♪ >> profitability of u.s. companies is unlike anything else available in the global equity market. >> i'm not necessarily saying it is a dot-com bubble type valuation. >> it will be increased volatility. that is what we need to be mindful of. >> in terms of economic growth and equity markets, yes. announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. lisa: welcome back to the start of one of the last trading weeks

of 2024. all eyes very much focus on wednesday's inflation data as the forward visibility gets murkier and murkier. right now as stocks are basically range bound coming after a third straight weekly gain possibly on track for the best performance for equities in the u.s. going back to the start of the 21st century. right now the focus very much on the commodity sector with oil prices rising after turmoil in the middle east. jonathan ferro is on a well-deserved break this week. joining anne-marie and myself if the tireless dani burger. how high is the bar for these gains to keep going? >> the market is only concentrating on what it can see, and what it can see is fed cuts coming this month and progrowth policies from the trump administration. that latter one we won't know until sometime, more than a month at the earliest. the only thing that could derail

that is cpi cummings wednesday. >> before that we have basically the world falling apart. the middle east completely upturned, overturned with the syrian government, the assad regime being toppled in 11 days. just how much does this rearrange the politics in one of the central hotspots of hot wars that we've seen over the past couple of years? >> the speed of which assad was toppled, flee into moscow, looking for someplace to seek refuge was absolutely stunning. the key question inside syria is who is actually going to govern? this has different spheres of influence around the country. the bigger question for the region is what does this mean for russia and iran that have strategic influence in the country and use it for their strategic development, whether that is being able to have ships and access to the middle east, or whether or not that is able to use transport from iran through syria to some iranian

proxies. that is the big question, and who is going to basically fill the vacuum? we did see then hit isis targets. >> and it just has emphasized how regime shifts happen in clusters. maybe not to the extremities we are seeing in syria but turmoil in france, south korea. at what point does it stop being "this just reemphasizes how great u.s. assets are" to "the entire world order is being upset and america is part of that world order." lisa: incumbents have been overturned time and time again over the world and it comes on the heels of inflation, on the pandemic, on a real widening in the gap between the reason why wednesday when we get cpi data it is going to be so important. it will also be important to show what kind of physical dominant there is in the united states with a series of bond auctions. gold prices surging on the heels

of potentially central bank buying from china and the stimulus package over there. coming up this hour, following the s&p 500 57 the record of the year. terry haynes of pangea policy on the fall of serious president as trump says he has no plans to replace fed chair jay powell. we begin with stocks at all-time highs, following their third straight winning week. jeff you writing the rally in the risk assets in the hope that u.s. growth continues regardless of new u.s. administration shifts seems too sanguine. karin volatility is a warning sign for the relative calm in fixed income and equities. jeff, are you going to be one of the lone voice is pushing back against the momentum that everyone else thinks can just keep going into perpetuity? >> i'm not sure if it is a lone

voice, just to be frank. not just equities, but you continue using that volatility as we mentioned that is where we see absolutely the need to be cautious. and the reason is we want to look at fixed income right now. curve steepening, that is what we are looking for. on the inflation side, we remember what that did to markets in 2022. certainly more risk to be priced in. lisa: markets seem to have priced in all the good news, but not the bad news. what we heard from donald trump in his first interview over the weekend on nbc since getting elected was that he wants to keep a certain status quo with jay powell, the federal reserve, but was doubling down on the idea of tariffs. what did you make of that and where do you think the risk is mispriced? >> i think he's trying to be as balanced as possible.

i go back to the treasury curve. one thing that wasn't talked about by either side during the campaign is basically the u.s. fiscal situation. so much inbound from france that if you look at the forecast, which country will have an even worse fiscal trajectory up ahead in france, i get it, it is a world reserve asset in terms of u.s. treasuries, but will foreign buyers continue to play more? and will probably need to deal with tariffs at some point. i think enthusiasm may not be as strong as in the past and that is what we are wary about. >> that conversation was had in both the run-up to the election and the immediate aftermath. you saw that rise in the treasury yields but it reversed itself and we are basically flat with where we were at the election. where did you lose that focus that had been part of the conversation?

>> let's take a step back, is there an alternative right now, a fiscal alternative? i'm not saying the dollar is going to be displaced but in terms of supply, if germany gets rid of the debt break, look at china's comments. both these countries are going to push on the fiscal lever, something the market has been looking for. so if this going to be fiscally driven reflation in a germany and china, actually do have an alternative. you want to fund that healthy growth he could see amongst the exporting nations. that is where the u.s. should perhaps not sit on his laurels. if there is reflation elsewhere, deficits will come down automatically almost. again, look at the curve and let's see where the dynamics are going to be. >> germany and france, political

upheaval throughout the entirety of the world just reinforcing u.s. exceptionalism. maybe this gets back to tina. is what you're talking about enough to undo the narrative of u.s. exceptionalism? >> if you are relying on the e.u. to push things from within, that will take time. but the report has laid out the broader timeline for sending to happen and if the e.u. recognizes that on the external side, there will be more challenges up ahead that may accelerate change as well. this is perhaps taking the one year, two year view. crucially looking at where valuations are, and also in treasury markets relative to the deficit, i think people will begin to actively look for an alternative instead of saying i'm going to stay with u.s. exceptionalism. i think people will want the right level of valuations for that as well. >> do you still think we are

going to see parity at some point between euro-dollar? >> absolutely. at some point in the next three months or so. right now looking at the data, our clients are overheads in european assets. all the bad news, but once we go through parity, it is not about the euro being too cheap,. >> moderately loose from prudent. first time in 14 years. how much is this driven by the incoming trump administration and potentially the tariff they are going to place on beijing? >> i think that is featured into overall policymaking take a step back here. look at export prices. not exactly rapidly expanding

right now. even without a change in u.s. trade policy, and there hasn't been much change in any case, this is necessary for a domestic perspective, so the target audience perhaps is last d.c., it is more the domestic audience. this is where i would focus on chinese equities and also i would add last week when chinese 10 year bond yields went through 2%, that may have triggered some rethinking within beijing as well. we need to lift expectations right now. >> alibaba shares are up, very much domestically focused. we also see oil prices higher partly because there is this feeling that renewed demand from china could this prices. also increasing gold prices. most of all this is going to be domestic.

nearby currencies, given that this really is insular. >> what was unique about today's statement was that billy had the positive message regarding household consumption. if that is household consumption, household spending, i would say that is good in terms of reducing deficit. i'm not sure there is a case for really pushing on real estate are pushing on investment growth again, certainly not compared to 2009. that tends to leave debt issues. i can just say this is a nonnegative for commodities but as this is really focusing on the south african rand or oil prices or lithium prices even, i would probably temper my enthusiasm on that. >> which is the reason people are focus very much on the u.s. again to see whether it can continue to grow and whether we see any significant policy shifts on donald trump administration. this week a significant

following nonfarm payrolls on friday. cpi coming on wednesday, the main event. we also get ppi on thursday. the ecb on thursday with that decision which is going to be a really fraught one. we also get options all through the week. from your perspective how much has the risk shifted to it overestimating inflation for people may be being surprised to the upside and the fed not being able to do enough? >> i think overall they're looking at the fed right now so i don't think we can rule anything out. it is less and shifting away from inflation, but at the same time that doesn't preclude that big push toward easing as well. strong inflation doesn't mean strong disinflation. there is a much larger risk to the downside that has been highlighted in the pmi reports and where you have manufacturing week spilling over. services have been driving inflation within the euro zone.

that is why there is a downside risk. i still would not relent 50 basis points as a tail risk. i think we should get 50 basis points in the swiss national bank this week as well, but i will tell you that the major downside risk clearly is in europe right now when it comes rises. >> and that would be 125 basis points of cuts if that were to transpire. right now, let's check in on what is going on outside of just focus on markets. yahaira: for the first time in more than 50 years, israeli ground forces of rusted syria. israel's foreign minister said they struck at chemical weapons missile storage facility, calling in preventative measure. with assad's government now toppled, benjamin netanyahu says this may help advance a deal to release the hostages held in gaza. meanwhile, the incoming u.s. administration's potential move to raise tariffs on trading

partners can increase risk in financial markets next year. he spoke to bloomberg earlier today in abu dhabi. >> geopolitical events coupled with potential escalation on the macroeconomic front, it is definitely listening that has to be watched. we will see consumers in the economy quite resilient in spite of these challenges. >> he's expecting to see continued volatility next year and is advising clients to be well-diversified. and big news in baseball, juan soto is heading to the new york mets. he signed a 15 year deal worth $765 million with no deferred money. that is the largest signing in pro sports history, topping the blockbuster contract with shohei ohtani last year. the sweepstakes have been in full swing for weeks with a number of big-name teams in

pursuit including the boston red sox, los angeles dodgers and yankees who he helped bring to the world series this past season. >> i just want to really emphasize that the mets did get juan soto away from the yankees and they probably will do a lot better. >> how did we lose them? i'm so upset this morning. >> a price tag that was worthy, i suppose. >> the yankees can buy a lot of other people. >> up next, the assad regime falls in syria. >> it is a historic opportunity for the long-suffering people of syria to build a better future for their proud country. it is also a moment of risk and uncertainty as we all turned to the question of what comes next. >> that is up next in terms of conversation. you are watching bloomberg surveillance.

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♪ >> basically range found after a third straight weekly gain with 50 seven all-time highs on the s&p 500. right now not a lot of drama ahead of this cpi print on wednesday and fridays rate decision, but crude up 1.4% as turmoil in the middle east boils over. under surveillance this morning, the assad regime falling in syria. >> at long last the assad regime has fallen. this regime brutalized, tortured and killed hundreds of thousands of innocent syrians. the follow the regime is a fundamental act of justice, a historic opportunity for the long-suffering people of syria to build a better future for their proud country. it's also a moment of risk and uncertainty.

as we all turn to the question of what comes next. >> u.s. airstrikes at dozens of islamic state targets in syria after rebel groups overthrew the government, ending 50 years of party rule and sending shock waves to the entire region. terry haynes writes the rule was not in positive for syria, the region, or geopolitically, but new syria is a void into which many competing geopolitical introduced -- interests, perhaps falling too quickly for the rebels or anyone else to be prepared. you wrote a phenomenal note over the weekend that were highlights the level of uncertainty and what could potentially happen. what you think u.s. involvement is right now, because we did hear them say we shouldn't be involved. trump has said he thinks the u.s. should not be involved in they u.s. -- and get the u.s. has been bombing select sites tied to the islamic state. >> and yet we will be involved. and we should be, i think.

the option is to be involved and help shape the future of the middle east, and we've been involved in that since after the second world war, or to receipt, in which case the opportunity for void and pressure on allies whether they be israel or saudi or jordan become much greater. i think the american involvement is here to stay. america sees the opportunity, frankly, as does israel and others to assert maximal pressure. one of the cruxes in the world in a hot conflict that has been more controlled by moderate arab states or by iran and others. >> when you say exert maximum pressure, maximum pressure on who? is this on a turkey, on iran?

