♪ good morning and welcome to "street signs. i'm silvia amaro and these are your headlines u.s. stocks set for a lower open as a government shutdown looms as trump calls on lawmakers not to accept any deal that doesn't remove or suspend the country's debt ceiling european stocks in the red after president-elect trump threatens tariffs against the eu if it doesn't buy american oil and gas. the foreign prime minister gives

cnbc his verdict >> i think blackmail is the way which usually trump works. he mixed together energy and tariffs on goods and on manufacturing and so on. i think it is uncorrect. the japanese yen slows its decline as core inflation comes in hotter than expected putting the central bank under more pressure to hike rates. and sources tell cnbc vw and its workers enter rapprochement over the plant closures, but there are still points of difference good morning, everyone we start today's show looking at the u.s. futures this because it is a very

important day when you think about what is likely to happen stateside. let's first get a check on the situation in the markets u.s. futures suggest it could be a lower start to the trading day on wall street so steeper losses, in fact, compared to what we witnessed on thursday we had the dow breaking its ten-day losing streak and overall basically a muted session on wall street however, at the moment, futures point to steeper losses and perhaps one of the reasons behind that is because investors are tracking what's happening in congress let me give you the latest on that the u.s. is hours away from a potential government shutdown after 38 republicans and almost all democrats voted down a trump-backed bill to fund the government for three months and suspend the country's debt ceiling for two years. now this suspension was a late addition to the bill demanded by president-elect trump in a bid to avoid a dispute over the debt ceiling soon after he takes

office a previous bipartisan funding bill was dropped on wednesday after vocal criticism from trump and x owner elon musk. the gop leadership have not set out their next steps after their latest funding bill was defeated with senior party figures looking to pin the blame on democrats. >> the only difference on this legislation was that we would push the debt ceiling to january of 2027. i want you all to remember it was just last spring the same democrats berated republicans and said it was irresponsible to hold the debt limit hostage. what changed it is risky for a shutdown for something they already agreed upon >> they voted to shutdown the government even though we had a clean cr because they didn't

want to give the president the first in his term. >> president-elect spoke to nbc news yesterday as he criticized the original funding proposal describing the debt ceiling as a meaningless concept and saying the smartest move from congress would be to eliminate it than tirely earlier this month, trump repeated that call saying it should be uss tended until he is no longer president and calling on congress to not accept a deal without changes to the limit the former senior advisor to nancy pelosi is joining us this morning. good to have you on the show, michael. first and foremost, i would like to understand whether there is actually any room for compromise here given the deadline is actually tonight >> there is actually one deal that hasn't been floated that deal would be a permanent

suspension of the debt ceiling because then the 38 republicans who voted no become irrelevant and the democrats would jump on board in terms of a bill i mean, this bill is really not much difference between the bill shot down by elon musk and this bill, except for trump's request for a two-year suspension, the democrats will say we'll take that two-year suspension and raise it to permanent which is in line with what the president-elect has been saying. that's the deal to be had. whether they will do that or not we'll see. here we are before he is even president and we have chaos already. especially a lot introduced by his friend and supporter elon musk >> i would like to understand here where at one point we could actually see the democrats supporting the removal, complete removal of the debt ceiling because now this seems to be actually the focus of the

conversations and of the differences of opinion here. do you think that we could actually see the democrats changing their opinion when it comes to that? >> i think i feel certainly in the cards. i think you can find -- you have chuck schumer talking about a permanent reduction. i think what democrats are worried about is a two-year suspension means in two years everything comes back on the table and people are going to try to claw back a lot of cuts to domestic programs to account for the increase in the national debt i think a permanent suspension essentially removal of the debt ceiling is something the democrats are willing to put on the table and i think it's something that certainly they're talking to right now both the president-elect and mike johnson to see whether or not that can be something that could get democratic votes because you will find more than enough democratic votes to offset the

