>> 2024 is going to be the year where we have a serious conversation in the markets on the fed's credibility. >> it's possible the economy could be farmer for longer. >> more likely to have a soft landing than a recession. >> the fed is unlikely to start cutting in march. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. lisa: happy new year. jonathan: good morning, good morning. this is bloomberg surveillance

on tv and radio. s&p 500 this morning -.1%. hitting the ground running for 2024. earnings season kicking off with earnings from jp morgan. starting the year on a nine week winning streak. tom: what's so important here is it was about a catch-up being gone. if you assume -- the super bowl in the 8:00 hour if we are going to be bullish what kind of bullish are we going to be. jonathan: let's talk about the scores of the last 12 months. the s&p 500 up 24%. the range of forecasts on wall street coming into this year you could drive a double-decker through them. 4200 on the low end. 5200 at the high end, oppenheimer prayed --

oppenheimer. abigail: -- lisa: that's really rare. we've seen 20% up, 20% down pretty consistently for the past couple of years and you'll have to go back to 2016 for a 10%. tom: i thought over the weekend over the long holiday it was way too much short-term analysis. i went over to where we were from the beginning of covid, spx up 12% per year. nasdaq up 19% per year. with a super 2023. jonathan: a decade with the stories in 12 months. the banking crisis. moved on from there. we have the story of hire for longer on the u.s. 10 year moving quickly through that. we had this ai phenomenon that

could continue through 2024 and beyond. how many stories, how many themes were there. lisa: for new year's eve i was going into 2024 thinking we will have another decade in a year. think about what we have set up for january. think about all the potential outcomes and headwinds that could transpire. me that was exhausting to think about. another year in 2024. jonathan: wall street getting back to work. barclays, we are lowering our rate for equal weight to underweight. the iphone 15 has been lackluster. we believe the continued period of weak results coupled with multiple expansion is not sustainable. tom: this is the key point. multiple expansion, that was the gift of last year.

the answer is what character is the bull market this year. can you get it going with multiple expansions in the last 12 months. >> down in the premarket by 1.6%. shaping up as follows. on the s&p the negative zero. the 10 year yield. it felt like at times this bond market was trolling us all. just to think about everything it going on last year and then to finish almost exactly where we started in 2023. lisa: i feel like the market has been trolling us. bold round-trip we are back to where we were in january of 2022. we are looking at a massive jobs number and i'm watching the labor market for clues of whether it's a surprise to the upside or downside. that will be interesting to watch. we also get the fomc meeting

minutes. i'm watching job openings even though a lot of people discount this as a nonmetric by people posting three jobs at a time. does it continue to go down given the fact people are seeing a little more labor coming into the market. continuing claims have been taking up grade on friday we get ism services. i'm watching how much pay is increasing. it is increasing too quickly for the fed to be at a trajectory where they are cutting rates. jonathan: this could be interesting. we are told they are not talking about it. lisa: otherwise they discredit themselves completely prayed if it's just there to throw powell under the bus at what point are we talking about something which lacks any credibility whatsoever. tom: john is modeling out 11% earnings growth. the juggernaut continues and on

any number of analysis rates are way behind. we will see a lot of sophisticates don't believe they will do it. jonathan: we start this morning with chris, the co-cio. wonderful to catch up with you sir. there was a range of questions you asking. whether lead -- where the leadership will come from and 2024. where do you believe that leadership will come from? >> the leaders were the big tech enabled companies, they were safe havens. great places to hide out with political turmoil. we saw more of that turmoil but we have the fed at your back in 2024. an economy that will hit a soft patch. i think that gives some room for a broadening out of the market. small caps look great in december prayed that continues at least into the early part of 2024.

a broadening of markets. tom: is there a part of value with all of the heritage that is growthy? >> we tend to look at those. growth is neither good nor bad and whether it adds value or not to the firm. we love growing companies. there is the cigar but investing flavor of value investing looking for companies that are not growing. we have plenty of companies as well. >> give us an example of a growth the value stock. it's not apple or microsoft is it? >> some of the sectors we are looking at in 2024 aren't the defenses. there some growth there as well. many of those companies were hit by higher rates and should look to recover in 24.

one growth stable. starting the day with a protein shake. growing over 30% and this thing is just a rocket prayed a lot of other companies would like to own it. >> one thing you do so well. you fundamental research prayed do you think this year it will translate into performance. that much more at a time when you talk about the growth venus apple did not have sales growth when it came to the actual unit sales. a lot of them wondering if they would get punished for that. do you think fundamentals will reconnect with stock performance this year? >> hope springs eternal at this time. last year obviously it did great. that will be tougher to do. some of them will probably do

well this year. it's not going to be across-the-board and not to the extent we saw. those small caps require a lot of work. they are harder to find information about. that's what we do and that's where we can add value. >> which ones do you think will be winners and which will be losers? >> we are partial giving our background to the ones that have been eating advertising. those have been google and meta. we think meta still has some room to run. it's not expensive. zuckerberg has shown some cost discipline which i think will continue. >> 194% gain year-to-date last year. if you weren't in that name, would you suggest the people at fresh capital to it given the move we've seen in the last 12 months. >> the market doesn't know how

much it was up. it just looks at what the earnings are going forward. over $20 a share is not expensive. jonathan: nvidia, a number one on the s&p 500 last year up 238.87. tom: a nice lineup. you've got to have a 3, 5, 10 year perspective. which one of those do you have the courage to own five years, 10 years? jonathan: the stock market does not have a memory. the individual stock. tom: i think this is important. he goes right to the glazed doughnut. 420 employees in st. louis. jonathan: you've done your research prayed tom: they got a deal with dunkin' donuts where they are putting a hydrolyzed

whey protein isolate on the glazed doughnut. lisa: let's go there and i would love a final word from chris on ozempic. is he worried about that? chris: it actually is on trend, unique protein support and so they are beneficiary. jonathan: thank you for making that point. good to catch up as always. tom: there's the banner headline. on trend with glazed donuts. lisa: i feel like i am you. i want to bite my tongue so hard. jonathan: what a way to start the year. lisa: dressed up candy bars with whey protein. this is the same thing. it's exactly how it works. it's got splenda in their. essentially for all intents and

purposes. tom: we were buying a dozen for the team. it was unhealthy, it would be sending a bad message. jonathan: let's talk about big tech. nvidia number one performer prayed number two was meta. royal caribbean number three. up 162%. carnival in the mix as well. 130. tom: this dovetails into the economic data we will see this week. some of these are off the bottom. maybe china is on the bottom. but these others are growing companies and we can argue about the valuation. but the answer is there are two discussions here. how do you price them and off the mat last year, how do you come off of the mat of 2023. jonathan: the question on

leadership and where that will come from in 2024 towards the end of the year people once again for the second or third time got balled up on the idea that discretionary can continue its performance. really putting out there that he thinks this resilience, this economic expansion can continue because real wage growth will remain decent through the year ahead and that will support this discretionary thinking. lisa: shouldn't the gains be more than 6% to 9% on the s&p 500? don't you see big tech hanging in there? this to me is the big unknown. if consensus is always wrong. the consensus calls for median performance. tom: what's the efficacy of watching bloomberg surveillance? jp morgan 4200, oppenheimer 5200.

a 20% variance. this is all bs. the answer is you take this to find your confidence if you're in the market. jonathan: what is the efficacy of surveillance. tom: why are you watching this? >> big question tk. from new york city this morning, good morning. the big bull on wall street. about two hours away. good morning. ♪ how am i going to find a doctor when i'm hallucinating? what do you think, fever monster? what about zocdoc? zocdoc?

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>> just to reiterate what i said before. we have significant national security interests in the region just on our own. and we will put the kind of forces we need in the region to protect those interests and we will act in self-defense going forward. i'm not ruling anything in or out. we made it clear to our allies and partners in the regions that we take these threats seriously and we will make the right decisions going forward. >> that was john kirby the national security council spokesperson speaking on abc over the weekend. live from new york city, good morning and happy new year to our audience worldwide. equity futures pulling back by .4% on the s&p 500.

lower negative off the back of this. check out apple in the premarket down off the back of this move. tim long, lisa we are lowering equal weight to underweight. weak results coupled with multiple expansion is not sustainable. >> they are not alone and this is something i found interesting over the past week of reading. putting out projections that he admitted were probably fantasy given the fact all projections are. he said apple the business did not have a great year. revenue down, expenses are up. this raising a question doesn't have the growth and doesn't belong there. jonathan: every month, every quarter. it ended the year up. year-to-date. tom: right now i have a 29 multiple -- 31 multiple and on

their massive growth so far compared to others it's a 29 multiple stock. the concern at barclays. they are not running this for growth they are running it for profit. it's a profit juggernaut. use of cash is everything. jonathan: still a monster cash machine. going back into big buybacks. tom: i can't say enough about how the magnificent seven job are just seven as they are. we look forward to the politics. jennifer is head of u.s. government affairs at invesco. joining us on the 14 things we need to focus on. i'm going to talk about something i'm shocked did not come up this weekend. it is january and january means you will be in your l.l. bean

boots in concord, new hampshire. does new hampshire this year matter? jennifer: absolutely it does. this is the first primary in the nation. it is right after the iowa caucus and quite frankly the best chance for nikki haley to really take hold in this race is in new hampshire. if she can -- cannot, this may be locked up early for donald trump. tom: will that affect her in new hampshire? jennifer: i think it remains to be seen. i think chris christie is trying to take advantage of that misstatement that she made a few days back. you've seen her try to change

the news cycle but i think we are on the fifth or seventh cycle and it -- she is not shaking it. lisa: given the facts donald trump likely as the republican nominee and pretty much the polls are pointing in that direction. how will he influence the key debates that are going to happen way before the election including in 17 days time when we get another government shutdown. jennifer: that's what we are watching here. it is the government potential government shutdown on january 19 and then another risk than on february 2. there is also this defense supplemental. so his reading of whatever sort of negotiated package comes out in the next week or so on immigration, ukraine, israel, indo pacific and border policy, that could sink or allow for

this defense supplemental to actually take hold and pass through congress. i think we are watching his reaction to whatever comes out. >> which raises this question about whether there is more urgency providing aid to ukraine given the offensive we have seen. especially given some of the attacks. do you expect the attitude in washington to have shifted about voting for aid in a more significant way? jennifer: ukraine aid is completely tied to foreign policy. that is only getting more intense due to the fact that we have close to 300,000 people who have now, over the border just since december 1. we are breaking new ground here.

