tom: good morning. chinese stocks way on asian markets after retail sales, and below all estimates, highlighting the need to boost demand in the world's second largest economy. france's new prime minister will

meet the national rally's marine le pen today. moody's becomes the latest credit agency to downgrade the nation's debt. and chancellor olaf scholz tables of vote he knows he will lose, triggering a snap election. we will be live in berlin. happy monday. it is the final full week before the end of the year. european futures pointing lower after some losses for european and u.s. stocks. upfront, the central-bank action , but before there, the federal reserve. the fed expected to cut 25 basis

points. ftse 100 futures pointing higher and nasdaq 100 futures also unchanged. let's look cross asset. one of the worst weeks of the year in terms of the selloff last week particularly for the 10 year, around 24 basis points higher, little bit of money moving back in but after the selling of last week. euro-dollar getting a lift, gaining .2% and bitcoin smashing through fresh records. it had been above 105,000 on the news that microstrategy will be included in the nasdaq 100. some strength came through last week, currently down by .5%. let's check in on the asian markets, front and center with the data out of china and

softness in retail sales and what that tells us about the weak consumer in china even as housing metrics start to show improvement. the asia pacific index currently down .3%. the benchmark and mainland china dropping .5% and in korea, the impeachment of the president there, lower, but you have more near-term certainty in terms of the politics. we will wait for how the proceeds in terms of the electoral prospects of the opposition in korea. the nikkei up 39 thousand, flat on japanese equities. let's get to the data story out of china. retail sales growth unexpectedly weakening, highlighting the urgency for beijing to spend it how may times have we heard that? let's bring in alan wong with the details. what stood out to you in terms of the data drop today out of china?

>> retail sales process 3% in november compared to last year, coming down from 4.8% in october and shows how short-lived the bonanza was in terms of boosting domestic consumption. it is lower than all of the forecasts we had for more than 20 economists and the other number i would flag is that industrial production was steady and relatively robust, but we know that's partly because factories are benefiting from orders that are frontloaded because of people trying to avoid tariffs, whatever new tariffs the new trump administration might impose on chinese goods. >> and it's a reminder that officials in beijing, according to the views of many economists, need to step up with additional support. what are we expecting into 2025? >> we expect eminently some cuts

in interest rates, the reserve requirement ratio. those things have probably been priced and by the market but chinese policymakers have signaled more measures to come but those will be mostly for supporting growth in the next year and what is noteworthy from last week's meeting of top official thing measures to boost domestic consumption and used strong language on that front. private demand remains very weak and because of potential headwinds to china's exports in the next four years, boosting domestic consumption has become more important and a focal point of policymaking. >> alan wong on the data out of china and what it could mean in terms of the policy response as

we continue to look for the details. can push a budget through a divided parliament. our correspondent joins us. what does that mean then for the deficit next year and what could the special law mean for the government's finances? what are the financial and budgetary implications they will be trying to form? >> the new prime minister will face the same fragmented and polarized national assembly like his predecessor and that would likely affect his ability to pass any significant fiscal plans.

this means practically time is running out to pass a budget as a special law by the end of this year. we estimate this will be consistent with austerity but the budget will still remain wide in 2025. we estimate it was around 5.4% of gdp, down from this year, so this is still an outcome. departments will seal cuts but it will be less tight than the plan but failed to get past that aimed at a 5% deficit. so overall -- tom: we had the cut from moody's , not for the first time. there were warnings coming through from credit agencies on the fiscal sustainability of the

government debt load in france. we look potentially of debt to gdp of 115% potentially up to 124% by 2029. is there an economic crisis brewing in france? >> we think a prolonged political crisis is not leading to massive economic turmoil because the government control over the budget but the long-term fiscal sustainability outlook seems precarious. what we have learned is that the divided parliament makes it difficult for the next government to pass the fiscal consolidation necessary to meet the medium-term plan so even if we assume that the budgets will return to their pre-pandemic norms, that will not be enough to stabilize the debt to gdp ratio, creating fiscal risk in the markets, particularly around