38 republicans who voted no. >> however, though, are you not even a little bit concerned about that what that could actually mean for financial markets if we actually see the complete removal of the debt ceiling here, would you not be concerned about how investors could react to this? >> i mean, i think it goes back to a time we didn't have this issue and more a question of how do you do the taxing and spending of the federal government the debt ceiling was always something that loomed afterwards as a threat. i think you take that out -- you take out a lot of uncertainty in the capital markets over whether or not any deal that gets done in the budget will have an expiration date because of the debt selling i think that market will price that in because all of a sudden, that sort of two-year catastrophe that investors had to worry about, especially in the bond markets, won't have to

worry about that anymore >> i would also like to go back to one of the points you made earlier in relation to the fact we are seeing the incoming president involved in these conversations. are we actually witnessing a new moment in u.s. politics given we have a different president in office, joe biden, and we are talking about what donald trump is saying and congress is divided because of the issues he has been raising >> what pre-cipitated the crisis is not the president-elect, but the person who would like to be president, elon musk his tweets, which had nothing what is soever to do with the dt ceiling issue that the president-elect raised later it was all about misinformation about the d.c. stadium and 40% pay raise for members of congress, et cetera.

150 tweets you have republicans look at this as this is a guy who has an unlimited checkbook via the x platform to make or break my election that scattered them to the four winds and voted down the first bill what you saw afterwards was an attempt by the president-elect to regain the narrative introducing the idea of removing or uss suspending the debt ceilg and take control of this yes, it is extraordinary that one, an unelected figure and, two, not sworn in figure, calling the budget shots while there is a sitting president in the united states. it's just a function of the fact that the debt ceiling was kicked off until then until now, it is an issue of whether or not it is an issue of the president-elect or still biden having the influence and

exactly what happened. we're seeing that here today >> going back to the position within the democratic party, i should say, i would like to understand what is the risk here of perhaps losing a couple of supporters from a potential deal if we actually see the introduction of any spending cuts. >> i think if they sort of go back to the old method which is we'll increase the debt ceiling and including budget cuts, then i think you will see all democrats vote no on that and they'll have to make sure -- they only have two or three votes of republicans to lose on their side and there are moderates out there concerned what the cuts would be for the districts. there is fema spending and others that cross party boundaries their best bet, really, in terms

of trying to appease the president-elect would be to cut a deal with chuck schumer and hakeem jeffries on the debt ceiling. that would get enough democrats, by far, to pass this bill and basically take this issue off the table. not just for president trump, but for presidents to come >> michael, the clock is ticking. we will see what happens later today. thank you for your time. michael yaki former adviser to nancy pelosi. in other news this morning, president-elect trump has threatened to hit the eu with tariffs with the bloc doesn't make large scale purchases of oil and gas. former prime minister letta said the eu should be prepared to respond to trump threats >> blackmail is the way trump works.

he named a deal, but deal sometimes means blackmail. i think it is a transactional approach we have to respond to the transaction approach and he mix together energy and tariffs on goods and manufacturing and so on i think it is uncorrect with the two topics are completely different, but if, and i would say i underline this point, if the deal is proposed by trump is such an isometric deal on topics that are not linked one to the other, i hink we have to do th same doing the same means that european union has to reply, for instance, not only on tariffs on goods and manufacturing, but considering that the most

isometric part is the relationship between europe and the u.s. on the financial side we have to start considering that maybe replying on the financial side to trump proposal can be a solution. i think the european commission has to start thinking on how to have a plan "b" on that thinking that if trump continues. he is not elected. he is not president and he is just starting threatening europe i think we have to consider also some retaliation on this. >> there's a lot happening this morning from the potential government shutdown to reactions to trump's comments on potential european tariffs let's get a check of european equities we have the stoxx 600 down 1% at the moment continuing the negative sentiment we also witnessed on thursday with the benchmark down 1.5% let's also see how european