and so the reaction. we saw on the sunday morning shows from senator graham and mike rogers they would like to see ukraine aid happen and want that support from republicans in their conference. they know what has to happen alongside strong border policy shifts. we are waiting to see they are still drafting that language. tom: does the administration have a border policy after the cacophony of news the last 10 days. >> i think they have a border crisis and there is an acknowledgment especially among democrats who are in difficult districts. you have in the house specifically 24 tossup districts and a number of those democrats who are in those tough races are really looking for resolution here. and you see this in texas, new

mexico, arizona. there has to be some sort of dealing with this issue and not just for house members but also for senate, these tossup senate races in arizona and ohio and montana. they need resolution here. it has to be part of this defense supplemental. >> the optics for the white house over the last week or so just absolutely terrible. u.s. border officials are processing more than 300,000 migrants for the month of december. >> it is extraordinary across the life of bloomberg surveillance it is an intractable issue that everyone wants to dodge. it the latest thing i saw in the zeitgeist is the buses from texas are now being dropped off in new jersey. they said they won't drop them

off at new york state. that's the immediate question. jonathan: on that point how does the president between now and early november convince the electorate that this is something that he can do something about? jennifer: that's why the next several days really matter. if it's not tied to defense supplemental then it's going to be tied somehow to appropriations. you are going to see this pressure rise when congress comes back next week. it's not going anywhere and there has to be some sort of resolution for this administration going into what may be an early start to a general election. >> they've got a lot of work to do in washington dc. >> thank you. coming up for spending potentially talking about government shutdowns. >> it's going to be messy. it's going to be really messy. it doesn't seem like there's any

resolution. there's been discussion from mike johnson that there will be separate bills for each one of the spending packages. they don't have time to pass something like 17 independent bills. >> i suggest it will be october of next year and then we go right into the presidential election. >> we are all looking for. february 2 is the other one. coming up shortly on the outlook for the economy. that conversation just around the corner. from new york this is bloomberg. ♪

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jonathan: kicking off 2024, link back just attach. miter on the nasdaq, taking things down by about .85%. lisa, would you say the majority of this is on apple? lisa: especially because it comes after 70 people have 20 to apple as a potential outlier of the magnificent seven not delivering the same sales growth. yes, given the weight of them, they could break everything down. tom: there are a set of opinions on apple.

3 trillion to 4 trillion on market cap. not really putting a timeline on it, but this is -- it is more about the business strategy and the structure of it. jonathan: let's turn from stocks to bonds. in the bond market, november. december, almost on 25 basis points. back to .39 -- 3.93. lisa: and why would shift. we are back to everywhere before i. it is very unclear whether people will get worried once again.

tom: united kingdom, 7.7%. 7.7%, down to 6.7% on food prices. that is from katie lentil. there is germany come the u.s., and these micro data get cu to the enthusiasm. tom: -- jonathan: those moves in bonds taking down the u.s. dollar. back down, but if you look at some of the ranges and levels we have gone through, think about the swiss franc as well. it has been pretty notable in the last month. lisa: it is all stemming from the belief that they are going to cut rates.

that conversation will still dominate things in 2024. jonathan: are they talking about it? what -- are they actively talking about them? i cannot wait. a good start to 2024. crude gaming. tehran sending a worship to the area after the u.s. navy destroyed boats over the weekend. this has been simmering for the last two to three months. lisa: especially that iran is bringing their own resources into the region. this is getting closer to what we have been hearing from mitch mcconnell and others. the militants and the less willing to shoot them down. tom: a book all about unintended

consequences and this is how you do it. they have the best of plans, the best of hopes, and then there is the risk that is out there now. our sequential mistakes being made? jonathan: shocking images coming out of japan over the last 24 hours, including these. a japanese coast guard colliding with a flight. all 379 passengers on board -- five of the six crew on the coast guard plane are unaccounted for. the smaller plane was carrying aid to japan, where a tremor hit the country. at least 48 people have died. five unconfirmed dead in that coast guard and plane collision. lisa: it is horrible, especially

after they were reeling from the earthquake. unclear about what some of the details were in this, but there is a question about how this country will evolve. you are seeing the yen respond to the disaster. tom: there is a real worry, unspoken sometimes. people are worried about order at different airports. this is not just a japanese issue. jonathan: we will bring those details to you. dutch manufacturer bowing to pressure from the biden administration. the company canceled shipments weeks before export bands came into effect in january. they are cracking down to make

progress in aia. lisa: they talked about how they would lose 15% of their revenue from china as a result of, the band. it is also european countries trying to restrict the ability. this comment to me is the key area to watch, especially as you hear xi jinping with niceties, memorializing the ties between the u.s. and china and biden trying to make nice. this is what you need to be watching. tom: i would say china is a simple mystery for this year. let's turn to the mysteries of your. bringing chief economist jp morgan. bruce, thank you for starting our year strong.

there is enthusiasm out there. investors -- they are giddy. there is no other way to put it. do we have the animal spirit, the nominal gdp to sustain our collective giddy? >> there is a support for growth reflected in the health of what is the private sector and the business sector side that should continue to keep growth going. now we have additional coming from market easing. the question is whether the enthusiasm, which is being driven in large part by expectations of substantial said easing will be realized. we think there will be a little bit of a speedbump that gets in the way because i do not think inflation will come down anyway like that.

tom: michael foley is on the shortlist to become the next governor. john williams is back -- should be understand that we are going to migrate back to the lower levels of your gdp? >> it is pretty unclear right now, given the shocks from the pandemic and how they have affected things. my view is that our star is higher. i do not want to argue that it is a long-term estimate, but i think the economy is in a healthy position and will take higher rate to bring inflation down. inflation is not going to stay as high as it was, but getting it down will take more work and i do not think it will happen quickly. i think the fed will be

disappointing, relative to the speed at which risk -- rate cuts are priced into the market. jonathan: what have we learned in the last 10 months about what data points are relevant and which are irrelevant? i'm looking at a manufacturing guy coming out. how useful is that? >> we were reminded that forecasting is hard but in this environment, we should learn that there is a whole set of is happening in this economy that are unusual. but as you noted, even as manufacturing has been soft, the service sector has been lifting and in the u.s., you had a big fiscal impulse that people missed last year.

more generally, the underlying health of the business sector is something that is not usually in place when the fed is tightening a lot. resiliency has been the theme, not strength some much. i think it is still in place and i do not think we should that against the global economy. lisa: i do wonder about the stacking of the employment metrics topped off with that nonfarm's payroll report. how high is the by the numbers to stay high and the market to wake up to the realization that you are talking about. that the economy is much stronger and inflation is a little bit icky? >> the payroll report is going to speak much more to growth even though we have an earnings rally report. we are looking for a .4% gain on

that. the economy is doing reasonably well, not as strong as it was a few weeks ago, but we are looking for growth to settle in the 175 a month range. as you noted, manufacturing looks weak, but there is broader strength in the economy outside of manufacturing. lisa: this leads to the question about the -- the round-trip. i we seeing restricted levels of rate? will he see that working their way through the economy this year or will it be something that allows the expansion to continue? >> that is an interesting question because the fed responded to the 10 year yields by arguing that it was doing some of its work for it and it has not pushed back against the

easing so far. it has embraced that we can get inflation down without pain and have the material fed easing. we do see it as a reflection of risk appetite going up. you see it across the assets across the world. it does promote resiliency and i think it will be proactive and slow the fed and other central banks down. tom: with you and joyce chang, and your work at j.p. morgan, but will be the outcome of china this year? >> i think five is a good enough number. i think there is enough policy support and that the external recovery that we see, which is quite modest, but thinking bold with tech -- i think it will grow with a very weak private

sector demand and significant reports externally and from the public sector. jonathan: thank you for catching up with us this morning. i did promise you and update on the latest out of japan following that airline collision in tokyo. a coast guard colliding with that flight. all 179 crews and passengers on the plane safely evacuated according to a spokesperson. the latest on the smaller coast guard plane? five members confirmed dead according to the land minister. lisa: we will be getting more details as they come in, but another tragedy on top of the already tragic images from the earthquake. that and the tsunami fears, as we try to establish what happened.

tom: it is a newer airport for commercial aircraft, mostly domestic and northern asia, less international flights. jonathan: more on that later when we get updates for you. an update. from new york, this is bloomberg. ♪ how am i going to find a doctor when i'm hallucinating? what do you think, fever monster? what about zocdoc? zocdoc?

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they will continue on her -- for months. i do not see anything there to stop the war. taiwan is underappreciated by market. jonathan: geopolitical tensions mount. more on that in just a moment. crude looks like this. brent crude up to almost 79. there by a little bit more than 2%. lisa: we have been surprised all year by oil prices but this year, really key to see. we are not seeing any sort of quieting down in the conflict in the red sea.

jonathan: maybe underappreciated by markets. november it was down. the last three months on crude, even with all of this going on in the middle east. tom: it is sort of middle tendency. i thought it would see a bigger move but the answer is that people are using surge or lifted. it is trading up. i would think it would be much higher. is it possible that the u.s. is the number one producer of hydrocarbons in the world? jonathan: it certainly contributes to that move. except it will not talk about it. tom: they will certainly not talk about it me. an inside surveillance joke.

he served the nation in the marine corps and a white house fellow. critically, he is a king of speculative fiction. elliott ackerman. given the philippines and the south china sea, we eagerly anticipate 2054 that you will see and march. elliott ackerman joins us this morning. this is not speculative fiction but reality in the red sea. what is lost in the press coverage? >> the one thing that is often lost is that we have a tenant seated focus pacifically on military event while losing perspective that all events happening -- happen in a political overlay. what is going on and taiwan? what is going on in israel? the longer the wars playing outcome of the more central the politics of the war become.