the collapse of barnier's government. we see spreads being lied and wider spreads inhibiting economic growth next year in the range of 0.3 to 0.5% of gdp with risks to the downside, so a bad combination for public finances and the risk is with high elevated uncertainty, spreads can widen further and that could exacerbate these impacts and risks. >> we will be watching that today. eleanor with the analysis. thank you. traders are adjusting positions with central bank decisions taking central stage wednesday before you get the doj and give england. let's bring in valerie tytel. talk to us about what we are expecting from the central banks

in the final week of central-bank action for 2024. >> final week, maybe the final week of liquid trade for the year. we have a busy week coming with the bank of japan and england on thursday. the bank of england and the bank of japan expecting to hold interest rates. the fireworks could come from the federal reserve wednesday. the detail will be in the projections. how many cuts to they pencil in? it's interesting to note the fed is meeting amidst weakness in the treasury market. take a look at how the treasuries have traded last week because it was quite a bruising week for the treasury market. there was no clear catalyst. it was an orderly selloff but the 10 year treasury yield had its worst week of 2024, rising nearly 24 basis points on the week, speculation on what is driving this in the answer was

not clear but the fed cutting amid a still strong economy with inflation still not back to target is perhaps hinting there is more weakness to come but we first have to get through the flash pmi's today with notable attention on the european pmi's. last time around, they were disappointing. we saw weakness in manufacturing spreading into services. it's notable all three of the main composite indicators are in contraction and are expected to stay there across france, germany and the wider eurozone composite well -- and while sentiment across europe is sour the one asset class not seeing that by as it crossed the 106 handle. bitcoin is having some of its best weeks of the year and has now risen for seven weeks in a row, a lot of positivity coming

around the deregulation still pushing this price higher. >> 105,000 on bitcoin. valerie, thank you, breaking down the moves around bitcoin and the central-bank action and with an eye on the pmi data later today. we do get that data and valerie is illustrating why that is consequential. wednesday, it is the rate decision, expected to go 25 basis points. the fed will cut, the boj may be also. thursday, boj, bank of england in that order. a little bit of uncertainty. the bank of england despite the softness seemingly positioned to hold pat. you can get a roundup of the stories you need to know in today's addition of daybreak.

our focus on continuing sluggish growth in terms of the data out of china with a particular focus on retail sales so have a look at that. the fallout continues after south korea's president is impeached. we will bring you the latest out of seoul next. this is bloomberg. ♪

tom: welcome back. south korea's constitutional court has begun reviewing the president's impeachment case. if the court agrees, a presidential election will be held in 60 days. for more, let's bring in katya. what's the latest? the impeachment happen largely is expected, a couple members voting for that. what next then for south korea and its leadership? >> the impeachment happened. the prime minister has assumed duties of the president as yoon has really pushed them and has held a press conference. we heard from the prime minister

today and over the weekend saying the priorities need to be shoring up economic strength and bolstering security against north korean forces. you will recall that's the whole reason we entered the situation. we are now entering the second week of this political upheaval with a bit more certainty and now what comes next is the constitutional court has to make a ruling and as you said they began deliberations today. we know as of about an hour ago the december 27 will be the first hearing date and it usually takes about 180 days. if history is any guide it will probably be about half of that time and they essentially have to rule whether they agree with policymakers or don't. if they agree it would trigger an election. if they don't agree that's kind of an open question for yoon.

tom: who could become the next president as we think about that timeframe? >> one person who certainly can't is the leader of the ruling party, who stepped down today after the impeachment and had also been criticized for some members of the party to vote in favor. however, the most likely is someone we have been hearing from quite a bit, the leader of the opposition, someone who has often been compared to a bernie sanders type figure in the states. he is a former labor activist and is sort of in the spotlight because if it comes down to a vote, it's looking like he would be the most likely candidate. >> he has quite a remarkable biography.