bourses are faring at the moment we are trading for over just an hour and 15 minutes or so. we have the ftse 100 down .70% more pronounced moves to the down side over in italy with the main market down 1.4%. the cac 40 down 1.1% let's discuss what's happening with our next guest. he is the head of investments. great to have you on the show. i would like to understand at the moment the down side to equities at the moment where do you think the biggest pressure is coming from? is this a result of what is happening in the united states is this coming data? >> i think it is a perfect storm with all data and tariffs talk has been directed toward europe. the thing about europe, they would be hit really hard if the u.s., for example, goes after the car industry whereas a lot of chinese tariffs are exempt from the tariff

charges. things like iphone from china are exempt 50% of stuff that comes from china to the u.s. are exempt little would be exempt out of europe i think europe is the sick child of the global economy at the moment. >> how are you thinking about it going into the new year? any change to the ntiment? >> it is the typical trump with the sabrerattling. i'm sure jeremy would like to be less on europe than in the past for gas supply and so on if that brought down cost, it could be quite supportive. again, i think trump will make a lot of noise before he gets into power. yeah, i think, i think the u.s. is still the place to be i think there's a lot of liquidity driving up this time of year as well so you are getting quite pronounced price

action to small events all eyes on the u.s. coming into next year. >> so tell us speaking about u.s. markets, tell us what are your expectations for the pce today. there is so much going and we forget there is incoming inflation data that is important as well. >> it is interesting we saw it with the retail sales data it wasn't as bad as people were expecting in the uk. it is hard to tell we seem to be at an inflection points lots of mpeting data we will get something in line with expectations today. it is really difficult to make sense. inflation seems to be trending higher at the moment the economic picture in the west teams to be continuing to falter a bit. >> given that information, is it feasible for the fed to cut twice next year or is that forecast coming with a lot of

uncertainty itself >> yeah, obviously what you see in the u.s. and uk, policymakers are not going to predict anything they will wait for the data and then move which means they will be too late. i think the u.s. looks a bit more clear the uk, for example, just pricing in now look at one-year gilt yields that is a cut. we have been increasing our duration in the uk for example and just with the headwinds from europe and some of the announcements in uk budget, you will see one more rate decrease for example. >> i would like to dig deeper from the implications from what we could see stateside what sort of reaction would you expect in equity markets and even bond markets really if we see a shutdown if there is no compromise in congress tonight >> yeah, we have seen this a few times before, haven't we have? this stuff tends to go to the

11th hour and some sort of compromise at the last minute. i was listening to the last guest talking about it do we see permanent removal of the debt ceiling i think it will go back and forward and back and forward i think we will get some sort of compromise at the 11th hour. if not, we have been through this quite a few times before. it probably just plays out the way it always does. >> right, if we see actually a complete removal of the debt ceiling, how would you read that >> i think, i mean, effectively it is renewed every couple of years. i was listening before do the markets take notice of that? i think probably not pause we know the stated policy measure in the future. it is just a permanent removal rather than it renewed once every couple of years. >> however, i'm wondering what that means in the context of smaller, but yet existing concerns about the fiscal position of the united states.

we actually had rating agencies bringing this up some time ago i wonder going into the new year is there a chance we could see these fears dominating the narrative and potentially bringing a lot of losses to the stock market >> the stock market despite the weakness in the last few days is priced for perfection. the u.s. massively dominated by growth and a.i. type companies you would need too much of a shock to have a profound impact on the markets i have think what is quite interesting at the moment is the u.s. looks good at the growth perspective which is not what we are seeing in europe that is a better position for debt we saw the figures in the uk coming down this week as well. but, yeah, we have to see if the rating agencies did react in a big way, maybe that could have a negative impact.

also f also, if it remains to be seen the trump/musk slashes central costs, that could have a positive impact on the deficit. >> i guess we await that important detail we appreciate your time today. head of investments. coming up on the show, signs of the potential progress with volkswagen and unions and they look to trying a deal before christmas. we'll have the details after this break

