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>> good morning and welcome today break here. i'm kriti gupta in london. air strikes against militants in iran come if retaliation after teheran launched similar attacks the day before to the markets traders wind back bets after strong u.s. retail sales cast doubt on a dovish fed in tornad. we hear from c.e.o.s this hour. the third quarter sales in terms of numbers 5.6 billion. when you take into the currency effect a massive beat on the third quarter sales numbers, the

european market opens in about two hours. futures are something to watch in context of geo politics. you're not seeing the major selloff. the major conviction to the downside. you are seeing a lot of buying in as well. investors sitting on the sidelines. stoxx 50 futures unchanged. slight underperformance to have ftse 100. the asset story gets a little bit more interesting here. the geo-political story is getting priced to some extent. you are seeing a bump in brent crude here. monetary policy is where it gets tricky. you have to price in what the fed and ecb are thinking. that is where the 10-year yield really matters. 4018 what we're looking at. down by one basis point in the asian trading session.

creating a little bit of a bid into the euro and the pound despite the weak thans we saw earlier this week. i want to get to our top stories and start in the middle east. tensions are escalating between iran and pakistan. the pakistani military striking terrorist hideouts. similar fraction iran against pakistan happened window. patrick, how concerned do we need to be about two countries that don't usually engage in strikes like this? >> good morning, yes. we know that as you said this was a retaliatory strike in response to the what iran did yesterday. both of these states are targeting a -- are target separatist groups in the porous

border. it does not seem to be coordinatorred. they are criticizing each other. it does not give the impression this is a coordinated effort against this group. that is where the tension is. where the geo politics could escalate. in theory this should be a separate issue. the timing of it is obviously just so frowght at the moment. just overnight we had more houthi attacks on u.s.-connected shipping. we had the u.s. designate the houthis again as a terror organization. it should be this bilateral issue that it workout together. it is coming at the time of strikes happening all over the region as well.

kriti: the terrorist designation is an issue. the biden administration in 2021 had initially removed that to makesure some aid got into yemen. yemen is one of the worst parts of the world to live in at the moment. how much of what we're seeing is related to that core issue of israel vs. gaza? what happens there? are these relates or are these different? how should we be thinking about it? >> yeah, i think they needn't be related. it could be a bilateral issue. but it is iran projecting power, right? iran has faced attacks by this group around the border area in the past but they have been pretty small, deadly. in december 11 policemen were killed in iran. it has never responded the way

it did yesterday with missile strikes across the border. that is why it seems different and seems like iran is projecting power when countries like israel wants to see it is weakened. iran wants to counter that perception. kriti: certainly an escalating situation. patrick joining us from istanbul bringing us the latest. there is concern about how much the geo politics are getting priced in here we talked about the cross asset picture earlier. walk us through market narrative where you're at? >> yeah, given the geo politics, the expect eations and the weakness in the chinese economy, i think the narrative is really one there is very little risk appetite given the headwinds.

stocks slightly higher considering it slumped 2% yesterday, we really shouldn't be reading that much into the rebound in the markets. indeed on the chinese hang seng, they are lifting things. given the showing yesterday, again, not much should be read into this. we're seeing the stocks extending the losses from yesterday. the nikkei despite earlier gains is pretty much flat now. it is that dynamic that we have seen as the money flows out of chinese stock marketes into japan. even the nikkei has closed flat. if you're looking for bright spots we did see some gains among sank samsung and its suppliers after it unveiled its smart phone. there is very little risk appetite in markets today, kriti. kriti: interesting dynamic.

how much of this is representative to caution being exposed to anything in the market. let's go into the micro. tsmc, the world chip maker. their net income falling less than expected, another sign that a chip industry downturn may have bottomed out. tom, walk us through these numbers. what do we need to know? tom: q4, you're absolutely right in terms of sales and operating mar jaden profit it was beat across the board. really interesting when you break out the results. you see the sale, the demand for smart phone chips came in higher than for artificial intelligence chips. that is in the fourth quarter. you round out the picture for 2023, we talked about this before. the full year of last year, the tension was between the slump

many smart phone demand vs. the frenzy for a.i. chips. it was the a.i. chips that made up to some extent slump we saw for smart phone chips. fourth quarter is really interesting. you're seeing a turnaround. beats across all of these different metrics. it is the smart phone growth coming through. a lot of that is coming from potentially samsung and its orders. the chairman is going to be stepping down. change at the top what happened that means for running of this company. capex came in slightly below expectations for the full year last year. does capex ramp up in 2024? last year growth margins were around 50%. they still need to get margins up. tensions in taiwan.