>> yes. in a different ways, sure. turkey is clearly a winner of this already in the sense that it gets to exert more influence in syria and we will see how the push for influence is taken by the victors in this conflict. clearly it's nose has been bloodied here, it thinks it can benefit by stoking the void that i talked about. that is something the united states and its allies have to push back against also. >> donald trump it very clear this is not our fight, let it play out, don't get involved. do you see the same level of involvement during the right now? what we see being transformed over to the president-elect and his administration?

>> president-elect trump has been very clear about his continued support for israel. his continued friendship and desire to be helpful to the saudi's. let's remember trump has a legacy here and a continued involvement in the region by the new administration. >> the period from when trump is elected and heading into his inauguration, this idea that it has been dominated the foreign policy for the president-elect. and it might only get worse. what does that mean for trump and the market hope of getting some of those domestic policies through when the trump agenda and thus far has been dominated geopolitics? >> the trump agenda has been dominated geopolitics for a very good reason. they spend an awful lot of it, and it continues. it is to his credit that is focusing on it so much and so

well, particularly when the outgoing administration seems to be a little back on its heels by comparison. but what i think is going to happen here is things will proceed on two tracks. the idea that you have tax cuts and that you deal with the tariffs and all the rest i think precedes largely a one track. the peer foreign policy proceeds on another track and frankly, the tariffs become kind of a bridge between the two since tariffs have now long been a tool of geopolitics as much as anything else. >> some of those concerns of what might come to the u.s., it might be forgiven because of what is happening globally, that that u.s. exceptionalism can kind of rain on because of the discontent around the world and the government being overthrown. at what point if any does that stop? that doesn't necessarily act as

a distraction, but it all involves america and investors likelihood of continuing to buy up american assets. >> it is a real hinge right now. the big question is the extent, how and whether markets tire of wanting to continue to support the united states when you've got serious problems with fiscal spin, debt and deficit. what the president is going to want to do, and this is part of the reason why he appointed scott bessent to be treasury secretary designate is that he's going to want to make a move in the markets toward wanting to curb debt and deficit in some way. that may be more style than substance, and at the same time he is going to want to make a move in that direction to reassure markets at the same time he is pursuing his domestic tax policies.

>> is that they -- basically the take away from the interview he did yesterday? >> which? >> that he wants to maintain the status quo. >> where? >> in the markets. with respect to fed chair powell and not wanting to risk -- radel anyone. but also, not really giving any sense that he won't. >> absolutely. the reason why i've always thought that the powell thing was a nonstarter and yesterday i was proven right is that you can't rattle the senate who you need to implement policies, and you can't rattle the market who you need for confidence domestically and abroad. the whole powell gambit is a loser from that broader perspective. >> thank you so much. it was an nbc interview that donald trump was speaking on and it was the first. and honestly i think that was probably my takeaway.

he wasn't really interested in rattling anything or shaking anything up in a material way. >> he is still getting his cabinet picks together. we are still waiting on a number of individuals he have to announce. on top of that, does tulsi gabbard still have this ability to get confirmed after what we are hearing is going on in syria? someone who went down and met with assad when she was in congress? it's going to be a very interesting week in terms of that on capitol hill. >> especially with some big personalities starting to clash within the cabinet. coming up, china signals loser monetary policy and a real shift given the fact they want to support domestic consumption. this is bloomberg. ♪

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>> there are three more trading weeks left in 2020 four. what we see is the momentum continuing even on days like today where it is not doing much. following three straight weeks of gains, 57 record highs. today we can't really find direction, last week was driven by tech names. this week seems to be anything from the premarket trading is being driven by small caps. in the bond space, key shift will be how much does she up yacht -- cpi shake complacency.

we will have a few rate cuts into the next year. we have across the board kind of going nowhere. just on the edges given some of the volatility we have seen. it really does up the ante of what we are missing in terms of stickiness in cpi. dani: what we have heard is they have shifted away from the labor market. the issue is when we will be getting this cpi data, what happens if it is hot? is it massaging the message through the favorite media outlets? lisa: look for some articles in the wall street journal and they will get a sense that we hear about a policy mix that will be frontloaded with tariffs and backloaded with the stimulative aspects. we do have options this week. i know you are focused on them just as much as i am.

$39 billion of 10 year notes. how much is trump aware of this? really focused on making sure yields are contained? annmarie: i think he's very aware. in nbc he said there would not be cuts when it comes to social security, medicare, that is the biggest slice of the pie. what else to your bond options is the u.s. spending a ton of money on? the defense budget, paying off our debt, net interest payments. he's aware of this and so are some of the fiscal policy hawks. jay powell has that dovish proclivity. lisa: oil prices have been taking higher with some of the growth we are seeing from saudi arabia and opec-plus countries. this comes maybe because of the turmoil we are seeing with the fall of bashar al-assad's

regime. one point 4%, a real question about how much this is geopolitical and how much it has to do with china under surveillance this morning. u.s. airstrikes hitting dozens of targets in syria yesterday. president biden warning which are all assad's fall from power could open the door for islamic extremists at a time where it seems to be avoided in u.s. leadership. annmarie: that is why there is concern about this reconstitution of isis. we heard from the general when they put out a statement last night. there should be no doubt we will not allow isis to take advantage of the current situation. all organization should know we will hold them accountable if they partner with or support isis in any way. when terry haynes it says they are not getting involved but they are involved, it comes down to this, whether it is biden or trump, none of these individuals

want to see a reconstitution of isis. dani: donald trump this is not our fight. in late 2018, he said the u.s. would be leaving syria. congress coming over to him saying we can't leave syria, there still is isis, the u.s. has to be there. 11 weeks later trump reversed course. maybe eventually we will pull back. there is still 900 troops there. what trump wanted to do and what he said he would do did not happen to the fullest extent. will this really happen? lisa: this was the strategic playing ground of iran and russia. we will have more on that in a second. thousands of folks -- volkswagen employees preparing to walk off the job if management and leaders can't reach an agreement over cuts at the namesake brand. it will be the second time they

have gone on strike this month. the union is ready to escalate protests if they fail to make progress in this long chain of pressuring european automakers. it is a rock and a hard place for vw. dani: demand is weak, this is nearly 100,000 workers. germany has 300 thousand workers. one third of workers in germany are willing to go on strike. if it's a stubborn vw that says we have to make these cuts, will it be that stubbornness that undoes them? a real willingness for these workers to walk out. annmarie: the lead negotiator for workers talking about they are trying to get something done before christmas. giving an interview over the weekend saying they should not shut down factories. it will also be the political pressure on vw to make sure they shore up these jobs.

closing locations would not be the right way because of poor management decisions that added to difficult situation. all of these automaker executives, the policymakers that set the tone of where we should be going and told us to produce cars. lisa: how much are we looking at a vw that has the capacity to do more, give more, some of the automakers flat on their back and cannot afford to compete. annmarie: is it coming down the pipe from the top when it comes to the german government and on top of that they are dealing with the onslaught of cheaper cars that are coming in from china. a lot of this has to do with policy shifts even less to so then what is going on at the floors. lisa: chinese leaders planning on loosening fiscal policy. marking its first major shift in stance since 2011.

this coming as china braces for a second trade war with president-elect trump and also facing off with some pretty negative data showing deflation in goods and more disinflation in the consumer price sector. dani: how much of this is for the domestic audience versus the international audience? there was a lot of commentary coming out of this meeting saying this is china saying we are prepared for donald trump. this time it appears to be a package. something this market had been waiting for. is this china saying we are prepared for you and we have the firepower necessary to combat any tariffs you might put on to us? lisa: thank you so much for being with us. what is your take on exactly what the motivation is behind this policy shift? >> if you take it at face value, this is the biggest policy shift

in china in years. this is the top policymaking body in beijing. talking about they now want monetary -- moderately loose monetary policy. there is language in their. that is jargon for willing to pull whatever levers they can. pushing for reforms in getting consumers to spend more. this signals china is readying for the fallout from the trump trade war. let's not forget they are coming from a pretty low base. there are plenty of reasons china needs to stimulate its own economy. lisa: do you have a sense of what they are looking at doing when it comes to fiscal?

they are taking a more accommodative stance. it is a real question given the regime has been averse to putting money directly into the households. enda: this is the devil in the detail. face value headline is it is a significant change of tone. this is what the world has been waiting for. we don't have the detail. the economic policy detail, we will get the figures until march. that is when we get the growth target and when we might get the detail. what kind of fiscal measures are they talking about? the government does have room. that is clear. it is a different level than what it is from the fiscal stress. china has room to spend money. do they have the appetite and

will to do so? dani: there have been lots of false starts with hopes of stimulus, one of the signs to look for of whether this is another false start or this leads to concrete action with the details you are talking about? enda: we know the starting point for china is they have been struggling during the post-pandemic period. they have been hitting the potential that the export market is roaring now. manufacturing has been hit and miss due to the overcapacity story. there is a case for china deliver support for its own terms. that's why there is the expectation that they have been slowly ramping that up. they now know the outcome of u.s. elections. he's already threatened tariffs on china since winning that election. they know they have to brace for

what is coming down the pipes. it takes time to get the bureaucratic system in order to get the agreement in place if and when they have to. china has the fiscal spending power needed to revive the economy. that is one of the key takeaways. they are bracing for the trade war. dani: they know it will be donald trump sending something down the pipeline, we don't know what the details will be yet, whether it is blanket tariffs. how much is china likely to hold back until we get the details and specific policy proposals from donald trump? enda: absolutely. there's a view out there among the analyst community that china will play nicely to begin with. they will hear out president trump and see what he has to say. the initial trade agreement, the phase one agreement before they get into any rounds of new or

punitive tariffs. china is flying blind like everybody else to some extent. at the same time, this is china saying we could support our economy if necessary. china is making sure they could respond where necessary. we saw the semi conductor restrictions with the export controls on those critical minerals to the u.s.. there are other areas where china could make it awkward for the u.s. the agricultural sector in particular. i think china is making it clear , it has its house in order. they will do a deal. if it becomes a trade war, they will cushion their economy and they have some tools. annmarie: we are getting a headline that china is probing nvidia on anti-log breaches.