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volkswagen and unions. with both sides said to be quote tentatively optimistic however, no agreement has yet been made with the ig metall union said there are disagreements that could cause the issue to fail. cnbc has approached volkswagen for comment. this as german equity have been on a tear this year compared to the european peers let's show you this chart because it is so, so interesting. look at the german dax performance to date. we're up 17%, almost 18% in fact when you compare to the benchmark so far this year, the stoxx 600 up almost 5% the german market clearly out performing the european peers so far and actually these levels are more in line with what we have seen on wall street so, let's discuss this in more

detail with our next guest sabrina reid, the portfolio manager at dws is joining us sabrina, great to discuss this topic with you perhaps, explain could us what are the main reasons for this clear out performance for the german dax >> so, yeah, i like the chart you showed because it does show how the deficits perform relative to the european indices. one of the reasons why the dax has performed the way it has is the sentiment was low on the dax to start with. on german equities in general. valuation levels still low starting off in the year and then earnings came in better than expected. so, the earnings of the individual index members were better than expected which drove the index individual share prices higher. if we look at the individual members, we will see that there's actually big divergence with the top performer and lowest performer in the index.

a lot of this came from the big tech player, but also the industrial space and aerospace that performed well. >> i would like to understand here what is the outlook when you think about the fact that we had a call for a snap election that, you know, came mostly as a surprise really. how is the political landscape actually impacting the outlook for german equities and has that to some extent been a benefit to the german index >> the snap election that was announced for next february next year was a positive driver for the german equities, yes the main issue was in november with the ism picking up. the economic activity which was more relevant because of what happens with the global economic activity global economic activity increases for the dax to improve

because 80% of the dax comes from the global space. only 20% is actually domestic related. it has supported sentiment for the joint equity space and smaller and midcaps space. >> right the key question as you think about performance for the new year, how much um kt impact cou we see for the german index with trump putting tariffs on goods >> that is one of the risks we obviously have to keep in mind with the german equity especially with the german automotive section and in general speaking to the industrial companies as well the automotive sector is most um impacted initially we do know a lot of the european and german companies have not been able to adapt to the situations in the past they have better margins than the past and better balance sheets to adapt to the

situations a lot of them have made this local for local approach which should also help them. that is something that will weigh on sentiment that is clear. >> i would also like to understand whether there is room for more upside because as you highlighted one of the reason why we saw the dax performing so well this year is because the companies have exposure to the u.s. economy which has been so strong so far. so, if we actually see a continuation of the strong u.s. economy in 2025, does that mean that german equities could actually be, you know, benefitting from that even if we see tough tariffs mposed by the new president? >> around 20% of the dax earnings comes from the u.s. that would be supportive and in general if we see economic activity spilling over improving in other areas if china does come back slightly even though our expectations are not high, but the eurozone picks

up, that would be supportive we expect mid to high single digit earnings growth for the dax members next year. that is something that will drive the index in our view. >> how about to what sort of sectors and companies can actually be the big winners in that case? what sectors would you highlight for '25? >> oh, we definitely like the industrial space just because a lot of the industrial companies are very global companies. diversified regional approach. we expect that after a long time of weak order momentum in the industrial space, this could pick up some time in the next year a lot of corporates are talking about a pick up in q2. that would be good for the cyclical side of things. we're wary and cautious and more selective on those names just because the valuation looks very attractive at this level, but there are structural headwinds for the oems

i would say industrials and technology i would mention on the positive side and the insurers have momentum in the next year. >> before we let you go, sabrina, i would like to understand the role potentially played here by s.a.p they are a huge german company i should say how has this company performance actually support the broader market when you think about year to date performance for the dax? >> the technology space specifically has supported the dax as one of the top mover in the dax. it's also obviously important to mention that the weighting of this is close to around 15%. that's why it makes a big difference with the shares for instance move up as it did this year that's why i said a big differential with the members that have done well and the

laggards >> i was just looking at the chart. s.a.p. shares up almost 70%. the company with the last results raising the outlook for the new year.is saline sabrinah for more, check out my piece on cnbc.com. in other news, german ppi grew 0.5% on the month in november and the annual rise of 0.1% analysts polled expected a 0.3% annualized decline elsewhere in japan, it came in at 2.7% in november with the colorly watched core reading moving higher from october's level. coming up on the show, lawmakers reject a trump-backed funding bill ahead of the