espning as they look to spend out their intersection like to u.s kriti: a.i. which was the initial tail wind a lot of analysts had been watching. we thank you so much for bringing us that crucial story the i imagine it will be a major topic at davos. is a.i. driving that story? come up later this hour, the barclay c.e.o. joining us. i imagine we'll hit a little bit of all of those topics. 6:20 a.m., the c.e.o. of l.m.e. stick with us. this is bloomberg. ♪

kriti: welcome back to bloomberg daybreak. i'm kriti gupta in london. we have been following the conversation from the world economic forum in davos. monetary policy from the leaders around the world buts there a big piece we're talking about in the u.k. how much investment is going to be attracted to this part of world at a time when every economy is vying for a lot of corporate investment that we're seeing from around the world. i want to start off with that question with a special gulf of mexico c.e.o. from adventure. i want to start on the conversation about investment in the u.k. we know later today you are on a panel with the chancellor jeremy hunt in particular. talk to us about how you view

investment in the u.k. >> the u.k. is an absolute critical market for us. we're soon going to be opening our first a.i. innovation hubs around the world we'll open 10. one is in london. that is a great sign about why it is really important to continue to invest and we absolutely are. we have done a few acquisitions already in the last few months and we believe it is a great market, great companies and terrific talent. kriti: some would argue that is an investment that doesn't have the longevity that perhaps some of the other markets around the world have. it is an economy still dealing with the cost of living crisis with a very interesting history of almost disweighed tech investment. what would you say to the critics of the folks that are saying those investments, those acquisitions you're talking about are not going to be worth it in 20 years time. >> well, let's look at the great companys that are in the u.k.

we are working with some of the terrific banks who are investing to improve the experience of consumers for example. using gen a.i. to market and personalize and that is a great sign about how the companies in the u.k. are intending to lead. when we think about investment, we look at it over multiple decades. we have been in the u.k. for decades. we continue to see companies there really want to lead. and to do so responsibly. it was great to see the u.k. leading on trust in a.i. they did so with a view that a. sirvetion important for society as well as for business and the u.k. wants to be leading to make sure you can do both, responsibly regulate and open up innovation. that's why we see the u.k. as being a very important place for us to invest over the long-term.

kriti: speaking of the a.i. story, the u.k. has come out tough from a regulatory standpoint. it has become kind of a real flashpoint between regular authorities here in the u.k. and in europe as well vs. some of the innovation coming out of silicon valley. are you concerned that the investment in a.i. specifically in this region may not be worth it at a time when you yourself said you are looking at cost-cutting measures for accenture? >> i think it is important to think about why is gen a.i. so important? we said it a year ago that every company would need to re-invent every part of their companies in tech data and a.i. we see c.e.o.s. i'm talking to them absolutely every day saying now we get it. what is terrific is as much as regulation is important, what you need to do as a company lead

with how do i make sure i use a.i. responsibly? there was no responsible p.c. there is a clear concept around responsible a.i. you're seeing that at davos. we released a report around the world economic forum. i'm absolutely confident that europe and the u.k. will get it right because the companies, the c.e.o.s are getting it right. kriti: it is interesting you're talking about doubling down on a.i. we talked about hiring more if that space. some of the people entry level coming out of college are thinking do i do that for an additional two years? is consulting really the future? i'm curious when you talk about whether or not a.i. in consulting can work in tandem or whether one replaces the other. >> if you take a step back, we just did this research across industries and job families that

said 95% of employees super excited about gen a.i. that's because you see the power of gen a.i. i ernlgly am using it every day. when i'm doing -- i personally am doing it every day. getting insights into meetings that i can't attend. what we're seeing is that is that it is going to augment absolutely every job that you have and in some cases it will replace jobs and in more cases it is really about creating new ones. let's just take field sales. people are out in the field. what they are going to be able to do in the future is not only just have a more interesting job because they are not reading as much. they are going to be able to get an assistant to say hey, you should go see this client and this is what this customer cares about. we have clients now you're literally on your phone and can push a button and show your marketing materials.