how are the markets reacting to this? relative certainty or at least a lack of additional uncertainty. talk to us about the market reaction. >> it's a bit in the middle. you had the initial open and stocks rallied and the currency strengthened but almost immediately we saw that pivot of markets back to the underlying issue even aside from that issue , the reality of situation has exposed, the expected weakening and south korea's economy, so even without martial law and this upheaval and the kind of weight this will create on consumer spending and investment , there are a lot of headwinds and we heard the prime minister talking about that. we heard him saying president-elect trump, who will be january 20, the president of the u.s., there's policies there including tariffs that are a huge headwind for the economy,

not to mention it is slowing as the tech trade flows down in the economy is highly dependent on trade as well so markets are looking towards that, not to mention the big question of the day, which is how the constitutional court will even rule. >> thank you for the latest out of south korea, the continued uncertainty after that impeachment vote. thank you very much. israel's cabinet encourages plans of demographic growth in the golan heights. the latest from the middle east is next. this is bloomberg. ♪

tom: welcome back. israel's cabinet has approved benjamin netanyahu's plan to encourage population growth in the golan heights. it comes after a series of israeli strikes that destroyed syria's navy and air bases after bashar al-assad was overthrown last saturday. let's get more from joumanna bercetche. so much continues to come through in terms of developments on the ground. what more do we know about plans for israel in that is really controlled golan heights in terms of population growth? this sounds controversial. >> it is very controversial. to your point, the israeli government approved plans to double population growth in the

golan heights region, netanyahu saying it is a necessary step because a new front has opened on the syrian border although they do not want to engage in direct conflict with syria but it's a disputed region territorially mainly because it was seized by israel in the 1967 war, became annexed in the early 1980's and most of the international community still recognize it to be under the sovereignty of syria with the exception of israel and the u.s. because under the trump administration the u.s. formally recognized the golan heights as part of israeli sovereignty so a contested part of the world and another example of how israel has moved to consolidate security in and around the borders with syria since the fall of the assad regime. we were talking about further incursions they made the golan

heights. hundreds of airstrikes taking out key military infrastructure, estimating 80 to 90% of their defenses have now been taken out and this has prompted rebuke and condemnation, qatar putting out a statement saying this is a new episode in a series of assaults and a blatant violation of international law. >> so strong words coming through at a time when the u.s. secretary of state was in the region presumably for one of if not his last visit in that role and confirmed the u.s. has spoken directly with that syrian rebel group that is now in charge of that country. >> yes. this is a significant step because it is the first torts perhaps providing some legitimacy to this interim government set up by those rebel

forces. we talked about the fact that the leader has tried to re-band -- rebrand the group as more moderate. essentially the two sides discussed the pathway towards effective governance. the u.s. said it would be willing to perhaps remove sanctions and to give international recognition to this government so long as a few principles are followed, namely respecting the rights of minorities and ensuring syria does not become a passageway for neighboring countries, hostilities, talking about syria effectively being a passageway for iran to get into lebanon. the third element was for hts to allow for the passage of humanitarian aid because 90% of the population are now living in a state of poverty. they also had discussions about

the future and identifying where austin tice, the u.s. journalist detained back in 2012, so the search is on to find him, but the biden administration is essentially warning that if they don't abide by these principles then there's a real risk of isolation so it remains to be seen what the government will be doing that so far they have been showing a more moderate face in the transition has been quite peaceful. >> we will see if those conditions can be met on the ground to get that approval from the u.s.. joumanna bercetche, thank you very much indeed. let's get back to the market data because it was china that was once again in focus for the session. much softer retail sales than had been expected. you have growth of around 3% and it really underscores the need for many at least to get more

support for the chinese consumer and the health of the consumer is linked to the real estate market. there was data suggesting there are modest improvements but clearly not enough is happening to help the chinese consumer and we know the policy focus is moving in that direction but there's a need for details according to many. in europe, futures lower by .1%, little brighter when it comes to the u.s.. bitcoin about 105,000. ♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