potential shutdown later today we'll bring you the latest after this break

welcome to "street signs." i'm silvia amaro and her are your headlines u.s. stocks set for a open as the shutdown looms at president-elect trump calls for a move that doesn't suspend the debt ceiling. stocks in the red after president-elect trump threatens trefs from the eu if it doesn't buy u.s. oil and gas >> i think blackmail is the way in which usually trump works he mix together energy and

tariffs on goods and on manufacturing and so on. i think it is uncorrect. the japanese yen slows its decline as core inflation comes in hotter than expected putting the central bank under more pressure to hike rates. and sources tell cnbc that vw and its workers are nearing a rapprochement in talks the union member says there are still points of difference time now to get a check on how we're moving so far this morning across the equity space. look at the stoxx 600, the benchmark, down almost 1% at the moment indeed, there is a lot in the minds of investors whether you

are looking at a potential shutdown in the united states or anticipating the economic data due later today as well or tracking comments from the incoming president over potential tariffs on european goods, there's a lot let's dig deeper at the european bourses. there you have it. red across the board more pronounced moves to the down side. however, looking at italy, the ftse mib down 1.2% similar losses over in germany with the dax also down 1.2%. let me take you to the top stories. u.s. futures are looking like we will see steeper losses on wall street today if we compare that with what we witnessed on wall street thursday which was actually a little bit of a muted session. these steeper closes, according to futures, however, could actually come at a point when there's a lot of division in

congress and there's a huge question mark whether we actually will see them reach any compromise tonight let me share the latest with you. the u.s. is hours away, really, from the potential government shutdown after 38 republicans and almost all democrats voted down the trump-backed bill to suspend the debt ceiling for two years. this suspension was a late addition to the bill demanded by the president-elect donald trump to avoid the debt ceiling soon and he takes office. a previous bipartisan funding bill was dropped on wednesday after vocal criticism from trump and the x owner elon musk. the president-elect donald trump spoke to cnbc yesterday as he criticized the original funding proposal describing the debt ceiling as a meaningless concept and saying the smartest move from congress would be to eliminate it than tirely

earlier this morning, trump repeated that call saying the limit should be suspended until he is no longer president or removed entirely and calling on congress to not accept a deal without changes to the limit let's get to the latest on the story. brie jackson is joining us this morning. brie, i would like you to give us an update on the latest at the moment >> reporter: good morning. so the back and forth continues here on capitol hill house democrats and some conservatives rejected that trump- trump-backed measure to keep the government open. hakeem jeffries called the proposal laughable the chaos continues on capitol hill after the rejection of the plan that would have kept the government up and running until march 14th that included a slipped down

disaster aid and aid for farmers and cutting pay raises for members. lawmakers did not want to raise the debt ceiling that is something president-elect trump is pushing for. they denounce the influence elon musk has had on this process trump has tapped musk to head the efforts to cut government spending so, talks will continue today and we do know that congress must act soon or shutdown could go into effect as soon as this weekend. if that does happen, the federal government would be unable to pay it's millions of employees, including service members before the holidays and hundreds and thousands of government workers could be furloughed. lawmakers must act fast to avoid this shutdown. >> we will see if they manage to achieve that we will continue to follow what is happening today brie jackson from nbc news

let's turn to the uk we heard from keir starmer he spoke to trump about tariffs on the uk. starmer said he is alive to the dangers that tariffs can pose. the prime minister has previously said he hopes to improve britain's trade relationship with the united states. and the bank of england is leaving the policy rating at 4.75% after an eight-month high in november. three members voted to cut rates and that thwarted expectations of a hold. that was the big surprise from the bank of england yesterday. meanwhile, the changes to the ftse come into effect today with the workshop joining the blue

chip ftse 100. richard stone is the ceo of the company of the trade association. richard, good morning. good to have you on the show >> good morning. >> perhaps explain to us how important the reshuffle happening today is >> the ftse reshuffle does it every quarter to represent the largest in the index it is important for those who track and follow funds in the top 100 companies. it is perhaps indicative of the nature of the uk market and which companies are doing well and where the size of companies is it's really good to see another investment company going into the top 100. that makes five in total. >> that is actually a record. >> it is >> explain the response of that. >> the response of that for investors is that an investment company gives them exposure to a basket of investments.