that doesn't exist today. that's why we think people are going to be very excited about doing much more with the more interesting things and a lot less of the tedious things. kriti: when we talk about a.i., we think about cost-cutting. augmenting, eliminating some of the costs. what does 2024 look like for you? >> last year we did a lot of structural change. so really making sure that we have got the right cost structure for the future. and 2024 is all about growth. kriti: any specific measures you want to point out? for example, layoffs? >> we're really focused in 2024 how we're going to grow. that is why we are investing particularly in u.k. as you heard. that's what we're predicting when you look at our guidance for the year. we're excited to help clients use technologies like to cloud,

like gen a. toirvetion both address their cost challenges and equally important their growth challenges. that's what we're seeing here. the conversation in davos around gen a.i., how can it help society and companies grow? and be more productive, which ultimately will make for a better economy for all. kriti: we'll certainly e see if that sticks. stand economic growth supports that. thank you so much for joining us out of davos. she is one of the many leaders we are going to speak to the next few minutes. the c.e.o. of barclays joining us. and just ahead an interview the c.e.o. of e.m. stick with us. this is bloomberg. ♪

kriti: welcome back to daybreak. i'm kriti gupta in london. the world's largest chip maker that supplies dhoips the rest of the world is doubling down on their 2024 capex. 28 to 32 billion they are saying the 2024 sale also grow by a low to mid 20%. tom mckenzie talking a little bit about simply where all of this demand is coming from. remember where the tail winds for a lot of these chip makers, moved by electric vehicles, a.i., is going to create this massive bid for chips at a time when the industry can't perhaps supply that quickly. a lot of this is coming from smart phone demand. that is a turnaround story when we talk about some where some of the moves are. where some of this demand is

coming from. it comes in the context of the supply chain issues we had this question. the first quarter operating margin reporting a 40% to 42% -- the estimate was 39%. not only are they ramping up their capex but they are ramping up how much money they are making off of it on a quarterly basis. that is a big deal from a company that in december had an 8% year over year decline. right now shares higher by 1.2%. i want to go back to davos where the world economic forum is olding its annual meeting. >> thank you. i'm here with the c.e.o. of e.n. let me start by talking about your investment strategy this year. essentially how much are are you planning to invest and where are

your areas of interest? >> i think talking about investment is not about how much we invested. it is about the opportunities. when the right opportunities come, we have the ability to make these investments. as you know many n the past year, we have made ventures into eastern europe and made investments in telecom covering four countries in eastern europe we look favorably at that region. we're waiting for the final regulatory approvals to close the deal. we are open for investment in all of the areas, middle east, west africa. asia. >> you're still looking at saudi arabia? >> i think that story is closed for now given the market there, the price having escalated, we continue to be the biggest shareholder but at the moment we have frozen the idea to get the majority. >> we look at european telecom stocks. they are among the worst

performing stocks globally. we see that you have made investments in a lot of them. vodafone. why are you so bullish? what is your grand plan here? >> i think the stocks overall of european tell comes, most of them are dividend-paying stocks in an environment where interest rates are very high. always you get a lot of pressure on these type of stocks. interest rates will not remain high forever. we believe there is a lot of value there. also for us it chris diversification in terms of currency income for us. we have exposure to dollar linked currencies pes in our market in saudi arabia. some emerging markets currencies like egypt, pakistan, south africa. it is good to have that mix. we believe it will see gloat growth in the coming years. >> are there any plans of a

takeover of vodafone? >> clearly as we have indicated we do not have plans beyond having a strong minority. we constantly look at the market. european telecoms to increase the stake in minority there are not lots of approvals needed and we continue to work on updating the approvals. when thr done based on the market conditions, we might increase our stake. >> what about the african business of vodafone, is that something you're considering? >> we always look at the potential. we have already good exposure to it through our investment in vodafone. we are well exposed to africa through our -- nine countries in west africa. egypt. we already have good exposure in africa. >> thank you so much for joining us. kriti, back to you in london. kriti: joining us from davos,

switzerland at the world economic forum. she is talking about what the conversation in davos looks like around the middle east. e she specifically asked about saudi arabia there. which kind of megacenter in the middle east comes out on top? dubai? doha? abu dhabi. coming up. several more interviews on our docket. the nedbank c.e.o. joining us to talk about davos. how much international vermont will be take on the south africa. we go around the world with our coverage. it will be curable conversation you don't want to miss. stick with us

