Good morning from the Financial Times.
Today is Friday, January 16th, and this is your FT News Briefing.
Brussels is thinking about a membership light option for new EU states, and the good times keep rolling for American banks.
Plus, China's state iron ore buyer is flexing some muscle.
I'm Mark Filippino, and here's the news you need to start your day.
The EU has a controversial new proposal to make Ukraine a member state as part of a potential peace deal.
Sources tell the FT that Brussels is drafting a plan to create a two-tier model.
The move comes as Ukraine's progress through the existing membership process has been held up by Hungary.
The new tiered proposal would give Ukraine far less decision-making power than states in the higher tier.
For example, Ukraine wouldn't have normal voting rights in some meetings right off the bat.
Kyiv would gain incremental access to parts of the bloc's single market, its agricultural subsidies and its internal development funding, but only after meeting certain milestones.
Some European capitals are spooked by the proposal, though.
They're worried it would have a negative impact on the bloc's future stability and would upset other candidate countries.
2025 was the best year for U.S. investment banks in four years.
It's a milestone, revealed this week when America's biggest banks reported their fourth quarter earnings results, and one that Wall Street hopes will herald in a sustained recovery in dealmaking.
Joshua Franklin is the FT's US banking editor and he joins me now to wrap up the week that it was in the banking world.
Hi, Josh.
Hi there.
So four of the five banks benefited from this investment banking boom, but JP Morgan was an outlier.
Why was that?
So the five biggest U.S. investment banks, J.P.
Morgan Goldman Sachs, Morgan Stanley, Bevan Citi they all reported growth in investment banking for all of 2025.
But it was more of a muted end to the year for J.P.
Morgan where investment banking fees fell surprisingly in the fourth quarter.
The bank blamed that on some deals that maybe were going to be done in 2025 pushed out into 2026.
But definitely you know the executives on earnings calls at JP Morgan did voice their disappointment.
But more broadly across the industry, people had hoped that this was going to be a year of recovery for investment banking.
And that's definitely what we saw.
About $38 billion in fees across the five big banks.
And the way executives were talking about it on the call.
They're hoping for even higher fees in 2026.
We want to switch gears to BlackRock, who is also out with results.
They showed a record quarter for the world's biggest asset manager.
What can you tell us about that?
It just shows you the rising tide of equity markets, just kind of boosting all of these asset managers.
So BlackRock reported quarterly inflows that helped push its assets under management above 14 trillion for the first time.
Morgan Stanley has a big money management business.
They went above $9 trillion for the first time.
And it's just to show you right now, in whatever state the US economy is in, certainly improving financial markets is creating a lot of wealth out there.
Yeah, definitely is.
What other trends did we see from this week's earnings, Josh?
So just a lot of optimism across the board.
Obviously, investment banking, and then in equities trading as well.
Uh was a great year for equities trading, stock and bond trading in general.
Uh, in the 2010s was quite an unloved business at a lot of these banks.
It wasn't really doing too well in a kind of low rate, low volatility environment.
But basically since the pandemic it's just been growing and growing um and has become a pretty meaningful part of of the business And then asset management as well for these banks.
That's something they're trying to grow into, to kind of provide a little bit more stability versus investment banking and trading, which does have a track record of being more volatile.
Goldman Sachs setting some new targets for its asset management business there.
Morgan Stanley talking about the growth trajectory it's on.
This good quarter for the banks seems to be overshadowed, in a way, by decision making out of Washington.
The biggest issue being central bank independence.
What did we hear on that front?
You know, it's so interesting.
So we have everything that happens at the Fed over the weekend.
The Department of Justice's investigation into Fed Chair Jay Powell.
Yes, exactly.
Everyone can't wait to see what the banks are going to say about it.
Jamie Dimons asked about it on Tuesday.
Talks about how he supports Jay Powell generates a lot of attention.
And then, in the world we live in, by Thursday we have the CEOs of Morgan Stanley and Goldman Sachs speaking to investors and analysts, and no one asked them about the Fed.
It feels like people have already moved on.
Well, Josh, can you go a little deeper on that?
Assuming that Fed independence does deteriorate and the central bank cuts rates to the level that Trump wants them at, what would that mean for banks?
So I mean the most important thing for the most important number in the world for banks is where the Federal Reserve is setting its interest rates.
That only controls rates at the short term.
And the big thing is, you know, the long term rate trajectory.
And that's where undermining of Fed credibility can really start to have an impact.
If the market doesn't believe that the Fed is independent or is credible in the same way, then you really can see inflation expectations become untethered to what the central bank is saying.