tom: things happen suddenly and then in sequence. we have the ships in place against these terrorists or whatever you want to call them? do we have it in place where unexpected bad things can happen declan's? >> when it comes so middle east and the challenges there, yes, we do. we are not facing a level adversary. i agree with terri's comments that the conflict is taiwan. the u.s. does not have the forces in place that can meet chinese aggression and that is one of the huge challenges that we face that they would be fighting that conflict in their backyard and we would be

fighting it across the pacific ocean. lisa: what are some of the ramifications over the past year and how public opinion has shaped the inaction to continue providing aid? >> look at ukraine. that is probably a war that will not be decided on the data field. i think it will be -- on the battlefield. that will be determined at the ballot box. when we look at the u.s., we have in the election that will occur this fall and how that unfold will be determinate. in two weeks, the taiwan people are having an election and that

will affect china's perceptions. i think the foreign policy of donald trump is much more unpredictable. i think the foreign policy of joe biden is much more incremental. i do not think anyone can necessarily say what donald trump's policies would be on any of these policies. we have seen a more consistent approach. tom: i look at where we are and it is a lot about public service. many have loved ones at sea or on tour. i we sit let's take our war in ukraine and iran.

we have a budget capable of meeting those three's -- three threats? >> we have to take a hard look at the budget and what we are applying but you also need intellectual resources. would a war against china look like a vp of the second world war? i do not know that is necessarily the case. ukraine has been raised -- very effective at sinking russian ships at the line. i am a marine veteran and my own service is real strategic reset about what it would look like to revisit a island hopping campaign. there is a budgetary question but also an intellectual question about what the wars of

the future will look like. that work needs to be done now and it will force some institutions to transform and ways that will be uncomfortable. lisa: what is a better strategy? one that is predictable or unpredictable? >> in terms of battle plans, you want to be unpredictable. i would use the word adaptive because it is difficult to predict what the war in the future will be. you want to get the posture might so that your forces can adapt. to use an analogy from second world war, the coin of the realm was the battleship. it had been the central platform for centuries but pearl harbor and the entire battle fleet was sunk and we have this new platform that is the aircraft carrier. that was able to adapt and

become the central point in which naval bottles -- battles were fought. it will have to occur very fast. jonathan: what do you suspect it is? >> i think it will be a network of platforms. i think it will be unmanned ships, unmanned aerial vehicles and our ability to fight a high-tech or and a low-tech war when those systems are taken off-line. it will be very complex but more of a natural -- network version of warfare built around very big ships and aircraft. jonathan: we appreciate your time. a u.s. marine corps veteran. tom: i cannot say enough about

his book 2034. i say need ackerman. it will be a great movie on netflix. lisa: what elliott ackerman is talking about will be fueled by a lot of these technologies connected to chips. unmanned kinds of high-level, not thinking but processing of data points. jonathan: we are totally on the same page. the difference between rhetoric and policy. the policy is not changing anytime soon. coming up, sarah pulling back a touch. the s&p 500 coming into a new year on a nine week winning streak. from new york, this is bloomberg. ♪

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>> 2024 will be the year that we have a serious discussion about the federal reserve's credibility. >> i am excited not to hang on every single word the fed is saying. >> it is possible the economy could be firmer for longer. >> if our call is right, more likely a soft landing than a recession, clearly not cutting in 2024. >> the fed is likely to start cutting in march. >> this is bloomberg surveillance with tom keene, lisa abramowicz, and jonathan ferro.

jonathan: this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz i'm jonathan ferro. equity markets pulling back by point 6% on the s&p 500. before we start talking about 2024, let's talk about 20 23. the average forecast, four thousand points on the s&p 500 closing almost 20% higher. let's talk about 2024. the moves for the year ahead. the friction on wall street. the high 5200, the low 4200. a 1000-point spread between oppenheimer at the high end and jp morgan at the low end. tom: a really interesting and wonderful 2023 of optimism. how did this happen? the solution is a thing called valuation expansion. stuart kaiser of citigroup did great research that year on the valuation expansion. the pe multiple expansion that

we witnessed. 12 months ago, that wasn't predicted. there it is, apple with 31 pe. jonathan: the early call to start a brand-new year coming from the team at barclays, lowering our rating from equal weight to underweight. the 15 has been lackluster. we believe the 16 should be the same we believe the continued week results coupled with multiple expansion is not sustainable. lisa: in last 12 months you've had revenue down come expenses up, operating income down. you have the question is how much is the cash flow fueling some of the gains by pouring them back into stock purchases and how long can they continue doing that and continue growth stock? how did we get it so wrong? we are up 107% last year. there saying the others will come to bat. we are not getting real growth that one of the biggest names.

tom: the optimism side, there's a lot in common between the great sir john templeton and dan ives. dan ives is channeling john templeton this morning. apple shares are on sale, the language of john templeton of tennessee. jonathan: his dan ives saying on sale? tom: he is modeling out a $4 trillion apple out there somewhere. jonathan: this is the struggle, the pain of not holding apple. everything barclays said is true. almost 99% is true and was true through much of last year. still, they still close the year higher by almost 50%. lisa: the bull case includes services, includes ongoing recycling and ongoing re-upgrading considering that the upload cycle was delayed and not deferred completely. there is a question about how any of the tech stocks will

perform. we headed into the beginning of last year and frankly everyone was saying that this will be the area of underperformance, finally. they were so wrong. we are so wrong again whatever they consensus is. tom: what i miss is zuckerberg. meta, zuckerberg. i missed zuckerberg in 2022. jonathan: i think we are all eating humble pie after the year we've had on the s&p 500. the year that we've just had in the bond market, narrative after narrative of the 10 year yield laughing and everybody's faces. closing the year exactly where it started. this morning the 10 year at 3.9557. equities pulling back a touch. down .6% on the s&p. lisa: how much does higher oil prices fuel the idea of potential inflation reigniting? the week ahead, ism manufacturing comes out tomorrow

as well as the meeting minutes around 2:00 p.m. 10:00 we get the jobs openings which has been coming down. it is a fuzzy number, but if you see the unemployment rate remained low and job openings come down, this fuels the immaculate disinflation discussion. there is the initial jobless claims. those have been increasing. i am curious about continuing claims considering the fact that there is this feeling that something has to give on the labor market front for inflation to come down and non-firm payrolls comes out on friday with ism services. do we see average earnings sticky at 4% year-over-year? can we see a fed truly cut interest rates by six times, by 150 basis points, throughout the remainder of 2024? jonathan: we are hitting the ground running the first week of 2024. sarah, good morning and happy new year. let's revisit the quote from

barclays. we believe the continued week results coupled with expansion is not sustainable. sarah: the theme for 2023 was all about the fed and what will happen. as the cycle peaked he would be -- as the cycle peaked you would be ok. if they come down a couple hundred basis points as the multiple expansion too much? that will be the tension and a lot of them. apple, which we were talking about, you have to look at the consistency and cash flow. that is what people are paying for, that and exclusivity. jonathan: the whole market or a select group that dominates the market? sarah: more select group. valuations, we keep saying, this is valuations year, it will matter this year.

i don't know when it will matter, but at some point it will. having cost makes valuations matter in a way were 15 years people talked about it and it didn't matter, maybe that happens now and people start looking at those metrics. you have a lot of money on the table and a lot of money that needs to be invested. tom: you can go to the bloomberg terminal, tra is the function, and you can model annual return quickly back one year, two years, three years, etc. we are now addicted to unmade 15%, i failed. baloney. it is a single digit return. at the most you will make 11%. do we need to get used to the equity return of 8% or 9%? sarah: i think you do. you have to look at history. you had a huge move last year and a handful of names. some of the other stocks started to catch up at the end of the year. the back end of the performance was really quick. i don't know where you end up with multiples here, but i don't think you can have the kind of growth we've had given the kind

of economic backdrop are looking at. if the fed is really going to cut six times like the market is pricing and we have a much weaker economic scenario than earnings are pricing in. there is a tension in 2024 with a lot of questions to be answered. lisa: you're the person i wanted to ask this question. a big surprise last year was the underperformance came from oil. tom and jon were talking about why that was surprising with conflicts in the middle east. we are seeing oil perk up a touch in relation to what's going on in the red sea. could this increase if it continues change the disinflation narrative? sarah: changing the trade routes alone could change some of that, because as things get more expensive -- but you have had a huge supply response to oil demand. you were talking about earlier that the u.s. is a huge producer. commodities are priced on the margin. if i have excess supply i can't get prices to move that high which is why the saudi's have to

keep taking oil off the market. if you see a crimping of the roots and you can't move things the way that you could before, then you could see some problems. that has been a huge help for the inflation picture. if that changes and you see data that is more inflationary, the narrative on how much the fed cuts has to change. that will be a question of, where do equity multiples go given that scenario? lisa: you were bullish on energy stocks through the beginning of next year and then you got more tepid as you saw some of the moves. how much are you leaning into some of those names because of how offsize people would be if oil prices surge? sarah: you get heavier when you think you have an opportunity and later when you think that the market isn't going your way. when the supply came up a lot, that is when you lighten up on your energy positions. you don't want to be out entirely. you have a lot of stocks that act better in a bad market than some other things do.

that is something that you want to trade around. we still think energy has a longer tail. tom: you have the short-term stuff or your daytrading. famous for that, sarah. we need to talk to the audience, their heads are spinning off of covid. covid is over, can i maintain some form of three-year, four-year, five-year ownership of whatever equity i'm comfortable? sarah: i think you can. this is a time to be thinking about that thematic trade of what will happen in the next few years. we look at something like tetra tech that does engineering construction and a lot of water and infrastructure stuff. you can look at companies that have a longer-term theme that are playing into some of the things going on. the volatility within that, you have to be able to say that this is where i will allow volatility to occur. some of the stocks that i like a lot have had challenges in a year when someone makes an acquisition or does something.

i think that you can look at thematic investing now because you have a longer term view and you have a market that's expensive. you better really like where you are positioned. jonathan: the regional banks, specifically. of almost 14% in november of 16% in december. is that leverage trade in the bond market or something to get your hands around for 2024? sarah: i think it's a lot to do with what's going on with interest rates and a lot to do for people looking for, maybe we can pick something up here. the valuations on that group were very not challenging relative to the rest of the market. i think you still have issues with the yield curve, still difficult to make money on some of those, and i still think we have commercial real estate issues we haven't flowed through. it is challenging to say that's a definite thing about the environment. it's more like, it's been picked up off the floor. jonathan: the two year versus 10 year is -36 basis points. lisa: they won't make up the

difference between lending long and borrowing short. tom: i heard the same article. the answer is i saw 10 cities in america, new york, and some up all the others and every other city combined is the same as new york. this is a local issue for us. jonathan: good to see you. happy new year. sarah hunt. welcome to the program, equity futures on the s&p 500 look like this. down .6% on the s&p 500. yields are higher by eight basis points. there is one stock the watch of the premarket. apple. moving lower off the back of this move from barclays, lowering our rating from equal weight to underweight. the stock is lower by 1.7%.