it's a diversified portfolio managed by an active fund manager. for the sector as a whole, clearly, it he creates additional demand for investment companies and brings them to the floor in terms of the investor attention. >> let's look at the less positive news going on with the london stock market. the reshuffle happening today is coming at a time when we have seen the numbers showing a large itch from you the london stock market i wonder really what is the outlook here is there anything to change the narrative? >> if you look at the market as a whole, a lot made of the number of companies that left london or uk a number of companies on the market has shrunk since 2008 and the crisis the government is taking steps to change the existing rules and making it easier to list and

raise capital. they are trying to do things to invigorate the market. the lse is opening up access to private companies as well. one of the great things with investment companies, they are able to invest in listed companies and unlisted they have exposure to the private assets things investors can get through to the public markets. they are bridge the gap with the public market and private assets >> is there a london specific problem? however, there is clearly a lot more attractiveness in the u.s.? higher valuations and higher capital options. what i like to understand whether is the measures you highlighted will be enough and will come into place quickly enough to make london more attractive and more competitive with wall street >> it's going to make it more competitive. let's wait and see

i think a lot is made of the u.s. market, but returns are heavily concentrated in the magnificent seven. the last few is one or two that sucked a lot of capital into the u.s. markets. yeah, i think london still has a great future and good prospects. >> we have also heard the government saying they don't want to -- they want to regulate for growth that was the tag line. what do you think that will actually mean? >> i think it's interesting when you look at the new government coming in there was quite a lot of optimismcreation. what you have seen is relatively anemic growth the bank of england was warning about yesterday. i think when you look at the public finances, you look at what the bank is saying. it is clear the public can't purse all of this. the government needs private capital to deliver its ambitions whether that's in the net zero

or infrastructure or whatever it might be to that extent, they've got to support the markets, they've got to support the crowding in of capital from pension funds and retail investors into those investments in order to deliver on what they want from a growth perspective. they can't do it all themselves. >> right i was wondering also whether you see a potential risk here from deregulating ultimately that's what we're talking b. when you think about the global financial crisis in terms of regulation, is it actually the right approach given everything we've been through? >> i think these things are like pendulums, aren't they i think the pendulum has gone slightly too far in that direction and one of the things that's talked about quite a lot is and the regulator talked about this in various sessions with the treasury select committee and others that we

need to put a little bit more risk back into the system. there's a risk aversion which is preventing people making the investments sitting in cash too long we are not getting the returns in the pension funds and elsewhere that we should be. actually, a bit of deregulation is probably a good thing. >> let's see what will happen. we appreciate your time this morning. richard stone, ceo of iic. coming up on the show, unicredit ceo lays down the test to european authorities as he looks to scale up the lender we'll have more details after this break ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term

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welcome back to the show let's now focus on banking

unicredit's ceo orcel says it is looking for a eurozone integration. in the op-ed, orcel is looking if europe will take steps that has been called for to unlock growth across the continent or show real action remains illusive swiss lawmakers blamed the lender to years of mismanagement in the report released this morning. the country's regulators are criticizing the oversight of the bank, but said they prevented a collapse ubs said it supports most of the

report's wreck recommendations the swiss national bank said it will consider the report in detail now, let's discuss what is happening in the banking space with our next guest. managing director for global financial morning star elizabeth, great to see you. let's start with swiss banking the report highlighting here there were clear mismanagement within credit suisse i guess we already knew that what does this mean going forward because as we heard ubs still very much concerned about what that's going to mean in terms of new capital requirements for themselves. >> yeah. i think capital requirements remain an important issue across banking globally you see with the final basel iv and the tussle going on in the