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at challengedathletes.org. and see "wicked" only in theaters november 22nd. tom: good morning. these are the stories that set your agenda. chinese stocks weighing on asian

markets, highlighting the need to boost demand in the world's second-largest economy. france's new prime minister is set to meet marine le pen today as he looks to form a new government. moody's becomes the latest credit aid -- agency to downgrade france's debt. german chancellor olaf scholz submits a confidence vote he will lose, triggering a snap election. we have some breaking lines crossing from the maker of ozemp ic, novo nordisk. the company planning to invest around 1.2 billion u.s. dollars in a new factory in denmark. it's already been ramping up investment to build out capacity to meet the demand for its weight loss and obesity drugs and it expects that and a new

ticket on that front when it comes to investing domestically in denmark again. it is a new facility. they will also be thinking about a facility to focusing -- focus on rare disease and hemophilia drugs. that's a stock we will be watching at the open. let's check in on the markets now with european futures looking for direction, currently pointing lower by .1%. the ftse 100 and similar territory. we have losses of european and u.s. stocks last week and globally stocks year to date have gained about 20%. nasdaq 100 futures looking to add 10 points. it's a massive week for the central banks of the world and

you will be getting the federal reserve basis points, followed by the bank of japan and the bank of england, which is expected to standpat. yields jumped around 20 basis points last week. there was a selloff on the 10 year as markets readjust to maybe a less aggressive action from the federal reserve. euro-dollar gaining. bitcoin smashing through 105,000 , up 2.3% now for the cryptocurrency on excitement once again around the prospects of regulatory loosening in the u.s. and microstrategy being included in the nasdaq, a hedge or at least to play when it comes to the crypto space. brent currently down .3%. the focus is on the chinese data and a reminder that the consumer

remains underwater and under pressure with retail sales growth coming in lower than expected, weighing on the asian section. it is current and mainland china falling .7% and in korea we have the impeachment but still uncertainty as far as the politics. the supreme court has to rule on it and then you get the election. korean stocks currently down .2% and the nikkei flat. olaf scholz faces a no-confidence vote later today likely to pave the way for a snap election next year. he has become increasingly unpopular as concerns over the country's economy have risen. today's big take looks at why germany is unraveling when europe needs it. european correspondent, oliver croake in berlin -- oliver

croaked in berlin. how does this set us up for the election next year? >> all the issues with this coalition where there since the beginning to go to the genealogy of this disagreement. the russian energy crisis. they point to that slow growth and budget and disagreements within the government began to come across. he fired the finance minister and paved the way for these new elections so he asked for the vote last week. he will go before lawmakers and make a speech and then there will be two hours of debate followed by a roll call and we will get the results of that at about 4 p.m. local time. the news is there will not be confidence in the chancellor. this is part of the choreography to set up that election on

february 23 and when we look at what to expect we have seen it solidify with them holding their lead. the spd, scholz's party, a little bit better now. we may see something like a grand coalition. of course, things could change over the next two months. it is the only country where a snap election takes about four months. >> not so snappy. the economic backdrop, you have been reporting on this for months in terms of the challenges. who is bearing the brunt of that now and how does that play into the campaign? >> just looking at some of the figures we crunched about the pre-pandemic trend and what we got in germany, you are talking about five percentage points of

growth that were lost because that trend broke and it broke for a number of reasons, not least of which was the absence of russian gas, the export markets collapsing for a number of countries, labor markets being uncompetitive. the decline in national competitiveness means that every household is worse off by 2500 euros every single year and when you think about the sectors that his hip predominantly, it was initially chemicals and heavy industry. that has trickled into the auto sector. if you look at the fortune 500 companies in germany just this year, they are laying off 60,000 people so far, to say nothing of what we might get from volkswagen, which is really 10,000 to 30,000 so this is at the center of the political discussion in germany and countries that have been rich for a long time do not like