lisa: the fact that the stock is lower by as much as it is highlights the concern people have of some of the issues that barclays have highlighted. i suggest that you will probably put out that they have been wrong. they have gotten the move wrong, fallen behind come all the things are true, you are correct, but this is a mystery. when will it matter this is not the growth stock that nvidia is? tom: i cannot stand the phrase underweight. is it a sell? i am serious. terry wiseman is in the green room aging off of this. what in god's name is underweight? jonathan: barclays can speak for themselves. i would say underweight as a marketing concept to make sure that you continue to get engagement from the managing team without actually saying sell even though you might mean -- tom: 3:00 p.m. on new year's eve i said to mrs. keene, i think we are overweight with

champagne right now. what is underweight? jonathan: that is a different kind of overweight. it is a ridiculous game to maintain access. tom: is sarah hunt ever underweight? sarah: not on champagne. jonathan: don't miss this conversation, the biggest bull on wall street. looking for 5200 on the s&p 500 year end this year. from new york city this morning, good morning. ♪

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>> just a few days ago, we issue what will be the last drawdown package, security assistance package for ukraine that we have funding to support. it is important when congress comes back to work next week that they get our supplemental funding approved and passed to so that we can continue the flow of necessary weapons and capabilities to ukraine. jonathan: two big deadlines over the next six weeks. that was john kirby speaking on abc over the weekend. light from new york city, the price action for you to kick off the trading week. equity futures are pulling back by .7% on the s&p 500. just a touch lower, apple and the premarket off of the back of the downgrade from barclays. tim long leading the effort

saying that we believe the continued period of weak results coupled with expansion is not sustainable. 1.7%. no drama in the context of the massive gains we seen in the last 12 months, but that's the question a lot of people were asking already into 2024. lisa: which is the reason why people are responding to a rather ambiguous what it means to be underweight. their fragility of the s&p level, how much of that is a deciding factor in how much of a mystery that is heading into a year when a lot of people expect it to trade sideways. how often does that happen? jonathan: s&p futures pulling back by almost 1% with the biggest waiting being apple. apple open close to 50%. tom: you can line the returns. you mentioned nvidia as a standing event last year. the question is, what do the mainstream tech companies

do, also the once more at the margin? i am fascinated by what nonprofit tech does. goldman sachs follows this carefully and a bang up at the it of the year. does that continue, companies with nonprofit? lisa: i love that nonprofit tech means something different to different people. tom: it will be part of our discussion, john in the 8:00 hour, he has been right and he has been bullish. we are being joined desk side today. i will go to the border and the immediacy of do something. define do something for the administration after the border dialogue of our christmas sabbatical. >> it will be important because we have the current speaker mike johnson going to the border, eagle pass texas on wednesday

bringing a large congressional delegation with him. this is happening while we have an agreement on the border. you heard from admiral kirby when it comes to ukraine it is real and taiwan fund thing, all of that is being linked to the border. at the same time, we don't have funding agreement when it comes to topline funding figures. we have two fiscal clips coming up come the 19th and second, for government agencies running out of money on those days at the same time. they're trying to secure this massive supplemental package that is going to mean money for a lot of foreign policy issues that the biden administration ones as well as money for the southern border. what the republicans want is tighter immigration controls when it comes to asylum or parole. this is where the conversations are. the most important thing to know is that no one is back in washington this week. they come back next week. it is very difficult when you

look at the timeline and calendar trying to figure out how they get this done. tom: to give us historical impact, i have their former republican secretary of commerce and they are apart but together on the immigration debate well over a decade ago. it went down in flames. is the debate different now than when he went down in flames? annemarie: it is curious in a few weeks they think they can get an agreement on something they've been discussing for decades. this is a generational debate. potentially, they could get something done, because push is coming to shove when it comes to the timeline on getting something done on the border, especially with what you are seeing over the weekend. migrants are being dropped off in new jersey because of some law eric adams enacted, some policy they can't be dropped off directly in new york city. there's pressure from democratic cities and states on this administration. a potential deal is there.

everyone says that it's darkest before deal is done. potentially, because the freedom caucus members on the house side will nitpick anything that the senate sends them, it might be easier for everyone if it is done just before the deadline. jonathan: the big change of the last 12 months, there has been a story where democrats can say that there is not a big issue here because it hasn't been an issue of blue states. now it is on the doorstep of those blue states and cities. how our local state and regional officials squaring up with the white house's message and what the administration in d.c. is saying about it? annemarie: the administration sent a letter to congress on top of asking for aid they asked for money to be sent to the southern border. this was an issue for governor pritzker, writing letters and calling on the administration. mayor adams being vocal about the failure of this administration when it comes to immigration and migrants at the

southern border. thousands of people crossing in every day. the issues that the republicans have isn't the funding, it is making it harder for migrants to come into the united states. making it easier to deport them. making it harder for asylum-seekers. this is where the debate is an issue. at this point, there is a lot of pressure on this administration from blue states that something needs to get done. lisa: how much urgency is there on behalf of the administration at a time when we are talking about thousands of people coming in and a question about how certain states will pay for? annemarie: there's a lot of urgency because we are in an election year. republicans aren't wanting to give too much of a win to the biden administration this year. it is the second half of the session. they have to agree on funding and they have to get the supplemental done. after that, there is nothing else that is going to be able to happen. republicans on the same side who want to keep their seats don't want to give a win to the biden

administration but have to go home with some sort of prize in november when it comes to reelection. lisa: we are getting close to some of the early primaries. how much is their discussion in washington about a different vice presidential candidate with joe biden? annemarie: that is not a discussion in washington. i think it is a big discussion around wall street, people who think, can you flip up a ticket? jonathan: something has to change, right? annemarie: at this moment, that is not a discussion. jonathan: are the polls getting worse? annemarie: for president biden, they have been pretty dim. i was going to say dire. dim, dire, gloomy for him. they are sitting on huge war chest. at some point they're going to start to deploy this and we have to see if it's going to work. jonathan: can we see more engagement from them? i saw the president complaining about how the media has reported on the u.s. economy and i can't

think of how many interviews he's done on the u.s. economy. isn't it easy to get airtime for the president? they can reach out to any network and they will take them whenever they are ready, yet they complain about the coverage of the u.s. economy. annemarie: i feel like you are baiting me because you saw my picture at the u.s. press christmas party and said, what did you say to biden? i would love to have abide in -- a bidenomics interview on bloomberg tv. the answer was a wink. tom: secret showing you the door. jonathan: when you put out nonsensical tweets like the one on inflation, that is not helpful. the data is in their favor at the moment. the trends look decent. this inflation and unemployment. it is their responsibility to engage the media and have those conversations. annemarie: they will put out secretary yellen from time to time and she does a lot of speeches as well.

you have jerry bernstein on the north lawn frequently rethink the press and going on interviews. the issue is that the american people still are not feeling it when it comes to inflation. their big issue is that the economy is the number one priority, poll after poll. this is what the american people care about. jonathan: i'm not sure what the disconnect is about. lisa: neither does anyone else if you have read the reports about the vibe session. why are economists saying they have no clue? i want good vibes for 2024. jonathan: i am offering you plenty of good vibes. ♪

jonathan: equities on the s&p 500 shaping up as follows. good morning and happy new year. equities are lower on the s&p. call it -.7%. the nasdaq lower by almost one full percentage point. responsible for some of this move, thank you apple and thank you for the downgrade from barclays. almost 1.8% lower. from underweight to equal weight . we believe the 16 should be the same. lisa: the magnificent seven stocks account for some 28% of the overall s&p waiting. if you talk about the significance of the stocks and why we focus so much, that is why. there goeth one name, there

goeth the whole index. tom: wednesday, thursday, friday, i wonder if we are adjusting away from apple and equity markets to a little bit of angst about what we see on friday with wage dynamic? jonathan: apple is 9% of the s&p. it is lower by about 1% this morning. the nasdaq year-to-date, a gain of 54% on the nasdaq 100. the bond market, big moves lower in 10-year treasury yield's in november and again in december. this morning come up by seven basis points. 3.9538. they are kind of talking about cutting rates? look out for the minutes in the next 24 hours. lisa: will that determine anything or be a further mockery of where credibility lies? there has been a narrative that has gotten further baked into

market expectations. how low is the bar for that to shift? wage data, oil prices, something else? that is what i'm looking for? jonathan: we had seen 1.10 on the euro against the dollar. the first down for the dollar index since 2020. the euro is negative this morning, seeing a reversal of recent moves. the swissie, really interesting levels in g10. tom: we don't speak, particularly in the break, or when he slipped in the door at five: 55. i looked at dollar swiss, euro swiss, and then trade-weighted swiss. it is a simple, the chart is draw dropping. the appreciation of the swiss weighted frank. this is beginning to move and i think for global wall street

this is a major story to see the swiss strength. jonathan: your top story as oil is rising, inching higher extensions in the red sea escalate with iran sending a warship in response to the u.s. navy sinking three houthi boats over the weekend. lisa: this goes to the conversation that we were having about the domestic issues in israel and the fact that the economy is struggling with so many people out of the workforce and fighting. oil, i so focused on this year. we were surprised at the end of last year how much prices went down despite this conflict. how much for risk as this to market if prices go up? it challenges the concept of inflation moving steadily lower. tom: i'm completely focused on the domestic politics of israel and mr. netanyahu. that is what i saw on the zeitgeist. i think it is underplayed in the u.s. press. jonathan: in japan come the

latest developments, a japanese coast guard airplane colliding with a plane in tokyo. the larger airbus 350 nine aircraft was evacuated safely, but five of the six crew on the coast guard airplane were confirmed dead. the smaller airplane was carrying aid to northern japan were 7.6 magnitude tremor hit the country. 48 people have been reported dead. lisa: did you see the images? shocking. the surf coming up and houses and cars crushed. then a crash, the cause of which hasn't been determined according to local reports. what is going on? this is yet another risk for that economy. people don't know how to price this in, but you have to focus on the domestic and military and issue.