u.s. capital levels are always an area of contention in the banking industry they have improved since the financial crisis, but i think also what one saw with credit suisse was capital levels just alone are not going to necessarily solve the problems and prevent failures such as that one clearly, there was mismanagement. the regulators play a role and deciding how you deal with failing large systemic bank is still a challenge for the banking systems. >> if you think about the new year, however, how is this likely to have an impact on ubs itself because obviously we're still waiting for this detail to be finalized, but is there a risk here that ubs's growth was actually constrained by what regulators are trying to do? can ubs ultimately compete with u.s. lenders because that's what

they want to do? >> i think there are a number of different issues there i don't think there's going to be any dramatic change in regulation in one particular country because regulators have always -- they're trying to the extent possible, but it is difficult with a level playing field across different countries. plus, a lot of the business models are not capital intensive. a lot of the wealth management is not necessarily dependent upon capital regulations i don't think that is going to be the key constraint going forward. how banks compete, european banks versus u.s. banks, et cetera, that has many different complexities because their business models are different and there are a number of factors there. >> there's another player that's

trying to change things. orcel. i would like to bring them up again. he is saying, asking europe to take steps that our leaders have long called for. he is clearly trying to push their buttons here saying listen, i'm ready to move forward for consolidation. you have to let me do it >> yeah. it's an interesting time with unicredit's moves on merzban and european union the issue keeps coming back. we see likelihood of consolidation in the markets the points he makes have some validity because it is not a single market for banking in europe there are many factors in terms of the lack of banking union and

capital markets union that prevent there be kind of efficiencies to do cross border consolidation. whether cross border consolidation is exactly what is needed in europe, i would say it's probably not the most immediate usual issue. i think having strong, healthy banking systems in many countries is a good start. there has been some progress in that regard as well. >> so what is the most immediate issue if it is not growing these lenders? >> so, growth, per se, in and of itself is clearly not all that is needed. i mean, what we have seen is there have been improvements in the european banking system since the previous debt crisis particularly countries such as italy, spain, greece, portugal

have cleaned up the balance sheets of the banks. so, it is very important for banks to be able to lend that they have strong balance sheets. so, i think and actually sometimes acquisitions and activity can weaken the banking sector as we saw when ubs was ing many banks yes, in some ways, large, efficient, profitable banks are clearly an important part of the strong banking system. >> to conclude the conversation, 2024 was a strong and important year for european banks. what is the outlook for 2025 do we have more upside to go or is it actually the opposite as we see the central bank cutting rates? >> yeah, the outlook is not too bad because as you mentioned about interest rates and they are still relatively high and coming down quite slowly we think that has allowed the

banks to be in a pretty good position and although we are still very mindful of whereas set quality will go and there are risks with tariffs the auto sector, commercial real estate sector that could affect the banking system overall, it is not too bad. >> right i'm sure we will discuss more in the new year i appreciate your time elizabeth at morning star. before we let you go, a final look at european markets and how we're moving this friday morning. we have red across the european equity space today with investors taking in also what is happening stateside amid a potential government shutdown. let me show you the u.s. futures, actually, with the context in mind. we are still waiting for developments in congress u.s. futures show it will be a likely negative start to the trading day on wall street after a muted session on thursday.

on top of the fact that investors are looking at how congress is going to fix this issue over funding there's also, of course, all eyes on pce to understand what they're saying terms of the inflation dynamics in the u.s. economy. that is it for today's show and me and the "street signs" team happy holidays i'm silvia amaro "worldwide exchange" is coming up next.

it is 5:00 a.m. here at cnbc global headquarters. welcome to "worldwide exchange." here's your "five@5. failed with less than 24 hours to go until a government shutdown donald trump and elon musk now placing blame. now the president-elect places an ultimatum to the european union. and back on wall street, the futures are lower. just hitting session lows a short time ago. and a turn around at