all we are dna tit-for-tat between american companies and chinese companies? enda: they will respond to any u.s. led trade war. they could make life difficult for u.s. companies doing business in china. whether it is inspections, oversight, permits. there are levers china could pull. this has been a consistent thing . if we do go down the road of a trade war so to speak, it just won't be the u.s. that has trade levers to pull. china will be responding. lisa: we did get this headline that china is probing nvidia suspicions of anti-monopoly law breaches. we are seeing shares down 2.3%, waiting for more details of exactly what goes into this.

the real question of how much china wants to crackdown while maintaining access to some of the products. dani: what this headline may be is the ccp is trying to hit back on u.s. companies because of things like export controls that happened under the biden administration. the expectation that maybe there will be a whole lot more coming down the pipe. dani: what does president trump care about is a barometer? it is the equity market. you go after the biggest company in the s&p 500. the one company that has the potential to move the market. lisa: we will bring you more details as we get them. here is the bloomberg brief. yahaira: the ban comes

underway following the embattled leaders brief declaration on martial law. he survived an impeachment vote over the weekend. the stock index closed down 2.8% today and since the martial law declaration, it has fallen more than 5.5%. the search continues for the suspected gunman in the killing of health insurance executive brian thompson. the new york police department released new images on saturday of the suspect in a taxi that took him to a bus station. police believe he boarded a long-distance bus out of new york city. photos were released after a great backpack was found in central park matching the description of one carried by the gunmen. in it were the jacket and monopoly money. the world health organization rapid-response team is having to the democratic republic of congo after 400 cases of a flulike illness were reported. they are calling it disease x.

it is centered in a remote region in congo. 31 deaths have been reported. that is your bloomberg brief. lisa: coming up next, trump fledging to keep out? -- powell? >> will you try to replace jerome powell? mr. powell: i don't see that. if i ask him to he probably would. lisa: if i asked him, he won't, if i told him, definitely. this is up next on "bloomberg surveillance." ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises).

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lisa: heading into the third to last full trading week sort of of 2024, we are counting down.

how much could that market go up? futures lower by about 1/10 of 1%. the real question on the bond market, trump fledging to keep powell. >> will you try to replace jerome powell? mr. trump: i don't think so. i think if i told him to you would. if i asked him, he probably wouldn't. >> you don't have plans to do that right now? mr. trump: no, i don't. lisa: saying he has no plans to replace fed chair jay powell when he returns to the white house area the comments come after he told us that as president he should have a say in monetary policy and interest rates. obviously he wants rates to be lower. he is a developer after all. a key question of how tied the hands are of the fed to the fact that inflation might be the

surprise card here heading into the end of 2024? >> when you look at last week's jobs report you get a bit of a riddle. you get very strong drive growth , -- job growth. what does that lead to? sticky inflation. we don't know in 2025. the wage growth is putting pressure on inflation, that is something the fed has to keep in the rearview mirror as they are supporting the labor market. lisa: you said recently it seems like it is on a knifes edge. are you saying we are at that tipping point where we could see whether the solidity of the labor market is contributing to an increasing likelihood of a rate hike? >> we are in this quiet period where there are very low layoffs

and pretty average hiring. if you take the last three months of data, we get something a little bit less than 140,000 jobs created on average. that is solid. i don't think we stay in this equilibrium. there is a tipping point that is coming. i'm not sure if it's a tipping point lower or higher. wage growth suggests the adp payroll data, it suggests wages are still robust, growing. it is tightness in the labor market. that is something that the fed could fix right away. dani: if that equilibrium shifts, that it is not just sticky, the wage growth translates into real acceleration? nela: that is the problem for the fed. right now it seems like they are on track for a cut in december. that could be a pause early next

year. we are hoping it is not a hike. much higher than the fed's projections right now. given how robust wage growth, before the pandemic that 10 years of expansion. we are now at 4%. there is no projection for hourly wage growth. dani: if they continue with some cuts in 2025 they allow that acceleration to happen. they create the environment where they could continue hiring, and that's what creates it? nela: it teaches one thing, monetary policy is risky business. that's how the economy falls into recession. they contain inflation and that tips the economy into recession.

that did not happen this time. interest rates went higher in the economy kept growing. we really don't know in the context of the economic environment exactly what will happen. when you look at the consumer, the labor market, it is solid and resilient. that is the hope for the fed, they still have some wiggle room. annmarie: was that too premature given that we don't have cpi yet? nela: we are seeing 3.3%. we are seeing a month over month that we are not going down to like 0.2 or 0.1% monthly range. that is a nervous period for the fed. if we keep going up month over month, that is not going to drive this down to 2%. it is not just wages.

it is driving up inflation. annmarie: she says we have so much growth right now, it is hard to think the interest rates are restricted at this point, are we restricted? nela: we are starting to see there is a lot more disagreement on fomc then there was previously. when inflation was unspeakably hi, it was easy to see the path, as we get closer to that 2% target, we are seeing the opinion start to diverge, where is that neutral rate and how to get there? lisa: thank you so much, we will see you for a full hour tomorrow. morgan stanley put this out. i would love your thoughts on this. payroll incomes provide strong support for consumption. stronger than the 4.5% in the third quarter.

we are looking at re-acceleration of how much people are earning and the hours they are actually working. dani: the big risk has been a restocking of demand. the policy that we might get. are we going to get policy that includes tax cuts, things that will allow people to have more of a disposable income. if you are seeing some of that happen, already seeing that in wage growth, what does 2025 look like then? annmarie: one thing we did here was he wants to focus on the first 100 days first. kind of what we heard out of the senate was immigration and taxes. the big question is when do tariffs come? lisa: what does it do to the workforce when it is potentially under pressure on inflation. up next, norman rule of csis and kevin rose and bomb of cambridge

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>> profitability of u.s. companies is unlike anything else that is available in the global equity market. >> i'm not saying we are seeing a 2000 evaluation. >> there will be a lot of unpredictability in the next cycle. >> the united states is going to outperform in terms of economic growth and equity markets. >> this is "bloomberg

surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. lisa: three more weeks of the year, what we see right now is a sense of how high you could raise your forecast. real question here after three straight weeks of gains in which you could see in markets right now is the sense that maybe we are just range bound waiting for some sort of catalyst to see whether we could breathe a sigh of relief or not. a question before we get to the angst of the morning is how many potential upgrades are we going to see heading into the close of 2024? dani: it's interesting, i was looking back on it we were somewhere around 4300 in terms of the year end with analyst expectations. we are way above that at this point. i wonder how much of this is also just overcorrection to say we miss that rally in 2024 and we will not do it again.

lisa: oil prices you could see creeping sense of something could disrupt this. the idea that geopolitical risk, namely in syria saw an upheaval after 50 years of rule from the bassar allis bashar al-assad regime. dani: for investors that continue to say we are bullish no matter what is what happens in terms of iran and russia in syria? this is strategically imperative to make sure they have a stronghold in that country whether or not that is access to mediterranean sea, supplying their proxies. bank of america put out their credit investor survey. the biggest concern for 2025 is geopolitics.

30% say that is their number one concern next year. lisa: not a lot of movement. people are keeping an eye on what point, i will point does this solidify the narrative? there is an alternative to the united states. the rest of the world is falling into an increasing question around leadership let alone economic resilience. dani: that's what you see this demand for u.s. assets. what else is there? when it is not just the middle east that is the hotbed of conflict. when it is france, germany, south korea, romania as well. i wellpoint do you say this is a complete upheaval of global order. the neoliberalism that allowed rallies is coming to an end. lisa: it all sounds really good. jeff hewitt came out and said watch the options. we do get cpi on wednesday. the key benchmark of the week

where the focus is not really on how we gives the labor market, the real question is how sticky is inflation, does it push the fed to potentially stop cutting rates and even hike rates next year at a time where there is a real weston about whether you could have your cake and eat it too. chris harvey of wells fargo as stocks come off a third straight winning week. president-elect trump doubles down on tariffs from day one and kevin rose and bomb of -- kevin rosenbaum. stocks range bound, november payrolls boosting in the fed will indeed cut rates next week. s&p 500 notching its 57th record close. looking ahead to next year saying this, stocks go higher but so does risk. we expect the trump administration to usher in a macro environment that is increasingly favorable for

stocks at a time where the fed will be closing rates. the backdrop over equities continue to rally. the year-end 2025 price target, 7.007. james bond, joining us now also known as chris. very cute. you give this pretty bold projection, why do you cast aside your worries? chris: there is a wall of worry. growth isn't strong enough. we think you are going to stay out of that. what we are talking about is risk is going higher. equity markets also go higher. one of the things we have said is goodyear. we will look back. equities will go up. we will look back, that is when people went too far on the risk

curve. that's when they put too much leverage out. we think this is a year where risk does take off. by the end of the year you really have to think about repositioning that portfolio. equities up but risk too. lisa: with your surging stock market, it is preparing for something down the pike. when we get to leadership and some of the internals, the question of how much check the bond market is. we just talked about the potential for stickier inflation driven by the rovers -- robust labor market. chris: what we were looking at was breakevens, they were between 2.5%. that's at the high-end of the 20 year range. you are already pricing pretty aggressive inflation expectation. we were at the high-end of the range at 450. i don't think you could get

there at 5% on fundamentals. they don't support a 5% range. is that a problem for equities? no doubt. it is hard to see that when the fed is in an easing cycle. dani: i'm interested in the timeline for all of this. you say 2026 is that time where you need to uncork the bottle of wine. to use another metaphor called this a dessert first market. for his timeline, that ends the second half of 2025. what says this could continue on another year? chris: if the fed continues to ease. we look at something like 2004-2006. they continue to do it. continuing into 2026. we get the cycle that begins to really heat up. fundamentals stay strong.