tom: looking back at the past year come this speaks to the risk of earthquakes which are usually on predictable faultlines, like the horrific earthquake in turkey, southeastern turkey, x number of months ago. this is with us and our perfect modern lives. they are not perfect or modern. they are earthquakes. jonathan: the biden administration is cutting back on incentives to buy electric vehicles. the number of ev models eligible for tax credit over 7000 dollars cut in half. the new list excludes vehicles that use battery components made by chinese manufacturers. you can hear a lot about this in the months to come. lisa: i was looking at which cars. it is the ford f1 50, a whole host of others, stellantis, tesla one model. it is interesting how much this is being done in the guise of trying to reduce any benefit to china versus reducing some of the emphasis on electric vehicle credits with a kind of shift that you've heard under the

cover of the administration and auto manufacturers. jonathan: if ev sales are struggling already, what happens when you lose some of the tax credit as well? tom: that is the whole thing, what happens when the tax credit goes away? this could materialize on global ethics and -- global fx. let's go to the larger view, which is everything hinges on china. do you agree? >> not for 2024, though i think that china is an important part of the macro story globally. we have the central banks in the u.s. and europe to worry about and we have supply shocks, especially in the natural resource markets and oil markets. china is important, but it is not all or nothing. i think the market is somewhat wrong in focusing too much on

the property sector and aggregate demand in china. with the market has lost sight of to some extent is president xi's willingness to go after the tech sector in china and generally against the concept of private property in china. this is what is souring sentiment for china. the extent that that is finding some relief in 2024, it could be a bigger deal for china on the upside than some resolution on the balance sheet of the property sector. tom: there have been multi-decades of failure for multinational stocks. is the dollar finally broken where there is an unspoken opportunity in international equities? thierry: if you are asking, the dollar is a reserve currency, the standard for international trade and finance, is it over?

i don't think so. if you are asking, will there be a structural break with regard to the status of the dollar, international capital markets and international trade, i think that the answer is no. before we had globalization, before 1995, when china and russia and the other emerging markets were not that fully integrated into the global economy or washington consensus, yet we still talked about the dollar as the reserve currency of the world. why? a good part of the world still depends on the dollar for its trade, commerce, and financing. no, i don't think that will happen. anytime soon, at least. lisa: every year you come up with potential tail risks. the tail risk of the dollar somehow being profoundly debased seems to be off the table from what you just said. what about the tail risk of some

sort of significant supply shock? you alluded to that initially in the commodity space. thierry: that is a bigger tail risk and it behooves every investor to at least have some oil in one's portfolio come along oil. when you think about u.s. recessions in the postwar period , a large number had been preceded by rapid rise in oil prices. you will see that. it behooves investors to have some oil in the portfolio because we don't know. to the extent that we will have a supply stock oil prices will go up and you would offset the losses that you would otherwise experience from seeing stocks and bonds go down in that context. lisa: this raises the question of how offsides the market would be should there be some sort of oil supply shock. given the fact that people have gotten accustomed to the idea that the u.s. is producing record amounts and even in the face of conflict oil prices went down, how wrongly positioned are people for this kind of event?

thierry: i don't know how wrongly positioned they are. there is a case to be made for the logic of oil prices having come down the last few months. the logic is very straightforward. the elasticity of supply in oil is quite high. potentially higher than the market surmised four to six month ago. what we have seen with the increase in oil prices that preceded the decline, huge increase in oil production in the u.s., and that is the basis for why oil prices are down. if we were to get a shock come out of the middle east or russia -- get a shock, out of the middle east or russia, it is not inconceivable the production could go up to offset that in a short time. that is the risk of shocks. over the long-term there will be an adjustment in u.s. supply that is positive and beneficial, but not in the short term. the market doesn't see it that way.

it is interesting that there are emerging markets that we don't necessarily associate that much from the perspective of their current account balance and trade with oil. they are not huge net exporters, like brazil, for example, but are large producers. the market associates the riau with oil more than the u.s. dollar. jonathan: do expect that to change anytime soon? thierry: no one role really associate the u.s. with a very large net export balance in oil. it would have to get to a point where u.s. trade is nominated by oil in that is not the case. it is still dominated by services and technology. jonathan: the numbers are staggering. 13 million barrels a day in this country. tom: what is interesting is that we don't have an oil policy. we take pride that washington has never come up with the plan. we have this plan, that plan,

whatever plan. i guess it is a technological success having no plan. jonathan: do we need one? is the white house relevant when it comes to this conversation? thierry: oil is such a geopolitical issue. geopolitics and politics generally matter with diplomacy, through some management of market forces that are relevant to geopolitics. there is a case to be made for the energy market to be managed from that perspective. if it wasn't for the importance of oil from a geopolitical perspective, i don't think so. jonathan: thank you. if you are just joining us, welcome to the program. the s&p 500 session low, negative five point 7% on the s&p 500. i think every time we quote the price we also have to reference the games of 2023. lisa: 107% for the magnificent seven stocks alone in one year. at least for the stocks that

were supposed to underperform. for me, the shocking thing is with all of those gains and incredible moves, we are basically back to the levels we were in january 2022. we have come full circle. people are saying will we muddle through or will there be a different paradigm? tom: in 2024, going back, you see earnings reports as well, where are we from q4 of 2019? double digit equity return some oneself of the biden stimulus and the rest, but there is a habit from last year that maybe we have to continue. how do we engage ourselves in earnings and economics from 123119? jonathan: if you member when you were a kid and you had to write down the new date? the last three years have felt exactly the same. lisa: start doing 2025 early.

just get practice going into jonathan: the next year. the price action on the s&p fulling back by .7% on the s&p 500 and a touch more on the nasdaq. if you are looking for the why, there's plenty of reasons. apple, a downgrade from barclays from equal weight to underweight. the stock is -1.85% on apple in the premarket. 188.97. from a beautiful new york city this is bloomberg. ♪

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>> the big tech-enabled companies were havens, great places to hide out in economic and political turmoil. you have the fed at your back in 2024 an economy that has hit a

soft patch but probably not going off a cliff, that gives a room a broadening out of the market. jonathan: where is market leadership coming from in 2024? from new york city, welcome to the program and happy new year. the s&p 500 session lows negative by almost three quarters of 1% on the s&p 500 following a massive year of gains on the s&p and nasdaq. apple is responsible for some of the move, negative by close to 2% off the back of the downgrade by barclays this morning with the team taking the stock down from equal weight to underweight. tom: they are looking at this huge dominant unit count of iphones which is, without question, the dominant strategic part of apple. then there is the service sector ever building. then there is managing for profit and use of cash. this is a titanic battle and may

be the one stock where there is the harshest divide. on bloomberg radio, he is short apple. jonathan: short growth with multiple expansions delivering gains of close to 50% year to date last year. tom: this is important. the magnificent seven or eight, or whatever it is, they are different stories. i don't like that they get bundled together. there is a huge set of different stories. lisa: when you bundle the seven together, they have delivered pretty big gains in 2023. 107%. there was a lot of the vergence. there was a lot of the virgins last year. nvidia was up to hunter 40%, huge -- was up 140%, huge divergence. tom: triple leverage on cash to compete with that, no question about it. we digress. we decided that e.m. and china

is so important to 2024. the importance of this year of e.m. and this massive mystery of china, i called it the known unknown out there. is china an emerging market? politically, the way that we treat with them, they are a developed economy. >> they are an emerging market in fixed income. i think the real shift for me in the last few weeks since the fed has been the factors driving foreign-exchange returns globally. that means a shift from kerry, the primary driver of outperformance across all currencies, whatever shape and size since the pandemic started to value. we have had two consecutive months of negative performance in any carry index. now you're seeing value come

back. what does that mean for emerging markets like china? funding currencies like the chinese yuan should start performing well. tom: is china's credit rating at risk right now? are you watching that? damian: the supplemental lending facility that china used from 2014 to 2019 to rebuild their shantytowns which cause the housing boom that president xi is starting to unwind, they are back in the game with that. it is china's form of quantitative easing, call it what you will. we are starting to see some evidence of that in the pmi data. jonathan: how much pressure can a leader with no term limits be under? damian: not that much. i don't know the dynamics of what goes on inside beijing. few people can say that with any credibility. there certainly a sense from president xi that he is trying to repair some of the i guess tighter policies that have

restricted the economy for the better part of the last two years. he is trying to undo that but it is difficult to undo sentiments, particularly domestically when it has been damaged so utterly, unbelievably. foreigners, forget about it. the fbi data came out and it has been abysmal. huge losses. no one is investing abroad. jonathan: whose confidence is lower? investors looking into china or in china? damian: investors looking into china. jonathan: how do you repair that? damian: other than a regime shift it will need to be something more tangible. we can bash china but we could easily bash the fed. look at the fed credibility issues. i will channel chair eccles and say that the communication has been awful on the fed's part. look, the communication has been abysmal in the u.s. as well. for speculator, for ahead are looking forward, it is difficult

to get a gauge on the market. lisa: after years of people talking about china being un -investable, can only go up from here? i'm hearing more people getting bullish on china because things have to get better than this. you have xi jinping having certain stimulus, maybe not as much as people want, but the latest being 50 billion dollars in low-cost funds to policy driven banks. on the margins, it is starting to respond a little bit. damian: is the argument many made at the beginning of last year when we saw the csi rally. people that road that up did well but if you held onto it you had a loss at the end of the year. it doesn't take much to me chinese equities in this market. going back to fx, the carry trade unwind is real. lisa: we had economic data that wasn't so good out of china but also from south korea, taiwan, a host of other asian countries in the region.

how much of this is a china problem and how much is a regional problem and can you distinguish those things? damian: it is more of the europe and u.s. problem. it is export orders. if you break into the pmi data and look at export orders, those gauges are down in the pmi. one silver lining was in the construction. that speaks to the financing that you point out that they're using to stimulate their economy, but i think it is more u.s. and european growth. tom: let's look at the emerging-market, switzerland. i triangulated dollars-swissie, euro-swissie, and trade-weighted-swissie. the middle is when we were in europe or davos, and we are way beyond this with trade-weighted swiss strength. how disruptive is that any and all?