>> good morning and welcome to "daybreak: europe." let's get to the top stories that set your agenda. pakistan in air strikes against militant highlights in iran come in retaliation after similar attacks the day before, adding another front to tensions in the middle east. traders wine back that's on aggressive easing after strong retail sales cashed out on a dovish fed in march. more big interviews from the world economic forum in davos, switzerland. we will hear from ceos in the next 30 minutes. no major selloffs at this hour like we have seen in a couple of days prior. no major conviction earlier. the cross asset story gets a little more interesting when we talk about the bond market,

monetary policy is front of mind. the overnight reaction, the fact that we are staying sustainably above 4% is crucial. a little bit of a bump in brent crude, coming on the context of some headlines, the state news agency said in iran associated with -- associated with the revolutionary guard said a movement -- it comes after geopolitical tensions are getting ramped up. not by the margin we have seen in the past. a big part of the conversation over at davos, switzerland, where we had next. haslinda amin with another big interview for us. take it away. >> we have the ceo of ned bank, it has embraced lending and clean energy projects. good to have you with us.

how do you continue to build investor value? >> we try to think about in our business stakeholder value. right across the stakeholder chain, ensure there is value for our staff and our clients and for the communities where we operate, and of course investor value at the same time. central for us in our investor value thesis at the moment are two pillars. first, digitization. we are right at the end of a refresh of our technology stack. we have been hard at work at that for the last five or six years. it has really put us at the forefront of digital financial services then certainly showing up in very strong customer data, customer satisfaction levels, etc. on the other hand, for a long time we have been at the center of sustainability, and our

biggest wrist -- risk is energy. those two pillars creating shareholder value. haslinda: your successor saying he wants to expand in new markets, what would make sense? >> strategically, we are a bank that is centered in southern and east africa. we are in six banks in those geography and we are strong in 30 countries in central and west africa. if i stayed or when my successor comes, we've been thinking for a while about expanding more into east africa. we are not sure whether we should do that through acquisitions or now that we have built our tech stack, whether we can make a digital injury into those markets. whoever is the ceo, that would be an area we would be looking

to expand. haslinda: might we see acquisitions within the next 12-24 months? >> i would doubt it would be that quick. haslinda: how are you think about growing your wealth bit -- business? >> we have a strong heritage in our wealth businesses, going back many hundreds of years. and we have a wealth business that straddles south africa, the u.k. and the channel islands. that's really the axis we're trying to grow on. we have a very strong wealth management business alongside a private bank that's just been voted the best private bank in south africa and a very strong asset management business that complements the transactional nature of our private bank. when you put those three together, we been growing strongly and delivering high returns. haslinda: put a number to it. in two or three years, what do

you see? >> i think compounding double digits per annum. haslinda: let's look at the macro picture for african banks right now. what are the biggest risks? >> more broadly across africa, the biggest risk remains currently the nexus between the banking system and the sovereign. and the challenges that so many sovereigns are facing as a consequence of the strong increase in interest rates. we've seen that play out in ghana and zambia. those have very strong knock on effects into the banking system. in particular the nexus created by basel, where banks have no choice but to hold high volumes of domestic bonds. that concern about what it means for the bank is still the number one risk. haslinda: how do you see me to

getting risk that something might go wrong? >> most of the larger banks in africa have had very good real-life experience in navigating those risks over many years. in south africa, for example, that risk is largely diminished by the fact that although gdp levels are around 75%, which is probably low in global terms, by far the majority in excess of 90% of south african sovereign bonds are issued in our domestic currency. so the big risk of both a spike in u.s. interest rates and currency depreciation, and it is set double whammy that has effectively been mitigated. haslinda: jamie dimon coming out to say it will change the way people work.