they really are just overblown. you have a situation where the economy is good, inflation is moderate. the fed is easing. we have a pretty strong mn day market. maybe i'm wrong that this risk takes another 18 months to build. dani: i'm curious you didn't say in their one of the things that helps us along was technology. r.o.e. beanie -- he was on the show contrasting how he usually sounds. saying it is all about technology. we need to look at them differently, how much truth is there to that for you? chris: we are building the foundation at this point in time. beginning to see some commercialization.

is that going through productivity? the answer is yes. is this any different than the early 2000? i think yes because valuations are different. it took years and decades to play out. i think this is true for ai as well. annmarie: yesterday we heard from president-elect trump who said he's a big believer in tariffs. he's going to enact them. he wants to make sure there is fair, fast, level playing field. chris: if you wanted to raise revenue, tariffs are the right way. if he really wanted to raise revenue, the u.s. is the biggest market in the world. if you want to sell your goods here, there is a sellers fee. amazon, ebay, airbnb. you have congress to do that.

it doesn't make sense that this is really a long-term solution. when you look at what happens, he's trying to create a sense of urgency. he will do it. what is happening now is other people know he will do it. their economy is weaker and they are coming to the table. the reaction is we are willing to negotiate. i don't think the chinese will do it. i think the chinese will put tariffs on china, it will be a tit-for-tat. with our allies, they will work with us going forward. for us, it is negotiation with our partners, allies, with china, it is just different. annmarie: we got a headline from china that they are probing nvidia. lisa: dani made the point earlier. potentially if this is a president who is going to care

about the stock market, they send certain large stocks down, how much do you want to be's except of of this verse is something more concrete? chris: you will look for things to do. at the end of the day it comes back to fundamentals. we will cause some volatility. the stocks will continue to move higher. i do think if we look with our partners, they will work with us. it's in everyone's best interest to work together. i will give you one more. lisa: it is going to be a doozy. chris: he's the james brown of politicians. i have to get it done now. i have to do it.

as a result, he is willing to negotiate, he wants to get things done. he is willing to work with them. there is a lot of leverage to get things done. annmarie: you have 40% communications, 20% consumer staples, why the breakdown? chris: on the regulation side, within 15 years of upward pressure, that is not dissipating, that is not repriced at 15 weeks. furthermore, we will have multiple expansion, we haven't even named a new head of the ftc . that will provide a new dynamic. that is banks, that is financials. communication is a quintessential space. that is a sector we have been riding the last two years. staples are unloved and

underappreciated. their fundamentals are beginning to change as we look at some of the price value in dynamics. 80% of it is happening. we have a little bit of everything in there. we think that will allow us to participate on the upside. there will be downside this year. lisa: never change. thank you for starting your monday morning. for more on the china issues and other news this morning, here is your bloomberg brief? yahaira: nvidia shells -- shares falling in the premarket. nvidia's position as the leading provider of ai chips with the u.s.-china battle for the tech sector. washington has barred the tech company from selling its semi

conductors undermining their ability to develop ai services. a move that has drawn sharp reviews from beijing. shares surging in the premarket up more than 15%. the wall street journal saying they are in the advanced talks to buy interpublic in a deal that would create the world's largest advertising firm. and all stock deal could be announced as soon as this week. president-elect donald trump's daughter-in-law will step down as cochair of the rnc. she said the job i came to do is complete and i intend to formerly step down at the next meeting. she told the associated press she would consider finishing marco rubio's remaining term if it becomes available since he was tapped to be donald trump's next secretary of state. lisa: the chessboard continues to load up with pieces.

up next, doubling down on tariffs. mr. trump: i think tariffs are the most beautiful word, it will make us rich. lisa: that is next on "bloomberg surveillance." ♪

lisa: starting off the first day of the trading week with a little bit of softness although really had an emphasis after three straight weeks of changes. not even 1/10 of 1% down on the s&p 500. marginally higher in the yield space. given the fact that we are seeing some disruption in the middle east. 1.3% trading. if it hadn't been for syria everyone would be talking about the nbc interview over the weekend.

, under surveillance this morning, going down. mr. trump: i can't guarantee tomorrow. pre-covid we had the greatest economy in the history of our country. there were a lot of tariffs. we took in hundreds of billions of dollars and we had no inflation. i think tariffs are the most beautiful word. it will make us rich. lisa: president-elect trump telling nbc's meet the press that he can't guarantee he won't increase prices for american family. he can't guarantee anything because he can't guarantee tomorrow. henrietta joins us now. what do you make of the fact

that right now in markets, people are taking it seriously but not literally. particularly when it comes to the u.s. trading partners of mexico and canada? >> i think they should be taken seriously and literally. to think they are somehow not serious under appreciates the fiscal reality, if he wants to pay for the tax cuts if you wants to invest further. it is the single largest pay for that he touts on the campaign trail. the revenue has to come. i would take it very seriously. with china, we have now a response function coming from china suggesting they take it very seriously.

i want to acknowledge what the rest of the global leaders are responding to. there's a big difference between emmanuel macron witek -- inviting him to see the opening of notre dame. there reality is they do not do much trade with the united states as we do with them. we cannot directly respond the same way they do. putting a lot of bureaucratic red tape on american companies. annmarie: we have heard him say he wants a fast and level trading field. henrietta: i think a lot of this is pay for, the level of trade we could talk about with preferred status, things have been changed from china to india.

i think the revenue component is the silver bullet associated with the $4.6 trillion cost of extending the tax cuts. i think the revenue proponent is a really big part of this. let's be mindful that it supports domestic industries much in the way biden did as well. we also need to subsidize this domestic industry. it will get more domestic boosting. annmarie: we have the ambassador that says the trade relations should be revoked. we want to decouple.

henrietta: they also advocate the special basket of sanctions on china, on individuals with certain activities. almost like an extra section 301 investigations. going after very specific activities. that's what we are watching next year as well. dani: trump said that he won for two reasons. one was groceries i.e. inflation, how sensitive might president trump be if they lead to corporations, especially grocery stores saying we will need to raise prices with prices increasing themselves. when he reversed course and that scenario? henrietta: the lingering question is whether or not the next president puts on the list for the tariffs. these are items you buy in the grocery store. powdered milk, anything with

alcohol extract, candles, extraordinary -- about $180 billion worth of goods. the trade administration for the biden administration, they said to me if it was easy we would have done it. when you are talking about challenging china and raising revenue, increasing revenue. that's the other thing lost in this conversation that you are trying to generate revenue and you don't believe that inflationary, you need to raise the tariff rates to offset whatever manufacturing, gdp negativity comes through as a result of sustained tariffs. they are very real and very disconcerting. they are on 0% rates. they could start at 15. these are the things you are buying not just in walmart and target but in dollar general,

everyday items. that is the remaining basket of items that he has not yet tariffed. dani: can trump accomplish what he wants in terms of revenue raising without those tariffs? henrietta: no. you will not be able to get to trillion dollars, that is the number we hear from various county officials and trump on the campaign trail. about $72 billion per year. if you want to go hike that you need to go harder. lisa: over the note there was -- over the weekend there was a note from morgan stanley. to danny's point, to avoid real increases, we call our base case over the next two years slow implementation. we expect the trump administration to achieve meaningful changes. we have practical and political constraints will shape the implementation. do you agree with that?

henrietta: i don't think so. there are so many different ways that we should not be sitting back on our laurels. for example, tariffs on the fentanyl issue. the same on canada and mexico. it takes 12 hours for customs and border patrol. on the section 301, it is possible president-elect trump adheres to the baseline trading agreement. that would put tariffs into place. it is this guy, who we know believes in the enforcement mechanism and a trade agreement is only as good as enforcement, we want to stress test that. we are going to pull out of favor one trade agreement. that sets up 10 days here, 45

days here where we get functionality in hikes -- and hikes in june. he has a view that he wants to break the trade agreement even further. i don't know they would adhere to the enforcement mechanism. i think that creates a pathway to these tariffs being increased immediately. be mindful congress will not vote on these tariffs. it will generate revenue and reflect to republican lawmakers. the tariffs have to go up. lisa: thank you so much. coming up, norman rule of csis on targets in syria. you are watching bloomberg surveillance. ♪

lisa: two hours away from the cash open. we can look at this feeling in markets. there is an underperformance now from the nasdaq 100 after china announced a possible probe into anti-mana ballistic properties. here is your morning movers with manus cranny. >> good to see you. kicking off with interpublic

group. omnicom is in talks. it would jump across the value of wpp. it would be a $20 billion beast if it goes through. the bid side is you have cost efficiencies and scale, especially when it comes to technology delivery and the advertising world. the other side of the trade is you lose clients and staff and become disaffected with a long process of integration and potentially duplication on the client side, but for now 14% higher. palantir teams up with enteral -- anduril. it is about molding that data together. it is about taking palantir and anduril and create an ai overlay on the reality of defense. palantir is worth $173 billion,

more than lockheed martin. morgan stanley has a big note out on the banks. i picked off one. state street has been upgraded. they talk about the end of qt being something that will reinvigorate the process for the banks. state street are raising the price target 130 nine dollars from $132 but they talk about stabilization and higher deposits. lisa: good morning and thank you for that. under surveillance this morning, bulls upgrade, expecting the s&p 500 to reach 7100. stoltzfus saying the current bull market likely has legs strong enough to climb the proverbial wall of worry into

and through 2025. basically try to find a bear right now. they seem to be extinct. dani: indeed, the bears have gone extinct. it is worth looking back and noting how wrong we have been over the past four years and it comes to year-end calls. 2020 one upended by inflation. 2022 by the aggressive height cycle and 2023 i everyone saying we are going to get a recession and we did not get one. are we going to be wrong again? lisa: that is the interesting point about john stoltzfus because he was the biggest bull on the street this year. he had lifted his target in november. it raises this question of what people have gotten wrong with their lack of enthusiasm into the year. annmarie: he says we are not suggesting paradise on earth. look at what is going on in the world and geopolitical scares

and tail risk for next year. that is where it is. so there are going to be challenges but he says there is genuine potential for ai to have greater efficiencies in key areas challenging progress today, so basically the ai run has more to run. lisa: president-elect trump saying he has no plans to replace fed chair jay powell, saying, i do not see it. he previous lee said he thinks he should have a say in monetary policy and interest rates, colin powell's -- calling jay powell's role the easiest in washington. get out the forecast books to figure out who could take his place, but i find interesting the point you were making. inflation will call his hand. biden lost the election in part because of inflation. how much is this a delicate

moment that he does not want to disrupt? >> the check on donald trump has always been the stock market. in might be if inflation is coming up and he talked but his nbc interview, it is the idea that groceries is the reason why he won, because basic necessities were going up so that could be one of these checks on his policy proposals next year and he is a real estate developer. he wants to see rates go down. he said he does not see that happening, but if i told him he would, if i asked him he would not. >> he is making clear i could get rid of him. i think he will listen to me if i wanted him to go. i think inflation might be the thing that not only forces his hand to rethink policies but rethink the fed chair. one of the first reactions i saw was he does not want to let him go because he wants to cut rates. what happens if that changes and you get a stronger dollar?