damian: they were little more dovish than markets are giving them credit for. the funding g10 currencies, the swissie is one of them, the aussie dollar is another, they've all rallied nicely against the dollar speaking to the strength of these funding currencies as the carry trade's are slowly unwound in this environment. i'm not a big buyer on the fact that you will see a massive dislocation between the ecb and the fed though that is what is driving a lot of the price action lately. i think european growth is an issue even though they have a mandate on price. i'm not buying it. tom: it is quiet, quiet out there. i have an accelerated tendency, what does it mean for listeners and viewers? damian: the market is vulnerable to a short-term reversal. if you see 25 delta risk

reversals with this skew, you're talking about currencies at or near three-year lows across half of the 30 major currency pairs that we track. that means that the currency pairs are subject to a near-term reversal where the dollar will strengthen. jonathan: a five-minute conversation and he did not bring up college football. it is not a classic nick sandmann team -- nick saban team? tom: a couple of the catch is that mr. wilson made? damian: mr. wilson, but the huskies. tom: the level of underdog -- damian: foreign a half point underdog -- four and a half point underdog. jonathan: your bet? wolverines? damian: wolverines are obviously the favorites but i'm rooting for the huskies.

i have a fondness going back to 1991 for the washington huskies and i am just a normal college football fan. jonathan: are you done, t.k.? tom: he went to the braves, what is that about? damian: the dodgers are going to own baseball. they have everyone. lisa: they have all of the look because people want to go there because it is -- the luck because people want to go there. [crosstalk] ♪

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>> i think the bullishness has a wider window to perform in going into 2024. >> i think we will feel pressure coming into the new year. >> i don't expect to see the magnificent seven greater in 2024. >> there is a lot that we think is positive and it is

constructed not only through year-end but into 2024. >> it will continue to widen out but we think some of the leaders from this year will continue to be leaders for next year. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio and television, good morning to all of you. good morning to 2024. moments, we will talk to one of the great rules of wall street. what this is about is putting economics into stocks and that begins with a busy economic week on the labor front and what it means for this bull market. jonathan: we are absolutely hitting the ground running for 2024. payrolls on friday. just around the corner after some massive gains, 24% on the s&p. more than 50% on the nasdaq 100. can we get some broader gains this year?

does the leadership start to change? tom: nominal gdp. the animal spirit of the country and all the mystery of the we heard from summit of jp morgan saying we get the good feeling, but then what? is it in may or in august? jonathan: i'm big lessons to learn over the last year, not just saying that strategists got it wrong but trying to learn which data points are irrelevant and which data points are relevant. when you look back at the last year or so, manufacturing has been some 50 in contraction territory since late 2022 and the whole of 2023. that data point, if you focused on that, it would have taken you down the wrong path for the u.s. economy so if you focused on something like jobless claims, it would tell you week after week that things are ok in the u.s. economy. tom: ism tomorrow. there are two sets of ism.

tomorrow, we see manufacturing in the subparts, the first thing you look at. jonathan: and then services and jobless claims. lisa: tomorrow, we get that at 10:00 a.m. i am curious to see how this feeds into whether the u.s. can continue to fuel double-digit gains in the stock market. we talk about the biggest bulls can all of this and coming together with projections. that much on the s&p after last year's 24% gain. the year before, a 24% loss. the year before that, a 27% gain. tom: maybe take it harmonically, which is if you have a 24% number in the rearview mirror, you go to 12% the next year and then 6% and then 3%. i guess there is a lesser anticipation here but i am sorry, there are too many mysteries. the year begins march 31. i have to recalibrate.

jonathan: always start programs like this every single year and talk about a consensus and you are right to point out where the highest forecast is right now. the low is 4200. the highest 5200. it is a 1000 point spread. any conversation about consensus , when you go through the forecasts, the range is so wide for the year ahead. lisa: there are not many people talk about the same can up till risks as they were at 2023, a catastrophic recession, something terrible. no one is expecting that. there is a feeling that we dodged that bullet and there will be maybe a soft landing or a harder lending but nothing that will shake the boat in any kind of massive way. that is the interesting thing to the upside or downside. where is that shock factor? tom: the financial additions index is a good measurement as well. 11 ratios i believe it is. and it shocked me how accommodative we are.

we curve up and are really getting out to some substantial societal economic accommodations that sherman powell has to deal with. jonathan: a tiny bit more restrictive this morning. price action on the session so far, we are down by zero point percent on the s&p. the dollar is a little bit stronger. if you want a single name, it is apple. apple in the premarket is down close to 2%. it is a major weighting. we are down by 2.2% currently in the premarket following a downgrade from barclays earlier this morning. tom: what is interesting here is to look back at the people that got it right. we look at the people who got it wrong with great humility, but now john joins us. speak to him about the bull market. he nailed it last year and continues to nail this year.

i will take it back to the analog of the middle 1970's, a horrific recession, the leap in 1975, and then a follow on in 1977. is 2024 a follow on bull market? >> i think in many ways it is, tom. i think the question here really is -- or rather the difference is it is a substantially different background in terms of a digitalized global society for business and the consumer, and what was back then essentially an analog world. i think things get digested much quicker. i think that the data is better quality, and because we have been in crisis, in and out of crisis since 2008, all the players as well as the traders and investors are more experienced in dealing with volatility. tom: it is so important here

that john is talking about last year was a prelude. i think that is so important. tom: 5200 price target year end. you and i talked about this the last few months. how dependent the call is on interest rate cuts from the federal reserve? john: not much really. we are not of the camp looking for six cuts this year in 2024. we are looking for perhaps one or two, and we are not looking for the first half for cuts. with think it will happen in the second half of the year that likely later than earlier in the second half. the fed has been remarkably sensitive in practicing its mandate for a stable economy and full employment as this car between 3% and 4%, and they want

to keep it that way so that is what we are looking at a little bit different. we like the fed ironically. very few people do. the fed has chosen the ben bernanke legacy carried on through jerome powell in the sense of communication and clarity. lisa: the rally might not be dependent on jay powell, but how much is it dependent on the central bank of tim cook? john: i will keep it away from a company specifically, but i would say certainly a business, the consumer, and the jobs market will play an important role this year. the keyword to watch for is resilience. when looking at economic data, we are looking for things to show resilience, and naturally it is a challenging environment when making transitions when you have the levels of trouble around the world, the geopolitical risk seems to keep ramping up by the day, but

consider where business plays out in this, where the opportunities are. both the cyclical point we are on the calendar as well as the secular trends that are driving potential growth for all 11 sectors. lisa: ok, so in other words, does tech still lead? an account for 50% of the 24% gain of the s&p last year -- accounted for 15% of the 24% gain of the s&p last year. john: communication services is about 50%. you also have when you look at the other sectors, think about industrials and that technology in that him and it is a good customer of technology whether it is sensors or robotics or what have you. the cloud and big data and all of that ai. when we look at this, whether it is a utility company, whether it

is a materials company, whether it is a pharmaceutical or a biotech, technology is where it is at. the other reason is last year tech was fabulous in its performance because it had been so brutalized in 2022 when the bears sold all of tech. the long-duration they sold, but they sold the good stuff that was highly profitable. positive cash flow. great products. deeply embedded in the lives of business and the consumer. tom: the cliche is the boat has left the dock. i would guess a very large percent of the "surveillance" audience feel like they missed 2023. how do you get back in the game if the boat has left the dock? john: i would say for the people who missed this it is a question of layering in, not back up the truck at these levels. consider opportunities that show up when you get some weakness in

names that may have gotten away from you. look for babies that get thrown out with the bathwater in down drafts to add to positions you are building, and in essence what you want to avoid is just blindly buying dips. you want to be selective, even within what appears to be a nicely broadening rally back to the future in terms of the prices of stocks in many cases outside the magnificent seven. they have plenty of room available. tom: in so many -- jonathan: and so anyways, we had a decade in a year. the year and price target is 5200 on the s&p. he was bullish on the s&p last year and was right to be. when you get into the details of the call, not that dependent on rate cuts from this federal

reserve. tom: 11% earnings growth, and the question is the multiple expansion question is front and center. i got it wrong. everybody else got it wrong. there is now what for the multiple expended part of the market? lisa: 209% above where we closed from the previous, the end of the year. that is the biggest bullish call at this point, not necessarily calling for another massive returns year in the overall index, but what is calling for is a muddle through with the secular shift in technology and other areas. tom: quickly, this is quickly because in cfa 101, i percent is a great year -- 9% is a great year. 9% is a plus, plus year. jonathan: 10% upside and then you come out and call for another 10%. it is not that easy obviously.

your s&p 500 at session blows, negative by 0.8% -- session lows, negative by zero and a percent. a is lower. you cannot quote the stock without what we did over the last 12 months. apple up 40%. amazon up almost 81%. who was talking about that? hardly anyone. a stealthy 81% rally in amazon over the year. alphabet at 58%. lisa: not all of these stocks are the same story. amazon as well as microsoft with shares of 57%, that is stemming from the cloud and generative ai. with better, it is the appetizing that came back in bulk. and tesla, it is its own

situation, but with apple, people are not upgrading at the same level or buying new iphones. yes, you have people putting out thousands of dollars for everything in the household, but is that increasing that much? i am just warming up. tom: a couple days into the be getting of the year. lisa: is that gloom? jonathan: i would guess joining us on apple and a downgrade from barclays in a minute. from new york city, this is bloomberg. ♪

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>> big tech enabled companies were safe havens, great cash flow, great places to hike up, and economic and political turmoil, we saw that but the fed with the wind at your back in 2024, the economy that will hit a soft patch but is not going off a cliff, so making some room for broadening out of the market. jonathan: massive gains in 2023. can we get the same in 2024? here is the protection this morning. your equity market lower by almost 0.9% on the s&p 500. futures on the nasdaq 100 a lot lower, negative by 1% in the last hour of the back of this move on apple. apple in the premarket looks a little something like this.

