewers worldwide, i in for jonathan ferro -- i am manus cranny info jonathan ferro. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg's the