again, trump wants rates to come down. is that when you rethink who is running the fed? >> and what could pause rethink on the fed is potentially the commodity market. essentially, the oil market could hold the keys to whether we get this soft landing. oil gaining as the market weighs fallout from the syrian government's collapse, with multiple groups now vying for control. crude has been confined to a tight range since october. a clot is expected next year with little room for a significant opec-plus output boost. basically, this is not that big a move considering we just saw a 50 year regime collapse in a matter of 11 days. >> that goes back to market fundamentals in the oil price. just because there is this glut and you cannot be overestimating the fundamentals now and the

weak demand coming out of china even though they are out talking about looser monetary policy and fiscal spending. saudi aramco over the weekend, more important for the oil market today than what is going on in syria, cut its oil prices to asia. this is fundamentals at play. in 2025, everyone is talking about there's going to be a bigger glut. lisa: the u.s. is currently striking dozens of islamic state targets in syria after president biden warned bashar al-assad's fall could cause a rise of extremism. what is your take away from how destabilized the region is and what you want to be watching to understand what could come next? norman: the collapse of the bashar al-assad government is an inflection point for the region. it does offer areas of risk and the united states and israel are

doing everything they can to minimize that risk. israel has undertaken multiple strikes against weapons facilities in syria in a manner that has been unprecedented since the 1970 three war. israel has moved some forces into a neutral zone to prevent anyone from moving into the territory. the united states has attacked thousands of isis sites in eastern syria because isis has conducted a resurgence over the last year and has been worrying. the united states want to make sure with the collapse of the syrian army that isis does not take advantage of this and expand further. i am not sure at this point there is a risk of expansion of instability beyond that territory. there are about six different groups who maintain present control different areas of syria , but that was true a couple weeks ago as well. now comes down to whether the group in control of damascus will live up to its word and

create a unity government. that would be good for the region. lisa: is the question instability in syria which does not have a large population and has been in disarray for a long time, or does it raise a question about iran a time when their power has been diminished across the board and it seems like there is a tipping point moment for them especially with a new administration coming in? norman: the arrival of the trump and collapse of iran's ring of fire around israel, the multiple instances of israel being able to conduct apparently covert and overt military activity within iran, iran's regime is weak. it is also going through a euro -- era of leadership transition. iran needs stability.

the question becomes how it handles its nuclear program in the coming weeks. annmarie: is iran closer to getting a nuclear weapon or less so? norman: according to the international atomic energy agency, it has never been closer to its -- to producing sufficient material for a nuclear weapon. as increased the number of advanced centrifuges and facilities that look as if they are designed for a nuclear program and the amount of highly enriched uranium is growing in iran. the same time, iran is vulnerable and knows israel could strike most of the sites and destroy them at well. for iran to undertake that activity, it has to think it is going to get away with it and be able to complete activity before it can be discovered. annmarie: can we talk about the breakdown of russia and iran in syria? you have president biden saying they broke down because they were dealing with other crises.

iran was dealing with proxies fighting israel and russia with putin's offensive in ukraine. is that accurate? norman: perhaps some of that is true, but we also have other issues underway. israel has eradicated much of hezbollah and iran's syrian experienced leadership over the past year and they took to their graves the capacity to build cohesive operations with multinational proxy forces in syria, so that introduced significant lack of efficiency that iran never overcame. the russians have maintained forces in syria and aircraft and naval assets and ground forces, but what we saw is a failure of intelligence and of planning and coronation and events moved so quickly these forces could not

put together a credible opposition to the syrian opposition moving south. we are seeing weakness in those forces for a variety of reasons. >> so the net effect from russia is effectively losing their anchor in the middle east at a time where you also have another former soviet state in georgia pushing for increased involvement in the european union. bca says it means the jig is up for russia my comes to ukraine and putin has been playing checkers and not chess. do you think there is validity to this and this impacts what russia is doing in ukraine currently? norman: it will impact russia's capacity in the middle east. the russians will try to reach out to the opposition in control of damascus to see if they can retain forces. russia's naval bases in syria allow it to maintain a naval presence in the mediterranean. without those basis, it will have to strike a deal with egypt or algeria.

its airbase in syria allows it to support operations in libya and africa. the ripples from this collapse have yet to play out and russia will pay a severe price if it loses its presence in syria and this will have political impact in russia and be seen as a result of its wasted energies in ukraine. >> as you see these world players upset iran, russia, what is america's role in all of this? they still have troops in syria. we learned the u.s. had done targeted strikes. how does that evolve? >> the united states should protect our 900 plus forces in syria and maintain its activities and international activity against dyess -- daesch

and support israel to make sure borders are secure. the best thing to do is to work with the region. they know their problems better than we do. they will have to mark -- work with moderate arab states to assist them as they develop some sort of coalition in syria to bring together a national government. >> we heard about strikes against operatives. why last night and why not two weeks ago? norman: certainly the imperative in the wake of the collapse of the assad government and the army made it ensuring that isis does not have the opportunity to expand further -- it is a wise move. it demonstrates that 72 sides had to be hit in eastern syria. this tells you about the organization of isis. there are thousands of isis prisoners being held by the

kurds. someone has to figure out what to do with the population. if they are ever released, that would provide a massive injection of personnel to isis, which are not able to expand and destabilize the region. >> are you more or less concerned about the state of the middle east now than you were before the weekend? norman: i am optimistic there are more opportunities for regional players to improve the middle east with iran's collapse of axis of resistance and this requires an international effort to support those players. we need a strong team in united states to provide assistance and guidance without pulling ourselves into this mess and the who these -- houthis remained relatively untouched and powerful. lisa: thank you for your

insights. let's get an update on stories elsewhere this morning. here is your bloomberg brief. >> president-elect donald said he had an exchange with chinese leader xi jinping, the first indication of direct contact between the two men since the election. trump said they talked as recently as last week without specifying when or what was discussed. >> i had an agreement with president she -- xi and had communication with him about giving the death penalty to anyone sending drugs into the united states. >> they last met in person in 2019 on the sidelines of the g20 summit in japan. inflows for u.s. bitcoin etf's have reached nearly $10 billion since election day. total assets from funds have reached approximately $113 billion, according to data

compiled by bloomberg. present elect donald trump's embrace of the crypto has produced a boom in the market. spot etf's for a rival cryptocurrency have turned heads , attracting nearly $2 billion in net subscriptions. it is the end of an era for taylor swift commending her tour in vancouver after 149 shows over two years. the concert series was the first to collect more than $1 billion in revenue, selling more than 10.1 million tickets. swift ended the tour by thinking the crown for being part of what she called the most thrilling chapter of her life to date. that is your bloomberg brief. lisa: next, the bulls broadening out. >> everything is broadening out a little bit. small-cap might have less vulnerability to global crosswinds. lisa: that is next.

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lisa: welisa: are getting toward the market open, 57 record highs, a quest for how much better this market can get in 2025. under surveillance this morning, the bulls broadening out. >> we are still on the momentum bandwagon and what worked well in 2024 is likely to persist in 2025 and suggests u.s. large-cap's in particular. looking at small-cap u.s., which might have less vulnerability to some of these global crosswinds. lisa: some investors expect the

ai driven runs broaden out to small caps next year. kevin rosenbaum writing we expect small caps to outperform. it has been a rough couple years for the asset class, but that is a nice set up for the future. right now, kevin joins us. thank you for being with us. before we get there, overall you do not have as rosy if u.s. everybody else who thinks the impressive run of u.s. equities can continue. why? >> i think that is right. u.s. equities have clearly been on a tear recently. they may finish up 30% this year after finishing up 26% in 2023, but returns have been driven by stocks, as we know. narrow stock leadership is fragile stock leadership, so we expect u.s. equity returns to moderate in 2025. we are certainly not calling for a downturn. we just think returns will be more typical than the stellar

returns we saw in 2024. dani: you still see global equities outperforming bonds. if u.s. leadership wanes, what takes the reins? kevin: the way we think about it is international equities relative to u.s. equities will moderate and global equities will just in general have a typical year. when we are thinking about asset allocation, we are trying to understand whether global equities will outperform bonds. next year, we do think that is the case. that is what is informing our asset allocation across our institutional and family plans. >> continue. kevin: it is easy to be nervous now. there are multiple armed conflicts going on in the world. and there is uncertainty about the new u.s. administration, but if you look back at history you

know global equities tend to outperform bonds any given year roughly two thirds of the time. in our view, global earnings expectations next year are reasonable and we expect risk sentiment next year will for main healthy, which should support valuations at the current level. we expect excitement over artificial intelligence to continue and we expect that the marginal buyer will be a little more interested in equities over bonds. we expect global equities to outperform bonds in 2025. annmarie: the biggest concern according to bank of america when it comes to investors as geopolitical risk. is that your concern next year? kevin: is a considerable risk. developments over the weekend were stunning. it underscores a couple things. first, political risk is high. we all know that now, but it