-2.4%, and the recession those off the back of this call from barclays. they lowered the price target a touch from 161 to 160. still using apa multiple of 25 times their full year estimate, but here is the quote and that speaks to the general angst and nervousness people have around this name more generally after a big gain of almost 50% for the year 2023. .we down downgrade our rating because we believe 2024 will bring more service risks to light. it is the cushion we were asking through 2023 but the stock kept rallying. the question we will start 2024 with as well. tom: i will go to technical analysis were used to support and that is in the nasdaq 100. we barely put back, even with today's angst. on apple, maybe it is grimmer charts sitting on support that has been there since early

november as well. we are so short-term. it is tuesday morning. we have pulled back. quick headlines. jonathan: last 12 months, iphone growth, a lot of bears were bearish. the bulls were bullish because you look at the revenue mix to services, ultimately, this can pick up and you get the cash machine continuing to spin out cash and you could gains like what we got last year. that is the thesis right now in 2024. tom: it is technology. it is the focus of those that are in it and those that missed it. when that we have, it is a huge advantage we lead with. jonathan: mandeep singh joins us. what did you make of the call from barclays on apple this morning? mandeep: last year but we saw among the big tech, there were companies that had clear exposure to generative ai,

namely microsoft and amazon and google. google has both ads and cloud. apple was the one company where everyone kept doubting their product refresh cycle and rightfully so. still now you do not get the conviction that the model can run on a phone. right now, models are running on data centers. we are running through a massive refresh cycle and cloud companies are the major beneficiaries of that. we still don't know when that will happen but it will happen. it is a matter of time. the technology, the copilot will run on your phones, and right now there is no alternative device except for your apple ecosystem whether your phones or your pcs. jonathan: do you suspect the winters of 2023 will be the ultimate winners? any reason to believe that is not the case? mandeep: yes are so early in the cycle and these are multiyear trends and we know from the past year that this is something that has a long runway.

you are upgrading all of your data centers. you will upgrade all of your devices as well. right now, you are in the process of upgrading all your data centers. yes, the growth rates were stellar last year. there will be tougher comparisons and there will be a digestion phase, but the fact is this is a multiyear cycle and that is not going away. tom: you do the most hard-core research on this i have seen, and you published in the last few days a terrific piece on the reality of ai. there is a satire group on twitter that is phenomenal. they talk about in search of the next bright shiny object. your bright shiny object is $1.3 trillion in the next nine years in ai. what part of ai is real, and what part of ai is the spoof of what we see? mandeep: look, i think the data center part is real. training of algorithms, models,

this is real. your data centers and devices will get upgraded. your ads will be more targeted, whether you like it or not. these companies have more data, and that is where they will be disruption. software as we know it will not be used the same way. tom: how do you respond to the hysteria that is out there about ai? everything is ai. ai, ai, eio. you respond to the hype? mandeep: there are certain cases, especially on the health-care side, you may not have the best data to make the 99.9 9% call it comes to giving some advice, and you cannot take the chance. we have seen that with autonomous driving. there are real challenges, and that is what company's are trying to software. you cannot take risk with someone's life so in the end it comes down to the accuracy and use case involved. for most of the customer service use cases, a 90% accuracy is good enough because it gives you

efficiency. think of coding. we need a lot of coders around. if ai is around and it helps to expedite the wen yu code, that is a big productivity improvement so those are the kinds of gains you will see more of this year and strive for the 99.9% use cases. lisa: which is something we will parse through throughout the year, the details which i find fascinating. i am focused on the 2.4% drop, a 72 billion dollars market value erasure from s&p 500 from apple. i wonder what this tells you. you see huge swings on speculation on these behemoths. what does that signify to you on how much skittishness there is only the part of investors? mandeep: valuations expanded. nvidia grew into the multiple. everyone else, it is more hope that ai will generate

incremental revenue. microsoft have told us clout is about 2% to 3% of their azure bucket. in apple's case, we don't know anything about when the incremental revenue will come. they don't have a car business, so it has to be a refresh driven kind of incremental revenue. lisa: are you saying that without some sort of artificial intelligence overlay or some other new innovation at apple, currently the multiple does not make sense? mandeep: it is at the high end of the historical range, and you go back in time the last 10 years, this is the highest multiple apple has ever treated at even though it is much bigger in scale than it used to be three or five years back. clearly there is a lot of hope and optimism baked into the multiple, but we know they have the distribution. they own the base, and that is where generative ai will deploy, so that is reason to be optimistic. jonathan: that structure of 2023 of the seven? mandeep: i have not given us

think a mental bucket. the cloud bucket is what is missing in the case of apple. you see that with microsoft, apple -- microsoft, amazon, google. it will cost a lot for these company's to invest. jonathan:jonathan: and yet the stock rallied. thank you. mandeep singh on apple. musician those coming down by 2.5%. the broader equity market on the s&p 500 shaping up as follows forget equity futures back near social lows. yields a little higher. the dollar and little stronger against the euro. 10957. crude rallying at 7330. in the next hour on bloomberg tv , amy of rbc capital markets to

talk about the data for the week to come, the earnings that come next week from jp morgan and the big banks, and the conversation no doubt will end up on rate cuts. lisa: you sound so excited. this will be a really interesting week. we will get some key data points to the ground running as we start off in 2024. still in 2024, not 2025 yet? jonathan: we talking about that before long -- we will be talking about that before long. good morning. ♪

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tom: 2024 started on a tuesday. busy. market check for you with challenges out there. futures at -48. vicks out more than a stick, 14.11. lisa: right now, you can see sort of this question around what are the most overcrowded trades heading into a new year, and maybe that is what we are learning as one reviewer pointed out, because it highlights that people seem to be really positioned for a soft landing in a continuation of what we saw last year. tom: that has to be reset after the repositioning into a crazy liquid vacation kind of weekend

with daytrading at the ski slopes. the bottom line is we are back in repositioning. it is a reset very much correlated across equities, bonds, currencies, commodities. brent crude, 7853. lisa: i will point out in terms of positioning this year, no, i was not daytrading from the ski slopes, but a bank of america survey conducted in december found that fund managers were more optimistic than any other month since january 2022, and they are talking but being the most bullish on stocks since february 2022. tom: onie dwyer published this morning and said investors are giddy. i don't know if jerome powell is getting -- giddy. lisa: the first week of the new year will have a slew of things and we kick off with the pmi followed by the fed minutes tomorrow. thursday, jobless claims and the adp report, which nobody cares about until they do.

and then he december payrolls. the key is the question around wages, whether a 4% year-over-year gain in wages is commensurate or consistent i should say with this idea of the federal reserve cutting rates by six times in 2024. joining us is michael mckee, kicking off the year. how much are people looking for a sense of this data being the important ones to really focus on? michael: the inflation data we get later in the month will be the important thing because the fed is tying everything to the pce numbers and the cpi is the warm-up act for that, everybody will be looking at a six month average rather than the year-over-year because we have been making progress, but the jobs and overs will be important because of this argument of declining inflation without rising on the limit because demand has to be destroyed. there is a forecast for a 3.8%, a bit higher unappointed forget that is something to keep your

eyes on on friday. and the total job creation, the idea is we need to slow down or we will not see the kind of soft landing we are looking for. so far, that has not worked as a theory but we will see this week. tom: are we still in the throes of the pandemic? we actually moved on? michael: we have moved on and are starting to see a normalization of the economic data while at the same time, health experts are telling us the pandemic is raging and there are more cases of covid out there then there have been in months and months and months. with the docs initial i guess and whatever natural immunity people have gotten, it is not the crisis that it was. but that does not mean it cannot come back because the covid virus keeps mutating. tom: you put me in the timeout chair once. does it matter tomorrow? michael: latter than it had been. it is a cushion of how many job openings there are and whether

they are still declining. waller on the fed was right. he said we can bring down inflation with a softer labor market by absorbing the vacancies rather than creating more with unemployment. that is what has happened so far, so if that continues, it will give people a better feeling about the fed. lisa: i want to finish up with a real question for 2024, which is the vibe session everyone was talking about. if you look at the economic data, it looks good. you talk to people, they feel terrible. do you have any sense of what explains that? i have been so many economic reports try to explain the mystery and everyone seems to disagree. michael: there are a lot of different reasons why people think this is happening. one of them that gets credence is it is recency bias. people are not looking at the change in the magnitude of inflation. they are looking at the price level we reached and food prices and house prices and think that inflation is still out there.

gasoline is telling them something different. we are starting to see in the change in consumer sentiment, so maybe the vibe session to the extent there is one will start to change. joe biden i know is certainly hoping for that. the good news is that maybe according to the weather people we might get some snow this weekend. tom: really? michael: those who are going today trade from the ski slopes will have some snow. lisa: some of us might have already looked at that weather forecast. let's move on. tom: michael mckee will move on to three busy economic days. our guest joins us now. one of the great things he does is focus on the american consumer. that is 70% of the american economy, give or take a percentage point. it is a 70% solution for every economic analysis, and it is a good place to start 2024.

what is the strength of the american consumer? >> we think the american consumer looks good. that is the bottom line. if you start with the foundation of the unappointed rate less than 4% and wage inflation more than 4%, that is a great starting point for the u.s. consumer. you look at spending through the holidays, november retail sales looked solid. the data through the second week of december looks good. you look at travel. travel is a great indicator of how the consumer is doing. it is discretionary and leads to more discretionary spending. when you fly coming which restaurants, spend money at hotels, entertainment, so on. the trouble data looked great -- the travel data looked great. tom: the politics of america, the presidential election, bank sees have surged. you are better at this than me. the credit card gloom out there is tangible. there is all of this where we annexed.

how do you process that versus the optimism you gestated? aditya: these are a point of concern and something we are watching quite carefully. we are watching student loans. these look like modest tomato moderate shocks to consumer spending but if you look at card data, one of the things you can do is sliced it in ways you cannot do with the official data you look at the cut by income nuc lower income households are actually spending at a faster rate year-over-year than the higher income households, so that has remained the case for several months and keeps us quite optimistic. lisa: as all of this optimism and strength and resilience consistent with inflation getting back down to 2% with the fed cutting rates six times this year? aditya: i think that is part of the story. real income growth has been stronger the last few months because of the slowdown in inflation, and yes, the vibe session is certainly a concern, but people keep spending so it is one of those things. i think the answer around price levels sticker shock part of the story, but the point is that

folks keep spending and it is pretty broad. the pickup in durable goods was really impressive last year and we will see if it continues so it is not just revenge spending from covid. it is broad-based consumer spending. lisa: this raises a question. it was talk about how this will be a more difficult 2024 for the federal reserve than many people i giving credence to, especially with the fact that housing prices have been challenged and now the housing recovery we are seeing and wages going up. is this consistent with inflation continuing to come down without some consistent restrictive policy from the fed? aditya: that is the question. the fed has declared victory rather early forget it was a remarkable performance by fed chair powell at the december press conference. it was not just that the data is moving in the right direction but also that the reaction function of the fed seems to have moved strictly more than the ecb, a little less cautious, but you get that easing of

financial conditions as a result of a more dovish fed, and will that preempt the slowdown in inflation? police supply expansion has helped supply recovery if you will, and that has brought inflation down. by definition, that does not hold output, but the question now is how much demand destruction do you need to get all the way back? tom: what is disinflation doing? the consumer is paying a lot for service inflation. aditya: pressure. core services x housing is at 3.5% year-over-year. the six-month rate is well below 3%. tom: what are we waiting for? aditya: that is exactly why we have the fed cutting. tom: the rate cut january 15? aditya: stop. tom: rate cut. come on. aditya: starting in march.