That's the FT's U.S.
Banking Editor, Joshua Franklin.
Thanks so much, Josh.
Thanks very much.
Iron ore is the world's most traded commodity after oil.
It's the essential ingredient for producing steel, and China is a huge buyer.
Now, at the heart of the country's import operations is a Beijing-backed company called China Mineral Resources Group.
It's the central buyer for the country's state-owned steelmakers and it's starting to put pressure on the foreign mining companies selling iron ore.
I'm joined by the FT's Ed White in Shanghai to discuss this.
Hi, Ed.
Hi.
So, Ed, what role does this Chinese company CMRG play in the global market for iron?
CMRG is a relatively new entity.
It was basically started by the government in Beijing as a way to combat what China sees as an unfair market.
China has been making purchases via a lot of different state-owned steelmakers.
It's a disparate group and that has given groups like Australia's BHP, Fortescue and Rio a lot of advantage in selling at a price that they feel is good and that the Chinese feel is too high.
So CMRG, coming in and consolidating that buying position, acting as an aggregated buyer, basically gives China a huge amount more leverage than it ever has had previously in this trade of iron ore.
And why is this a problem?
Having a state-controlled Chinese group dictating the terms obviously gives China more power in pricing negotiations, but it also helps China direct and control global supply chains of these key resources that China needs for its economy.
Another key worry that both the industry and government officials have is that iron ore is just the starting point and that over time, CMRG's ambit will move across to other things like lithium copper, other areas where China is a big importer and has a massive amount of leverage when it comes to purchasing.
So Ed, you mentioned that some of the world's largest miners, who are based in Australia, export this iron ore to China.
How important is this material to the Australian economy?
Well, Australia is called the lucky country for a reason, and that's because of this huge mineral endowment that they have.
One of the key commodities is iron ore.
So the iron ore exports has delivered to the Australian economy about 12 trillion over the past 20 years.
That makes it one of Australia's most important long-term export commodities.
And so the Australian government is keeping a close eye on this situation, in particular a close eye on CMRG.
And how are Australia's miners responding to this threat?
I think, from the point of view of miners, it's a tight balance, because they do ultimately have a commodity that is crucial to the Chinese economy.
China needs it.
They have to buy the stuff from Australia.
It's the right chemical balance that the Chinese currently need for their steel mills.
But over time, that may change.
You have very large... iron deposits coming online from other parts of the world.
And so I think in the long term you can see the Australian miners position which has been a very, very strong position in these price negotiations.
You can see that slowly starting to weaken.
And obviously China getting its buying power stronger in the meantime is also adding to that weakening from the Australian point of view.
That's the FT's Ed White in Shanghai.
Thanks, Ed.
Thank you.
It has been another exceptionally busy week for geopolitics.
Next week is shaping up to be the same, but kind of different.
Victoria Craig, The Briefing's Monday host, is here to chat about that.
Hey, Victoria.
Hey, Mark.
So what do you got eyes on for Monday's show?
Yeah, so Davos, remember that annual gathering of the world's who's who in the Swiss Alps?
That is happening all next week.
How could I forget?
Nobody can forget about that.
Organizers say it's actually going to set some records this year.
So let me throw a few numbers at you.
400 of the world's top political leaders are set to attend, and that includes roughly 65 heads of state and government.
And this is the big number.
Nearly 850 of the world's top CEOs and chairs will be there.
But we're also expecting the largest U.S. delegation ever to attend the gathering this year.
And there is one reason that everyone's eyes are focused on the mountains of Davos, and that is one man, President Donald Trump.
He's going to be there for two days to speak and chat with world leaders.
And the theme of this year's event, by the way, is a spirit of dialogue.
Wow.
Couldn't have been more on the nose of the complicated geopolitical backdrop, right?
Exactly.
And there are several big stories that, of course, we're all going to be keeping an eye out for next week.
And they will also likely be topics of discussion at Davos.
Those include any new developments on the situation in Iran, updates about what's happening in Venezuela and the sales of the country's crude oil.
And there's also ongoing dialogue between the U.S. and Denmark over Trump's desire to own Greenland.
So plenty of things, very ripe for discussion.
That's our Monday host, Victoria Craig.
Thank you so much, Victoria.
Thanks, Mark.
A pleasure.
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This has been your daily FT news briefing.
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The FT News Briefing was produced this week by Misha Franco-Duval, Julia Webster, Sonia Hudson, Fiona Simon and Victoria Craig.
I'm your host and editor, Mark Filippino.
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