highlights how difficult it is to predict political events as well. that is why we see so few investments funds focused solely on political risk analysis. you contrast economic and market data and they are more plentiful and abundant and that is what we hang our hat on. having said that, the best move now for most investors are not to make rash decisions in light of the developments. markets have amazing ability to shrug off events and continue to march up. lisa: thank you for being with us as we look ahead to 2025. right now, looking over the next week, all eyes on wednesday with cpi coming up in the data people have been waiting for to try to understand how much risk inflation is. >> that is because this market has had such short-term focus. they look to this month and they

say we are going to get cuts. if you get a hot cpi, that is the thing that could undo it. in terms of short-term risk, it is hard to see past wednesday. annmarie: this fed has had a biased labor market. depending on the cpi report, i wonder if that starts to change. lisa: friday was another rorschach test where some people said it was a sign of strength and others said it was a sign of weakness, so another kind of choose your own adventure. dani: as long as we get choose your own adventure, stocks cannot get higher. they need a big signal. you can have china hitting out against nvidia and still the market is going higher. you need something else to wake everyone up. lisa: p oppenheimer of goldman sachs do not miss this coming up, as well as tim adams of the iif and kristina campany of

invesco. from new york, this is bloomberg surveillance. ♪

♪ >> that means that the fed will

be comfortable cutting by 25 basis points. >> it is likely that a pause in early 2025 is warranted. >> it takes the eyes off the ball of inflation. >> the real challenge will be what they do if inflation starts to go back up? >> howell is in a slightly tricky spot. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa brown annmarie hordern. lisa: a big week for economic data as well as some ecb rate decisions at the end of the week. we see basically this incredible wave of enthusiasm from the equity strategist around the world welcoming all of the incoming data as the soft landing they've been hoping for. a little bit of a downdraft today on the nasdaq 100. people look forward to the idea that the fed is going to cut rates on the heels of a rise in

unemployment and not necessarily have their hand pushed by inflation. annmarie: i do think small caps outperforming is notable because a lot of the enthusiasm about this market has been about tech you mentioned blackrock. they basically said the business cycle is debt, it doesn't exist anymore. because of ai, you had a lot of the bulls saying that this is the reason why gains can continue, that valuations don't matter anymore so we are getting labor of something a little bit different this morning. annmarie: john stoltzfus saying people look forward not to nirvana, not this absolute absence of geopolitical risk, but simply the adoption of ai. at the same time, notable that you are not seeing a bigger drawdown. >> stunning what happened in syria in terms of have swift it was that assad had been unseated and then fleeing to moscow.

concerns in the region that syria just becomes a vacuum and it is unclear who could fill that void. and you have the memories of libya and iraq basically loomed in over a lot of these arab states. optimistic that some of these regional leaders could potentially really guide a new syria. this would mean a lot of questions for russia and iran given their strategic advantages and what they hope to hold onto. >> this pulsating in the background but climb the wall of worry as people run out of reasons to really be worried. we will frontload a lot of the potential good news. we will get to that with peter oppenheimer of goldman sachs as stocks post another winning week on the back of iran's. to adams on the outlook for financials under trump, and andrew hallman horse of city on why it fed cut is all but certain. s&p 500 and nasdaq pushing record highs on the back of the reassuring november payrolls report.

peter oppenheimer staying cautious saying we are being modestly pro risk in asset allocation with a friendly baseline of global growth, further declines in nation, continued central-bank cutting cycles. markets are already pricing a more from the macro backdrop. we think equity drawdown risk is limited. not really bearish but maybe not as over-bulled.it is so good to see you in person, peter. i want to start with what it means to be constructive but not necessarily over your skis enthusiastic. peter: there are two things in terms of the context here. one of them is absolutely the backdrop from a cyclical -- cyclical perspective, positive stocks. if we look historically at times they soft landing, interest rates coming down, stocks tend to do well. but of course they've already done better than they would have normally done running into this

interest-free cutting cycle. even that doesn't really fully reflect the scale of the rally we've seen because it didn't start at the beginning of this year, it began in october last year. so we have high valuations, and a lot of good news is priced in. i think the set is positive but we don't expect to see huge rises. what we are looking for his broader returns and a focus on diversification to improve risk-adjusted returns. that is really what we are looking to do. lisa: to the point about the -- annmarie: to the point about the ai cycle, do you think that maybe people are overplaying the gains that some of the ai baking myths can make and really now it comes down to understanding the application across sectors? >> the ai story is real and

there is good reason to be optimistic, but the main players in this space which of course are huge in the index have record high concentration in the u.s. markets and are spending vast amounts of money on capex. and therefore relative to other parts of the market. if ai is going to be as revolutionary as the optimist hope, other parts of the market are also good to benefit and participate in that. this is another reason to expect some broadening out of market returns, and also a reason to be a little bit more diversified so that you are less focused on very concentrated positions within the market in the u.s. or indeed even in the u.s. market, which is now so dominant in the global index. >> you seen instances where investors have tried to pick through this market and say what else is going to benefit from ai?

what is being left out, what should also rally if it is based on artificial intelligence? >> one of them you mentioned earlier was mid to small caps. there are certainly companies within the next level down of size that should benefit because they are either contributing or indeed will generate new products and services on the back of the capital investment the largest companies are doing, and that is a sort of cycle that we've seen play out. for example, around the internet in the late 1990's. but i also think that we have a symbiotic relationship now between large-cap tech and infrastructure and energy. because of course these companies to realize their ambition are going to need to see huge amounts of increased energy production, more electrification. so the other parts of the market will be part of that process and

many of these have been left behind from the rally we've seen in the last year. that is another reason to look a little bit more broadly, i think. dani: another one of the reasons you point to is central banks, and will offer shocks. is the fed coming back? for the last two years the fed has said that easier financial conditions have been a problem for them. peter: but that was in the context of significant rises in inflation which are now using. i think if central banks are less conflicted, there is an ability and good reason, there is going to be an important support. but it will also be an important support for some of the weaker balance sheet companies or more leveraged companies that have been left behind a little bit on a relative basis in the last year or so when most of the returns had come through at

least in the u.s., very strong balance sheet tech companies. >> it feels like the market continues to price in all of the good policies, but what about some of the bad policies especially for places like asia? how are you thinking the incoming trump administration might use tariffs? peter: there are the tariffs themselves with a more negative impact on asia and europe depending on how and to what scale they are applied, and then also there's the inflationary impact that those will have in the u.s. as well, which may moderate the extent to which long-term interest rates can come down. that is some risk to the market given the current valuation. our view is that eastern europe, we will see more targeted tariffs particularly on the auto sector. there is weaker growth anyway. , but it is also worth noting that a lot of european companies

are very global. i think that we would look at europe and some of the other regions as part of this diversification process and display for growth we've seen in europe this year, the spanish market is up 27%. >> so there are pockets. >> exactly. the strategy is designed pockets of value that give you diversification to improve risk-adjusted returns. >> you mentioned spain. is that because the core is dealing with political paralysis. >> there has been an amazing turn of events relative to the sovereign debt crisis we saw. all of the weakness was settled by very high debt and very weak growth.

and indeed the political paralysis was france and germany is constricting or restraining in terms of what kind of road they can achieve. having said that again, it's important not to over-map domestic economic conditions. germany again has very weak growth. but the market has done rather well this year. it's true that some of that comes down to composition of the index, but that is why it is very important sometimes to look beyond the index in the country itself and to really try to find pockets of value and growth opportunities, and we think there are a lot of those women look around the world. >> if the ecb cuts, when you actually get bullish and even go overweight in certain sectors of the european equity sector? >> yes, i think so.

we overall expect the u.s. market to outperform europe, but selectively. there are going to be some areas that do very well. we do expect interest rates to come down more quickly and europe. the currency is weak, likely to weaken further. you can find pockets of europe as i mentioned earlier that have 60% or 70% of their revenue exposure to the u.s. that is roughly similar to the average company in the u.s. but valuations are much cheaper and interest rate cuts will help those companies. >> i say this at a time when there is a real question about whether inflation is truly under control in the united states. saying we are kind of at this point were we don't know which way it is going to go just a stunned looking at the labor market. how much of the game change it would be if they were true signs that inflation was sticky.

>> it is important to recognize that we are coming out of an decade or more of extraordinarily low interest rate. most countries at policy rates at zero or below zero three or four years ago, a quarter of all government debt in the world had a negative interest rate. i think that has now shifted permanently into an environment where we are going to get lower rates than the last couple of years and not going back to the level he received previously. for some companies i think that is going to be restraint because the cost of capital is going to be higher, that is also a reason to focus on quality companies stronger balance sheets with good business models that are well diversified. because i think many of those are going to create good, compound growth over time for investors.