tom: starting in march? aditya: starting in march. lisa: can we finish with the vibe session? you cannot discount what people are feeling. if people are feeling bad, there is usually a reason for it, but there is some inconsistency with how people are spending and behaving versus the sentiment surveys that have come in this milling time and time again. what is your theory for this? aditya: i think it is sticker shock. he was a fun fact for you. the university of michigan index is still below april 2020 levels. it has not covered since it collapsed with the surge in inflation. i think it is that folks are seeing prices when they go to the grocery store and shopping that they are not used to seeing. yes, they have the spending power, but it is still unsettling and it will take a while for folks to get used to these higher price levels because the fed is not trying to get prices back. it is just trying to get inflation back to 2%. we are probably stuck with

higher prices in the long-term. lisa: there have been a number of cities that show people care more about the prices they pay then the income. how long do people have to wait before something becomes normalized? is there a historical analog? aditya: it is a tough one. the last wave of inflation we had similar to this is in the 1970's and 1980's, and that is just one data point, and the survey does not go back before that, so it will take a while but i think we are slowly inching back towards normal. tom: why do we have to wait until march for a first increase? i don't get this. let's get going. one little rate cut in january will upset the apple cart? aditya: no, but as a signal of more to come. if they cut in january, the markets are already pressing six and will probably price seven or eight next year. tom: thank you so much. particularly on the american consumer. the consumer data in the

terminal, -38. you will tell me lisa is the reason for this. you will tell me apple is the reason? i don't buy it. it is the beginning of the year and people are besetting. lisa: i will give you this name as well. rivian plunging in early trading after coming up with deliveries below expectations, saying they delivered 13,972 vehicles versus an estimated north of 14,000. tesla came in a little bit with a beat. these are some of the tea leaves but the big moves are telling you where some of the maybe, i don't know, crowding might be. tom: it is always in the news. frankly, it is about ev as well. on the markets right now, -37.

we are down 0.7%. lisa: i am looking through these numbers and it really is interesting to see that even tesla came in below expectations deliveries. this coming at a time when there is a lot of skepticism around how long some of the buying trends can continue. we have seen ford pull back from some of their projections of electric vehicle adoption. we see now the fact that subsidies will not be as good from the u.s. government for a number of different models. they use certain parts that are derived from china, so how sustainable is it? tom: stop action in the boom of the end of the year, tesla up to 260, comes down to 250 something , off a little bit near 248 right now. premarket here on tesla. lisa: you much flat. how much can we read into an entire year for the first day? we will try a fools errand but we are sitting up with a series of assumptions get some gradual

model through economy, and that will be the real question behind a lot of these idiosyncratic stories. do we get that, or will it look different with hot inflation? tom: the zeitgeist at the end of the year was the study of ev worldwide in china and all the restrictions of importing into the u.s. versus some real import information in europe as well. coming up, this is the interview of the day on technical analysis. good morning. ♪ what do you think, fever monster? what about zocdoc? zocdoc? dr. castell has a great bedside manner. so many options. but dr. xichun will take your sketchy insurance. xi-chun! xi-chun, xi-chun, xi-chun! thanks, bro!

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>> the economy is in a healthy position here. we will take higher rates to be sustained to continue to bring inflation down. inflation is not as high as it was the last two years but getting down from 3% to 2% will take more work and it will not happen quickly. as a result of that, i think the

fed will probably be disappointing relative to the speed at which rate cuts are priced into the market. lisa: that was bruce at j.p. morgan as we look at a new year, new trading week, new trading day with softness as we parse through a touch of weakness but session blows or a little bit off session blows now. a bit of dollar strength and a bit of a reversal in some ways of what we saw the last three months of last year, including a lift to crude on the heels of iranian ships entering the red sea in response to some of the attacks from the houthi militants and the american reprisal. off to the dina park a.m. hour, but will be an interesting week to set up the year to understand what the consensus is and how much it can go wrong. tom: all the equity chit chat, the answer is exceptionally interesting week. the answer is we get the labor

data and was it the wage dynamic and that is the key determinant to keep the bowl tone going. lisa: just want to run through some specific stocks. appleshare is very much getting our attention as barclays becomes bearish or at least marginally so on the edges, down 2.2%, but that is a $65 billion to $70 billion market cap move. rivian lower by 4.5% after disappointing with their deliveries. south of 14,000 vehicles versus the estimated more than that, and tesla basically flat. it is notable apple has moved so much in response to not that significant of a proclamation, just basically a recognition of reality. tom: is the opinion of one house, barclays, that apple will be a little bit tepid, but i think also it is just a little beginning of the year reset. but he is back.

everybody will be back over the next week, and the uncertainty of wednesday through friday, and on this tuesday, it is a reset, which is be unhealthy. we are allowed to go down every once in a while. lisa: it is too much good news being priced into this market? our guest asked this question in his recent no. i will ask you that, especially at a time where it seems like people are may questioning the bullishness at the end of the year. >> oh i think the bond markets move at the market's interpretation of what the fed is going to do is a little extreme, right? if three is the new two in terms of the inflation, which is my view, it will be hard to get core inflation below 3%, and the market curve is saying the fed will go all the way down to 3%, that does not make sense in a soft landing because that would be a zero real rate if inflation

at the fed is at 3% at a time when the economy is doing ok, so i think the bond markets look over the skis. for the 10 year yield, or percent to 5% -- 4% to 5%. we will have a bullish broadening. we might have a little more of a sober tone, and remember the market goes up two thirds of the time, which means it goes down one third of the time, so maybe we kind of come to reality a little bit here. tom: let me begin with an open question. your charts are the powerful use of overlay, when idea, to ideas, a third idea all on top of the surface, which is a single chart right now that matters for people who want to find the courage to get real data. jurrien: the weekly chart of spw

on the log scale of course. if you take a weekly chart, you will see a stammer step function. tom: are we one standard deviation above the long-term trend? jurrien: no, we are below the long-term trend. if you go back 150 years, we are slightly above the long-term trend, but if you look at spw, we have been in a holding pattern for two years. the market generally goes up 10% per year 2% of the time, and to go sideways for two years is a long time. of course as we know, it has been the magnificent seven, so many other stocks have not participated, which is a great second chance for investors to actually participate if they missed this. that i think would be my primary chart. if you look at it a slightly different way, s&p 500 cap weighted index, we got a little bit above that long-term uptrend. obviously, a lot of very benign soft landing dynamics being

priced in. i don't think the fed will deliver what the market is expecting. the market is like a spoiled child the fed gives it three rate cuts in the market wants six, never happy, so one of the stories for 2024 will be the fed walking back some of this very dovish narrative. lisa: there could be a situation where you see a broadening out with some of the sun was moving stocks the past two years outperforming. does that even matter for the overall index if you have the golden children of the whole power cycle, which is the magnificent cycle, not performing? jurrien: is one of the great unresolved questions for this year because the magnificent seven are 30% of the index, so if you get a rotation out of those seven stocks into everything else, 493 of the s&p or the russell 2000, what happens to the index? if 30% is being rotated into

everything else, can the tape beat up or is that a more muted tape even though under the surface the market is broadening, which of course is what is very important? it is kind of the offer versus the beta, and i think the alpha will work. the beta i think is kind of a math question. we know historically when breath is extremely narrow, so fewer than 30% of stocks are outperforming the index, it tends to be inviting records sometime speaking markets so the late 1990's, early 1970's come to mind. and when the market is broadening, more often than not the market goes up but again you have this naff tension of it being so concentrated. lisa: do you find the big tech stocks are more interest-rate sensitive and would suffer more from some of the positivity you are talking about that would keep rates higher? jurrien: in part. when the market started its bear market in early 22, almost

exactly two years ago as of tomorrow, those with the stocks that were initially hit because they were long-duration stocks sensitive to interest rates, so it is ironic that that is how the bear market started. last summer, those very same stocks when yields went to 5% were seen as immune from that because they have so much cash flow, they did not have to borrow money, they did not care about interest rates, and we have the whole ai vibe going, so it is interesting that it is the same stocks, same environment, different outcomes, but the rest of the market financials, dividend payers, companies with bigger balance sheets, more interest-rate sensitive, that vice of titer the could he conditions, when that gets lifted, those stocks can finally lift as well. tom: i remember you as a young whippersnapper. it was 10 below zero and he is in short sleeves and we forget about this, the great peter

lynch, in 49 years, a return over 15% per year. how much of america does not believe in what lynch and others have done? they don't believe in the equity advantage. to me, it is overwhelming, the equity gloom that is out there versus a number of decades ago. jurrien: it is still the proven aid to compound well, and compounding works not just in the markets but in careers and everything else. you do a little bit at a time in over the long-term it compounds. it requires patience. not everyone has patience. when you have the lopsided market dynamics -- tom: i will cut you off. did lisa destroy this? lisa: i new year, tom. -- happy new year, tom. jurrien: one of the things i

learned not so much from peter but his successor was i would come to him saying i think the market will go down 10% and he said, good, i can buy some more, because the fund was so big that it took the opposite approach of what may be everyone in the media thinks so the liquidity provider -- tom: why are you looking at me? lisa: let me get something straight. there is an important role for honest skepticism on the way down and up and this morning i have been saying the bull case is only 9% and tells you where people are positioned for total returns. i think it is fair to be skeptical. that is our job. tom: bob would say here is the door. thank you so much. it is an eventful week. it is tuesday, don't forget that. lots of economic data coming up in the next three days. we will have all of that coverage for you on radio and television. "bloomberg surveillance." good morning. ♪

jonathan: we start 2024 with a little bit of gravity. equities are lower. the countdown to the open starts now. announcer: everything you need to get set for the start of u.s. trading. this is "bloomberg the open" with jonathan ferro. ♪ jonathan: live from new york, coming up, starting on a nine-week winning streak. apple receiving a downgrade straight out of the gate. risk in the middle east continues to summer. from new york, the big issue. welcome to 2024. >> as we enter 2024 -- >> 2024.