getting more poor and you have seen the consequences of this and that has been a major story of the selection going into february 23. >> oliver croaked on the ground in berlin. thank you very much indeed. the applications of that stagnation of the politics -- on the politics of the nation. we will stay with that story and speak with someone who has just published a book exploring germany's economic decline so stay with us for that conversation as well. investors are bracing for the biggest week of monetary policy this year, the federal reserve taking center stage with its decision wednesday. i am joined by maria, head of equity research at state street. thank you for joining us. how do you think about the central-bank action of this week

and how that informs your views as you position to year end were global stocks of added about 20%? >> central banks have been helpful in 2024 as they start cutting interest rates when the economy was still strong so that has been a significant support and if we we continue to see normalization, there is no other way to think about it. >> are we overestimating the ability for the fed to go as aggressively as some may be assuming trump administration? >> ok. fair enough. we know they are normalizing policy rates and they have been cut but how far that goes is a debate.

i think that's a big debate for fixed income market. for the equity market is that the fed starting -- started cutting interest rates and they are trying to get ahead of it. normally when central banks start cutting we are already in recession or getting close. what the fed is trying to achieve is to avoid that and create what we want to see, the soft landing and a lack of a sharp slowdown and continuing to get stronger and i think that's the driver for equity markets. for fixed income, we can worry about how quickly they go but the avoidance of recession is really the key driver. >> do you think we can repeat the gains we have seen this year next year? >> we had a good year and 2023 and now in 2024. we still expect the stock market

to go higher but what is important is the mix of stock market drivers. this year, a lot of it came from policy normalization. multiple expansions would be harder but what we need to rely on his earnings and where they can grow the fastest. in the u.s., we can still see solid growth. tom: and you are sticking as you say with the current winners and momentum trades. what do you say to those who flag positioning risk in those mega cap tech names which you favor and have served you pretty well presumably this year? >> i have to say we are known to be specialists in market positioning and looking at our database those positions are extended but i would say to people who are worried is they are extended for good reasons.

we see a correlation between investor positioning and margins, return on equity, so they are owning high quality assets. they are hugely underweight in the sectors in region where earnings are slowing or underperforming. so the tech sector is crowded. it is expensive but for a good reason. that is where we see quality. if anybody is worried about any kind of political uncertainty or risk to the market, tech is kind of your safer play either way. tom: and you have been consistent on that due for some time. talk to us about fading the trump trade than. and small caps, fading them wine? >> small-cap companies, they are really at the moment struggling with profitability.

my favorite chart is the proportion of companies struggling with high interest rates. so a more growth centric environment is great but what they really need is a cut in interest rates, a very aggressive cutting cycle. and the cost of borrowing for small-cap companies is still quite extended and those companies have very small margins. for russell 2000 companies, it is one point .4%,, so they are struggling. so it is supported but earnings need to improve and that's the point i keep making. that is tech, not small caps. >> is it the earnings story that

puts you off europe? i'm looking at the ecb with rates expected to drop for the second half of next year. then you potentially get new fiscal stimulus and the support from the ecb and stocks in europe are looking cheap. ? >> it is earnings. and i think you are right. european stocks are a bit underweight but what is interesting, if you look at the history of investor earnings in european stocks, they only increase when they expect earnings to improve in europe and significantly. they need to be higher than the rest of the world. this is not something that will likely be on the cards this year. maybe it will slowed if we get this policy support, which is

again questionable given the political uncertainty. tom: marja, equity research strategist, it is all about that story, but for now the u.s. has it. thank you for the market analysis. at 9:30 a.m. u.k. time we will be dissecting europe's economic challenges with nadia calvino. italy's prime minister says the government is willing to work with stellantis to keep jobs in factories in the country. the sides are in talks to protect around 40,000 jobs and sources tell us the carmaker is expected to commit to making new models in italy while the government may announce more incentives for the industry. the energy industry is set to me representatives tomorrow for the first time since the former ceo was ousted. more homes in london are pouring