>> don't be a stranger, so good to see you. a real consensus now that there is this feeling that the ai transition is going to be a real game changer and at the same time, a real question about how much is already been priced in. >> i just go back to david rosenberg saying that he is not throwing in the towel, but he thinks maybe markets are no longer irrational. it is the next decade, and that is why valuations, not that they don't matter, but you have to look at them through a different lens now. >> here is your bloomberg brief. yahaira: u.s. officials discovered american technology and russian weapons recovered from battlefields in the region. records obtained by bloomberg revealed details about a supply chain linking silicon valley to moscow despite the heavy sanctions in place. suppliers to russia's military has been able to wire components from u.s. chipmaker texas

instruments unannounced to the company. russian distributors have managed to send thousands of shipments to military contractors including some several companies in the u.s. sanctions. donald trump says he has no plans to replace fed chair jerome powell when he returns to the white house. from has previously said he should have a say in monetary policy and the setting of interest rates. the president-elect himself appointed powell for the role in 2018. how has that he does not expect tension with the oncoming administration. and the 2024 formula one season has come to an end. lewis hamilton with mercedes who is set to join for our next year. what he is looking forward to in 2025. >> i think 2025 promises to be a

really exciting year. we've seen the cars and the teams converging in performance. there's now four teams that will all be competing to win next year. >> next year's season gets going with the australian grand prix in march. lisa? >> is that where jon is right now? >> i think so. >> he will be back next week. the outlook for financials under trump. that is coming up next on "bloomberg serveillance." ♪ the best ai assistant isn't one that knows the whole world. it's one that knows your world. a custom assistant, built on watsonx with ibm's granite models,

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♪ >> markets just about range

bound ahead of the open as we parse through geopolitics as well as potential for an upside surprise on inflation coming out wednesday. there has been a lot of talk this morning about the upside potential. time for the morning calls. bank of america downgrading amd to neutral, seeing more competitive risk against nvidia's dominance. next up, upgrading blackstone to buy, expecting the investment manager to benefit from constructive themes in 2025. and finally, morgan stanley upgrading jeffries to overweight, seeing the company as a significant market share gainer. the reassured by president-elect trump's picks including scott bessent and kevin hassett. we will likely see burgeoning m&a activity with an improved dealmaking landscape. personnel's policy so we will see who comes in at the regulatory agencies to learn more about the juror of

regulations. tim, thank you so much for being here. right now the banking sector is driving a lot of the optimism in the financial space going forward. tim: animal spirits are back in the u.s., there is a sense of deregulation across europe and the u.s. will see how much of that actually happened but there is a sense of optimism that we haven't seen any while. dani: should it be mostly centered on the largest american banks or the smaller ones? tim: i think main street and wall street are going to do well over the near-term. wall street looked at the near-term with a great optimism. we are going to see ipo's and that is good for our institutions. >> i know you are concerned about the deficits that you took kindly to the fact that there are some deficit hawks but trump said he is not going to cut social security, not going to raise retirement age. however we supposed to get the

deficit down? >> we look at social insurance and defense and net interest of the debt is about 90% of what we spend, we can grow and scott bessent is focused on growth, but we are going to have to find ways to find savings. deficit hawks are gone in washington, they don't exist anymore and maybe we need the markets to send us a signal it is time to become more silver in their fiscal outlook. >> you spend a lot of time focused on the structure of the financial system of the united states and by all accounts it is really strong and diversified. there's been a lot of discussions around mergers and smaller banks and if there is an administration that is amenable to that kind of tie up. >> i think the largest institutions get larger and the midsize become larger. j.p. morgan spent $17 billion a year on technology. think about the text spend that these institutions put in place

and who they are competing with. the midsized guys are going to get bigger. lisa: who are the big competitors, apple, google, or is this an issue of the olives of the world and mark this has been the two-sided barbell at a time and fewer regulations for the largest banks could make them more competitive against both? >> we hear a lot about apple and google and tech platforms and if you are jamie, you are trying to compete with the tech platforms. then maybe you can apply or partner with private equity or private credit. >> i'm really curious what happens to europe and all of this. if the biggest to get bigger and they are not just eating the smaller banks, they are taking it from europe which has been really struggling. trying to get some sort of merger through. do something need to change?

>> absolutely. the periphery is doing much better. spain, greece, poland. but europe needs banking consolidation, so much that this new parliament needs to take on. they are saying the right things, but it is time for action across europe. >> the germans really did not want that to happen. what could give the boost to these countries to say we should start consolidating? >> you are hearing it from christine lagarde. you need brussels to say it is time to act, time to consolidate. i think we will see more over time as well. >> you think that the germans are going to be ok with an italian bank taking over one of their national champions? >> they already have. the italians already taken over. they have no choice. i think they all realize that to compete domestically and internationally with u.s. firms on the content that got to consolidate.

>> you talk with a lot of regulators and elected politicians and i'm curious whether you've really heard a change in tone over in europe that recognizes how different this moment is that they are in. >> i think the trump shock has gotten their attention. it is a challenging place, a bureaucratic machine. you need political leadership that is missing in france and germany. brussels needs to act, frankfurt needs to act. we need to see political leadership. >> where at the political leadership right now in europe? it felt like it was giorgia meloni that with the central figure of europe because everyone that showed up as either a lame-duck or on their way out. >> the polls are very progrowth and i've like -- i like what they've done with the economy. spain is saying we are going fast and greece which was always sort of the stepchild of the e.u. for so many years is now really putting a great performance. they need to lead and do more

and germany is the secret, the key to the future of european growth. >> say you've gone on this whirlwind tour of the whole world. what is your big takeaway after meeting with international leaders in finance around the world? >> there's enormous optimism about the u.s. that there is so much we don't know about what this new administration is going to do. personnel and policy, ultimately how will these different policies be put in place? will we see tariffs? is it selective, incremental, or much broader? we don't know. >> thank you for being with us and congratulations on making it home. coming up next, we are going to be speaking to andrew hallman horse and katrina camp any. >> it is the sequencing as well. tariffs, are they coming first

or is it going to be maybe after the good stuff like tax cuts? >> we talk about mergers and acquisition and we see a whole host of them including in the advertising space, including when it comes to energy. just have to wonder how much more of this is pent up. >> this is why the big banks are going to do well. you get mergers and the animal spirits are back. >> really interesting point that tim was making in terms of who are the big competitors? is it really google and apple, apollo, or is it just a guess as they move forward into a brave new world of finance? markets basically range bound come a little softer after three straight weeks of gains. this is bloomberg.

♪ >> a little bit of softness, i don't want to overstate this. after three straight weeks of gains, this is a market looking for direction. although you are seeing one when it comes to the small caps. up 4/10 of 1%, one hour away from the cash open. here's your morning movers with manus cranny. >> there is certainly an appetite to do deals. you've got interpublic up this morning. in talks to do and all stock deal. $20 million revenue in the

advertising business, that is what we are talking about. trumping wpp in terms of size and scale. there is the data side which is efficiency in technology and the offer side, people get fed up when you do megamerger's. sometimes your producers just leave. they say i don't need to live through this experience. either way there is a shift in the thinking about doing deals and getting it through. this is about smart defense. taking your ai capability, overlaying on the top of the weapons maker. so you think sensors on vehicles, on robots. it is about making smart decisions going forward. i'm sure he is smiling this morning. this company is worth 173 billion dollars, that is more than lockheed martin. that shows you the acceleration in technology with defense. he spent time talking about this this morning.

why are the chinese not investigating an accusation done in 2020 signed off? this was all based on his opposition that they would pass new product information back to the chinese within 90 days. either way, $7 billion deal is now up for discussion. as the u.s. and washington up the game in terms of tariffs, the chinese are reacting on monetary policy, fiscal policy and ground zero which is nvidia. >> great work as always. let's turn to the labor markets. in record payrolls report showing moderating conditions with a solid topline number, but unemployment ticking up slightly to 4.2%. andrew saying the unemployment rate is the better signal to watch. the report was not quite soft enough for the fed to cut 50 basis points and week -- as we projected, but a 25 basis point cut appears very likely followed

by cuts in january and subsequent meetings. andrew, i am so glad we get a chance to speak with you because you have a contrarian view and you have persisted in this contrarian view that this labor market has a great deal of weakness that people are not seeing. what gives you that conviction now even though it has been a while since we've seen some of the confirmation in the headline numbers? >> it's been really noisy data. we have to make some decisions, you have to take a stand on which data are giving you the correct signal about where the labor market is going. if you look at the payrolls surveyed, that is telling you we've added 2.2 million jobs. sounds like a great number. if you look at the household survey, we are down 725,000 jobs. that is typically what you would see going into a recession. which is the true signal?

of course we don't know, you have to have humility in terms of analyzing this data, but if you look at that payrolls number, we know from the revisions that the business survey, establishment survey payrolls are being overstated. every month when we get that number we should be subtracting something like 70,000 jobs per month from that number. that is the overstated number. the household survey which is giving us a better indication is telling us that we may actually be losing jobs here. we continue to have the softening trend in the labor market, the unemployment rate that is rising and i think that if the trend to be watching. >> if that is the case, how much can you discount the idea that the number of hours worked is actually inflected upwards and when you pair that with some of the wage gains, that is been some of the inflation concerns start coming back in? >> i'm not too concerned about inflation because of the softening that we had in the labor market. we have a strange labor market

where businesses are hoarding labor right now we are seeing a higher rate that is very low, but we don't have a layoff rate that is rising. it has come down but it is not falling further. wage growth is slow that it has been invalid sticky at a higher level. this is a different labor market than what we've ever seen before. firms that are reluctant to hire, firms that want to hold onto their current employees if they can, but when they lose those employees they are not backfilling them. that means you don't necessarily have a higher probability of losing your job, but if you do lose your job you have a higher probability of not finding one again and that is going to affect consumer behavior in the broader economy. >> does that mean that there isn't really a number outside of what would be normal that we could get on wednesday that would mean that the end shouldn't be cutting? should the fed really be cutting regardless of the figure we get on wednesday? >> i think we have to go back to the environment where the fed,

central banks are balancing risks to inflation and risks the labor market. it was easy to say year ago that patient is running very high, that should be the complete focus. i think we aretill fighting the last battle here in little bit. yes, inflation has been sticky and hasn't come down as nicely as some people thought it would, but you also have to look at the labor market. inflation running closer to 3%. i think it is going to continue to slow based on what i'm seeing in the labor market but that is a forecast at this point. 720 5000 people are not working now. >> do you think the fed has that message, what they should do and what they will do? do you think there is a number that would cause them to stop the cuts in december? >> i think december they are probably going to cut. this would be more about what are they going to signal for january? right now we get a soft report on wednesday for core cpi inflation.