he sees ai allow the -- allowing workers to have 3.5 days of work days. what impact does this have to the workforce? >> davos is good at hype. if you had to say what is right at the top of the hype curve at the moment, it is ai. you see it in the advertising. i certainly think it is going to have a material change, many things historically have also had material changes. listening to a panel, changes in how businesses operate in productivity and we can already see that in our business now. we are an early adopter of the copilot ai for microsoft. we can already see how that is starting to improve productivity. even more interesting is changes in science and how ai can be used to help accelerate building

them new materials that might be needed for electric vehicles, etc. i cannot see it creating a 3.5 day week. that is just not how humans operate. we will use it to improve productivity rather than drop the time we are there. haslinda: but you see ai allowing you to have a smaller and more productive workforce? >> what technology has done over time is enable smaller workforces. this is another step in that journey, both as customers do more of their banking digitally and don't need to interact and engagement with branches. i think we will see the same thing in ai in productivity. at the same time, you are going to need to expand in the areas of those data experts in data scientists who are able to use that ai to create value for your

business. some maybe you reduce it at the moment but expand toward the top. haslinda: one final question, you are leaving after 10 years. what will you be doing? >> it's actually going to be after 14 years. will retire at the back end of may this year. so i'm still fully engaged for the next five months. we've got global roadshows to do and year end results to deliver. thereafter remaining for a few months as an advisor to help the new chief executive. part of my job is to make sure that he lands and runs and even more successful business than i've been able to do. to be honest, i sort of decided this is a year to complete my nedbank job and you take some time off. haslinda: mike brown, we thank you so much for that.

kriti: thank you so much for that crucial interview. breaking news coming out of pakistan, specifically around the tension from the middle east. it looks like the caretaker prime minister will be cutting short his trip from davos to return back to pakistan amid the developments with iran at the moment. he's joined by his foreign minister who will be returning with him. as we get more developments, we will of course bring them to you right here on bloomberg television. in the meantime, coming up shortly we speak with the ceo of barclays. that interview next, live from davos, switzerland. stick with us. this is bloomberg. ♪

kriti: welcome back to

"daybreak: europe." i want to return to developing story coming out of pakistan. we just heard comments pakistan saying they have no interest in escalating the situation with iran. we know they carried out airstrikes on iran earlier today, but yesterday there was an attack as well. it looks like the pakistani military is due to share details of those strikes in iran soon. pakistan saying they would like to have peaceful relations with iran. it's worth mentioning that pakistan is actually an american ally was so this will be crucial in terms of the geopolitics in the context of what we seen. the comments being translated by a pakistani spokesperson there. the comes in the context of some of the leadership cutting their trip short amid the development's. i want to recap those headlines

as well. the pakistani foreign minister will be returning as well as the caretaker prime minister who has been in office since august 20 23. i emphasize caretaker because we know the domestic situation in pakistan is crucial as well. as we get more developments we will be letting you know. it looks like pakistan and iran have had no contact since after the strikes between them in terms of diplomatic relations. the context really matters here because this also comes in tandem with some of the airstrikes, additional airstrikes on yemen overnight as well. geopolitical strategists will say these are unconnected because they targeting individual militias that have been associated with these various countries. but again, number that national that has been proven. as we get those development, we

will absolutely bring them to you. but for now what we do know is that those leaders have been cutting their trip to davos short and are not an actual communication, despite pakistan saying they have no interest in escalating. we will make sure you bring it to you live. that does it for us at the moment. clean more interviews coming out of davos switzerland ahead, chiefly from the ceo of barclays. that conversation next. stick with us, this is bloomberg. ♪

kriti: welcome back to "daybreak: europe." i want to recap a developing situation, tensions overnight between pakistan and iran have escalated as we see both strikes from the pakistani military carried out in chevron.