onto the market to get ahead of an upcoming tax increase. the number of newly listed homes of two bedrooms or fewer rose 20% in the four weeks to december 7. the stamp duty is set to sharply drop in april with owners seeking to take advantage of strong demand. new york police seeking to extradite luigi mangione, who is accused of the fatal shooting of the united health executive, says they have built a strong case against him. they say the evidence includes videos of the suspect's movements, fingerprints and shell casings tied to the gun he had on him. manji owning has hired -- mangione has hired a lawyer to defend him. protests continue in georgia over the government's turn away from the west towards closer ties with russia. we discussed the significance next. this is bloomberg.

♪

tom: welcome back. georgia has selected its next president as protests backed by the current head of state can the west towards moscow. greg sullivan joins us with the details. what is behind these protests and the opposition's criticism? >> there have been protests for weeks happening in georgia. broadly, protesters are upset about the country's turn away from the west. the october parliamentary elections were an impetus for the protesters. they said those were marred by

fraud and even the president has said she is the only remaining legitimate institution in the country. now, the parliamentary protests are important because they allow the ruling party to extend their rule for 12 years. after claiming victory, they suspended european union membership talks, which brought new life to the protest. the parliament dominates the electoral college, which nominated the rule -- the ruling party positive candidate over the weekend. tom: what political credentials does he have and what turned him towards moscow politically and what could he mean in terms of the future of georgia? >> that's right. he was relatively unknown internationally. he is known within the country. he was a footballer with a stent at manchester city. recently, he's been a right-wing lawmaker in the country's

portland. he has been critical of the west it is known for aggressive and harsh statements and we can read this election of him as a solidifying of the government's position, turning away from the west and toward russia. they have been trying to mend ties with moscow and this represents a continuation of those policies. tom: greg sullivan, thank you very much indeed. plenty more coming up. we will give you details in terms of what to expect from the federal reserve. we have some terminal charts to break that down. there's putting more coming up. stay with us. this is bloomberg. ♪ starti is never easy, but starting it eight months pregnant, that's a different story. with the chase ink card, we got up and running in no time. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card

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>> we are seeing inflation pick up again because financial conditions are very loose again. we have animal spirits picking up because of the election outcome and people are excited. that has a negative consequence, which is inflation starts to pick up again. that is probably the biggest risk to the multiple. >> that the fed cannot cut. >> as much as people are anticipating. tom: mike wilson on the biggest risk for him as inflation comes

back and the fed does not cut as much as the markets were expecting. markets expecting that to be locked and loaded but pushed out to 2025 and there is more uncertainty now. maybe they hold in january. expectations that by october you get fewer than three cuts of 25 basis points by the fed. we saw that selloff last week. that adjustment is happening as markets take into account the inflationary policies of the upcoming administration. the commentary from jay powell will also be crucial in terms of steering into next year. it's also tied into what we see in terms of u.s. equity performance year-to-date. households stateside being long. it is not just households but also corporate and financials. that raises the question as to

whether or not there is much more headwind or had room for further upside given the gains of this year and last year for u.s. stocks. a look briefly into the european story and questions about the french budget and debt to gdp, looking at potentially 115% next year. that will change depending on what the budget will come through at but looking into 2029, expectations on the current course is you could get to 2400% debt to gdp in france, and germany 58%, and arguably that needs to reverse or meet in the middle. many would say germany needs to spend more. will a new administration change that spending dynamic?

that is pretty pronounced. 8:30 u.k. time, we will be speaking on that subject with someone who has published a book exploring germany's economic decline. stay tuned for that. we will be speaking with the chairman of engie at a conference at the oecd. and u.k. time, dissecting economic challenges with nadia calvino. stay with us. this is bloomberg. ♪

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