that is going to make the decision very easy. but if we get a stronger reading, you would still see a cut in december but we might be at that point were we slow the this really open rhetoric saying we are going to be cautious and careful. of course every central bank is going to be cautious and careful. it doesn't really mean anything. >> speaking of january, we are going to get a brand-new trump administration, a republican sweep. and trump yesterday was talking about immigration the first 100 days. what is going on in the labor market. how tight could the labor market get if we do see things like mass deportation? >> one of the things he talked about was that this was going to start with those immigrants that have a criminal history, that that is going to be the focus initially. lisa is talking about this idea of sequencing. if that really is the focus, that is not something that is going to have a big effect on the domestic labor market. we know that a large percentage

of workers are working without authorization, so if you had a large deportation program, you can have issues where firms are trying to hold onto their native workers. back at tighten the labor markets. you do have that risk. i think we have to watch how that policy plays out, but based on what i heard over the weekend that is not making you more concerned. >> the other risk his tariffs. the fed might have to think about what that means for inflation next year. are they a negotiating tool, are they a blanket? >> i think we've already seen tariffs as a negotiating tool. we saw them floating from mexico, for canada. those are probably not going to come into effect. they are meant to be a start to negotiating things related to immigration and fentanyl, not economic issues. the across-the-board tariff is on a separate track. i think we will see some form of that. if you are increasing the cost of foreign goods, suddenly those

costs could pass through. they are going to be quite slow in terms of taking their time and watching how this place through in the economy and remember from central-bank perspective, if we put that tariff in place, the first instinct of central bankers is to say that is a one-time rise in the price level and we don't respond to one-time rises in price level. i don't think this is going to make the fed a lot more hawkish. >> i think it is the right thing to get at, what would make you rethink the thesis, if we do see an increase in inflation from policies or just if cpi comes in hotter than expected, what is it that would force you to look at a different set of considerations in your template? >> it icy growth and job growth that is accelerating, the unemployment rate coming down instead of coming up, we are starting to hear firms say we

had a lot of pricing power. evenly cut prices we are not getting the kind of sales we were expecting. that is why i think we are in a downtrend in terms of inflation. if those things inflected, it would get worried about higher inflation. >> do you still see a very big risk of recession? >> i would disagree with fed officials that it is not elevated. when you have an unemployment rate up by almost 1% in very low hiring rates, if this going to move over into layoffs. we haven't seen that yet and that is a very good thing. it looks like maybe this could continue sometime without getting that pickup can layoffs, but if that risk elevated? i would also say very high valuations and equity markets. it doesn't mean that we have to have a selloff, does that make the risk more elevated that we would get a correction in risk assets? thank you drive somewhat of a slowing in the economy.

>> andrew, always wonderful to speak to you. i love to hear the contrarian view and a different way of looking at the data because it really has been a war shack test. investors looking ahead to the final set of inflation data before next week's fed decision. cpi into out on wednesday, ppi on thursday. anna wong joins us now. is your view essentially that an upside surprise to inflation seems to be the base case and some of the whispers were hearing among your colleagues? >> i think the key item to look for is used car prices, and it seems like the used car price reading is going to be elevated. i think as andrew mentioned, the broader trend is for disinflation because companies are losing pricing power. that is not something you need to worry about. looking forward, i do worry that the core cpi is stuck at 3.3%.

we expect this coming print to show a third consecutive month of stalling year-over-year core cpi reading. we expect the same reading in december. so basically by december or by the january fomc meeting, the fed will have four cpi report or core pce reports where the year-over-year reading is actually going up and we expect core pce to take up to 2% in the last two months of the year. >> omar sharif points out of the wildcard for this or is owners equivalent rent, specifically new york because prices reset every six months and we now fall into that six month period. what are you expecting when it comes to shelter costs? >> the risk icy actually happens in january. bls did explain how they are resetting the weights of owners of lint and particularly concerning is that the weight for single detached homes may

likely be revised up, and we have seen that the rent in detached homes have been more elevated than the rest of the housing market. so we may see a rerun of what we saw in the first three months of this year where we suddenly spiked up pushing core pce and core cpi up. >> thank you so much for being with us. christina weighing in on what happens after next week's fed meeting writing following a december ease, the future path of fed policy is quite uncertain, given the underlying strength in the u.s. economy. the fed is likely to pause after december. whether they ease again in march or not will depend upon the evolution of policy initiatives as well as underlined nominee data. christina, before we even get to next year, i'm just curious how important it is to really look at cpi on wednesday especially given what we were just hearing,

that there is a certain bias for it to surprise to the upside. >> the fed is taking every data point as it comes, and it matters just like the payrolls report mattered. but i don't think it changes the outcome of the december meeting. i think they look and see where we are and there is so much uncertainty whether it is policy evolution or some of these seasonal that we are expecting to get in the early part of next year. i think there's a lot they have to work through. they are data dependent, but i don't think it necessarily means that the data print six days before changes that meeting. >> how much have they lost the upper hand when it comes to driving the narrative? they don't have a crystal ball, they can't understand where exactly this economy is going to break or re-accelerate and we are looking at a market actively trying to think about every day and it has come to a conclusion that seems reasonable.

do you follow the status quo more than some proclamation from the fed? >> i think there's a bit of both. the fed is grappling with the same uncertainty that everyone in the market is, and they are trying to say what is the endgame? we are trying to maintain this soft landing in the fed has done an incredible job so far of doing that. how many times have we had recession calls, and we continue to have an extremely resilient u.s. economy. the labor market is slowing that is what the fed has wanted to manufacture. i think when we take a step back , we are moving in the direction that the fed wants us to be going. >> but part of the issue of the uncertainty because it is happening now is that now is when everyone feels the need to say hey, here is what we think is going to happen in 2025. i know one of the things you see going forward is steeper curve.

how much could that get cut short at the cutting cycle also needs to get cut short? >> a lot of that has changed already. in the end of the summer when there was a real concern about the u.s. economy breaking more and then needing to cut to length through neutral, there was a lot more scope for the curve to steepen. from here we still think there is value in the front end and you have had so much work of you find the curve a lot but you had a lot of work of repressing the front-end. you're getting pretty close this month that twos are flat to policy rates and you take out the negative carry in the front-end and i think that gives people some comfort. are we talking about 100, 200 basis points of curve steepening? certainly not there is still a case. >> on the front-end. on the long end, there have been all these fiscal concerns about the election and you saw yield go higher in the immediate aftermath flat as a pancake. what gives? >> we had the same

questions and conversations. i think there's two things the market is grappling with. one is doge and how much efficiency and savings are really going to come, and i think that there is -- i don't know how much hope there is, but this is a question mark and there is a potential difference to what we were considering before. in the second thing, the market has taken a lot of comfort with scott bessent being named treasury secretary and that this is more of a conventional player, but we will still see. trump has said that policy initiatives are tariffs, deregulation, immigration, taxation. what is the order we get, what is the magnitude, how quickly do we get them? all of these things will matter because at this point you've come out of the election and you have some animal spirits and you already have strong growth. we think that is still a positive tailwind at least for the first half of 2025. >> what is it about doge you

think the market likes? the president said yesterday he is not going to cut things like social security and medicare. this is the biggest pie of the budget. 5.3 trillion dollars spent on social security health care defense, veterans, net interest payments. where exactly could they cut? >> the market is probably more optimistic than we could buy into ourselves. you've also seeing this across administrations come across history over the last 50 years of people saying we are going to make the government more efficient, we are going to cut cost. will there be the ability to do it? it has been bipartisan. both sides of the i'll try to do this. i think there is the hope especially with bringing in business people who this is their bread and butter, let's see what they can do. >> i want to end on the most important note which is treasury auctions. 10-year note on wednesday and 30

year notes on thursday, and it goes down to the crux of all of the lack of knowledge that we have about the murkiness of 2025. which of the denominations would you most want to buy? what are you watching for in some of these options? >> we are still happy structuring portfolios with higher yield security. again, i think there needs to be some premium out the curve. and that is counted with the backdrop that you have u.s. exceptionalism. that story is what is anchoring us and you have global d synchronization, especially with all of the politics. i think certainly we have continued to be impressed with backdrop and anchor for support in the u.s. market, but we would rather be out front. >> what would it take for you to be interested in the long end? >> again, i think more clarity on where we get policy, and i think you get to work hundred 75, toward that upper range,

that maybe you could start to put some money toward that. >> thank you so much for being with us, great to see you. right now let's turn to everything else going on this morning. here is your bloomberg brief. yahaira: south korea's justice ministry has banned their president from traveling overseas, coming as multiple investigations are underway following the embattled it is reef declaration of martial law. he survived an impeachment vote over the weekend. benchmark stock index closed 2.8% today and since the martial law declaration last tuesday, has fallen more than 5.5%. the search continues for the suspected gunman in the killing of brian thompson. here's the latest. the new york police department released new images of the suspect in a taxi that is believed to have taken him to a bus station. from their police believe he boarded a long-distance bus out of new york city. the photos were released after a

green backpack was found in central park matching the description of one carried by the gunman. in it, a jacket and monopoly money were found familiar. an exciting news in baseball, juan soto is heading to the new york mets. the 26-year-old slugger signed a 15 year deal worth $765 million, the largest signing and pro sports history, topping the blockbuster tenure contract shohei ohtani signed with the dodgers last year. the sweepstakes had been in full swing for weeks with a number of big-name teams in pursuit including the boston red sox, los angeles dodgers and yankees who soto helped bring to the world series this past season. >> i really a special -- appreciate it, especially for underscoring the one soto story multiple times because it really is wonderful. >> why is it twice this morning? this is a biased show. >> up next, setting you up for the week ahead.

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♪ >> the longer you wait, the more likely stocks are to start going up, climb back some of the losses, if you can call them losses. three straight weeks of gains counting down to the opening bell. here's the trading diary for the week ahead. after the closing balla, toll brothers and oracle reporting earnings. opec holding its year-end conference. wednesday cvi plus results from macy's. thursday cpi and another round of jobless claims. plus, ecb rate decision as well as cosco earnings. coming up tomorrow, don't miss this, peter scheer of academy

securities, emily rowland of john hancock and los angeles executive director gene seroka as we finish up the year, heading into cpi. what are you watching? dani: i'm just watching the enthusiasm that we hamper this market, enthusiasm but geopolitical risk. enthusiasm a policy risk for 2025. people are giving themselves kind of the out to say it might not all the sunshine and roses. >> especially these bank of america surveys saying 30% of geopolitics look at the events of the weekend. we are seeing shifting narratives when it comes to the middle east and russia. >> massive changes as we just heard. just basically overturning but water than we had seen in the middle east. this was bloomberg surveillance. thank you for choosing us. we will be back from tomorrow. from auctions, lots of them,

have a great day.

: all right,, lately. sonali: "bloomberg open interest" starts right now. ♪ matt: coming up, john stoltz will seize the s&p 500 hitting the 7100 by the end of next year thanks to a stronger