and tehran attacking pakistan, two nations that have really not been at odds for quite some time. pakistan saying after the strikes they have had no contact. pakistan also saying they are emphasizing the idea that want to keep these peaceful relations. however they have not had been third party mediation or any possibility of it just yet. some of the counterparts have third party mediation some --, so that is perhaps the next step. the pakistani military is due to share details soon. they have claimed airstrikes that were carried out in tehran were targeted for militant hideouts, it was not done as an attack against the state. this also comes in the context of some of the leaders of pakistan that were actually in davos, cutting their trip short. the prime minister's cutting the

trip short as well as the foreign minister. that's just one of the conversations around the geopolitics that will be influencing monetary policy as well. i want to show you a chart that shows what they are pricing on the monetary policy front. it is looking to be even more hawkish than the federal reserve and the ecb. and you start to see those concerns around the geopolitics, how cemented in that approach can they actually be? specifically around one of the world's largest lenders, that's where we go next. world economic forum is holding its annual meeting. francine lacqua is there and joined by a guest on this topic. >> i'm delighted to be joined by the ceo of barclays. thank you for joining us.

we just heard the news about some of the attacks, the fact that we don't see a solution at the moment for geopolitics. >> if you look over the last two years, one of the things we have seen is, whoever sat here one or two years ago would've had a view on of how the year would pan out and what happened was very different. we did not expect the ukraine war or the attacks in israel last year. we did not expect the bank crisis. it's going to be a bumpy year, but more than anything else, we've got to be resilient. got to be prepared to react. >> what does it mean for barclays? you have an investor update

february 20. >> the most important thing in any bank is to start with a platform of strong capital, strong liquidity, good risk management. that risk management is to allow you to react to the way the world is changing. on top of that, you have to manager costs so that you can deal with fluctuations in revenue and produce for your shareholders. we tell people how we are going to do that. >> is he going to be radical or steady as she goes? >> we are going to have to be more efficient. that one billion in structured savings was one part of that. we will continue to strive for efficiency and improvement to the types of revenue, running the business well. >> what can you tell us about

the investment bank? there's always questions about what happens to it at barclays. >> the investment bank has been extraordinarily successful. we have had a strategy over a number of years to do investment banking and to do it well. when i find in my travels, especially in the geopolitical world in which we live, his people are looking for a counterpart who is not just a u.s. bank. if they had to pick one, they tend to pick british banks. and we are a strong british bank. part of it is london. u.k. london has been a global financial center for 300 years. so i am optimistic that our clients value that and it is good for the u.k.. >> barclays has gone through a rough patch, you see it getting

easier and better ahead? >> first of all, i think the valuation in stock price does not reflect the potential of our country -- our company and our capabilities. that is the message i want to give and tell people how we are going to realize that potential. >> how drastic do you need to be , or is it just an adjustment period that they need to see the results? >> certainly they need to see the results. more than anything else, it's a bit of adjustment, a lot of hard work, persistent, and effort. and you have to sustain it. >> there's a lot of questions about financing. how big a deal with this be for barclays? >> we have had only about 3% of complaints.

we were a relatively smaller player in the business before that. >> what do you get asked most when you speak to big shareholders? do you know why the qi a sold off the state? >> i'm not meant to comment on individual shareholders. but they are asking what do you think your financial returns are and how do you look to attain them? our financial risk management has been strong over a number of years. >> there are number of questions about the u.k. and the city of london, which you are bullish on. there are questions on some of the offers they need to put in place to come up front. are you confident the u.k. will get better after this? >> the u.k. has been doing well. growth has been not great, not

as strong as the u.s., but it is stronger than many other countries in the world. it has an excellent foundation of talent, of capabilities, which is why it is a global financial center. the really important thing is political risk in the u.k. is almost less than it has ever been in our living memories. is between two parties that are similar in how they approach financial markets and the banks and the city of london. this is not the labour party versus margaret thatcher from 1979. >> what can you tell us about hiring but also layoffs this year? >> we are always in the market for good talent. we try to hire people with a long-term view. at the same time, we hear about technology and productivity and

efficiency. we are looking to make the bank more efficient. we will continue to manage our costs very cleverly and we will continue to try to find the right talent for the bank for today and for the next 10 years. >> that was barclays chief executive officer. kriti: francine lacqua there from the world economic forum in davos, switzerland. a quick correction, i misspoke about the location of the pakistani airstrikes in iran. they were not in tehran but on a order city. we will bring you full developments as we get them. interviews from davos, coming up interviews from davos, coming up next

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