Bloomberg - Evening Briefing - Wall Street's prediction

Wall Street chiefs are finally calling the bottom on the dealmaking drought that has plagued their earnings for the past two years. Executives at the biggest banks are expecting a pickup in the coming months, tied to the Federal Reserve’s apparent pivot away from two years of interest-rate hikes. As they wrapped up the worst year for investment-banking revenue since 2012, Wall Street’s top brass outlined their expectations for a turnaround — at least at some point. “I’m pretty optimistic,” Goldman Sachs CEO David Solomon said on a conference call discussing earnings Tuesday. “I’m not going to say it’s running back to 10-year averages right away, but it has materially improved. I do think you’re going to see some more meaningful IPOs in 2024, and we are, just across debt and equity issuance, see more activity, more engagement.” —Natasha Solo-Lyons

Ron DeSantis did just enough in the Iowa caucuses to keep alive his argument that he’s the most formidable Republican challenger to Donald Trump for the party’s nomination. The Florida governor cast his runner-up finish Monday as a triumph that will extend his 2024 candidacy. But Trump’s historically wide margin of victory was a disappointment for DeSantis. The result raised questions about how much longer he can stay in the race — DeSantis only narrowly edged rival Nikki Haley, the former South Carolina governor who faces questions about her own viability heading into New Hampshire. Haley is polling much higher than DeSantis, but still 14 percentage points behind Trump, according to the RealClearPolitics average.

Former US President Donald Trump, second left, speaks at a caucus night watch party in Des Moines, Iowa, US, on Jan. 15, 2024. Photographer: Al Drago/Bloomberg

Goldman Sachs topped profit estimates as its equities-trading unit posted a jump in revenue that was triple what analysts expected, capping off what it’s pitching as a year of transition. The asset and wealth division helped drive the gains, posting its highest quarterly revenue in two years on a gain tied to the sale of a financial-management business. 

The US hit four Houthi missiles in Yemen in a preemptive strike on Tuesday local time, American defense officials said. “US forces struck and destroyed four Houthi anti-ship ballistic missiles,” Central Command said in a statement. “These missiles were prepared to launch from Houthi-controlled areas of Yemen and presented an imminent threat to both merchant and US Navy ships in the region.”

Elon Musk leaned on Tesla’s board to arrange another massive performance award for him after he sold a significant chunk of his stake in the company to acquire Twitter.

Elon Musk. Photographer: Alessia Pierdomenico/Bloomberg

Morgan Stanley’s traders fell short again, dragging down profit at the firm, as the company’s wealth business surged past expectations. Revenue from the fixed-income trading business was little changed from a year earlier, disappointing analysts who had expected an increase. Net revenue from the wealth unit, meanwhile, totaled $6.65 billion, higher than analysts’ expectations of $6.4 billion.

Federal Reserve Governor Christopher Waller said the US central bank should take a cautious and systematic approach when it begins cutting interest rates, a process that can start this year absent a rebound in inflation.

Apple is planning to remove its blood-oxygen feature from its latest smartwatches — the Series 9 and Ultra 2 — to get around a US ban of the devices if an appeal of the decision fails. The plan was disclosed Monday by Masimo, which has been locked in a feud with Apple over patents related to the technology.

• Bloomberg Opinion: It’s time to scrap the Iowa caucus.
• Insurers seek to exclude US, UK ships from Red Sea coverage.
• Hutchinson exits, leaving Republican field with no Trump critics.
• Bloomberg Opinion: Morgan Stanley leaked some block trades.
• Chip-software firm Synopsys agrees to buy Ansys for $34 billion.
• Burger King owner to buy biggest franchisee for $1 billion.
• The French are drinking less Champagne after boom years.

The most expensive real estate in Brazil isn’t on the beaches of Rio de Janeiro or in luxury apartment towers in Sao Paulo. It’s in the small town of Balneario Camboriu, dubbed the “Dubai of Brazil.” The city, with some 150,000 residents, has been converted over the last half-century from a small fishing village into an experiment of what happens when private developers are given free rein. Seven of Brazil’s 10 tallest buildings have risen there, including the highest residential tower in Latin America. Buyers include Brazilian soccer star Neymar and billionaire families behind fortunes minted through industry and agriculture.

A beach in Balneario Camboriu, Brazil, on Tuesday, Dec. 12, 2023.  Photographer: Maira Erlich/Bloomberg

Get the Bloomberg Evening Briefing: If you were forwarded this newsletter, sign up here to receive Bloomberg’s flagship briefing in your mailbox daily—along with our Weekend Reading edition on Saturdays.