♪ >> inflation has been coming in a little slower. i wouldn't even say sticky or stalled. i would say progress is just slowed. >> the fed has to reiterate its commitment with inflation target. >> the market at every step has been worried about inflation and rejecting these moves by having yields go up. >> it's really about the bond market. where people are starting to get nervous is from a positioning standpoint. >> the big question to me would be how high could these yields actually go? announcer: this is "bloomberg serveillance" with jonathan

ferro, lisa abramowicz and annmarie hordern. >> john and lisa starting your holiday, it is the final full week of 2024 and really, markets this morning, shortened week, kind of boring. no action. scarlet: there is no government shutdown and the data that came in on friday showing inflation was fairly subdued, also encouraged investors. the picture right now is pretty mixed but i would expect there be a lot of windowdressing, a lot of people find the best performers of the year to close out a year. >> how much are people preparing for higher for longer rates following the fed and also just recalibrating with 2025 would mean in terms of policy? we do have the news coming out of japan when it comes to honda and nissan.

we are talking now about the third biggest auto manufacturer, these two companies combining by sales. how much of this is just preparing for the tough road ahead? scarlet: it's remarkable the numbers we are talking in the loss of buyback $7 billion of it some shares. by 16.5%. right now it is a basic agreement for merger talks. they did hold a joint briefing and nothing is going to really be done until this new entity that will be listed by august 2026. there's a lot of time for things to maybe go awry or a lot of details so to be ironed out. a former leader of nissan spoke to manus cranny last week and called it a desperate move by nissan. he said it is not a pragmatic deal. synergies between the two countries -- companies are difficult to find. the brands are similar but for nissan this is a desperate move. marry for short-term problems

putting these two companies together. honda, i think they have more control of the board so they are really in the driver's seat. annmarie: they are not in the financial strafe that nissan is. this deal lacks industrial logic it is probably a result of political pressure. we know the ministry of transportation has been pushing for a similar deal about five years ago that never came to pass, but this time around nissan's in a much weaker position and it perhaps has no choice but to consider it. >> i just wonder how much more we are going to see of these. all these chinese auto manufacturing companies coming out to produce these cars cheaper and it is a big story that is going to be for 2025. coming up, michael o'rourke with stocks snapping a three-day losing streak. mike shepard as trump threatens to retake control of the panama canal, and the outlook for the oil market in 2025. we begin this hour with stocks

rising as traders boost fed rate cut bentz aftercooler inflation data. michael o'rourke is cautious, but he not only are stocks expensive in their own right, but they are also let the most expensive levels vs. treasuries in 22 years. good morning and thank you so much for joining us on this holiday week. merry christmas and happy holidays to you and your family. if you think stocks are very expensive now, are you selling? >> i think you just have to be more selective. the s&p 500 equal weight trades at a more significant discount than the s&p 500. that expensive nature is all at the top of the mega cap stocks. obviously we had a tremendous two-year run here. we have a new presidential administration coming in. you can expect a lot of volatility so there are definitely numerous value stocks out there in the market. you just have to be a lot more

selective, and i be cautious about chasing the s&p 500 itself. annmarie: you talked about trump and you said the equity market forgot that trump is volatility bullish. not only is he willing to break if you eggs, he will break a few extra simply because he can. scarlet mentioned at the top of the show we almost had a government shutdown. with the market reminded about last week? >> i think people are starting to realize a lot of the rally has been we are going to cut spending, we are going to cut regulations, and we are going to grow gdp. you go through this government shutdown where we risked a government shutdown here, and you're like, you have to just remember it's not an easy path to achieve those goals. those are great goals to try to achieve. it is ambitious and i hope we can achieve it, but it is

washington, d.c. the market shouldn't price all that in right away which is essentially what we start to do in the equity markets and what you are seeing in the bond market here is not fully believing everything that the equity market is excited about, and that is why you see the 10 year yield up above 4.5%. >> i look at tesla shares up about 67% since election day. elon musk has really been a tailwind for the overall market. at what point does he become a headwind for market? >> one thing i find interesting is elon musk has numerous companies, most of them private. he could benefit with his relationship with president trump through any of those ventures as well. anyone could just that on tesla. there's a lot of challenges out there. it seems like a really aggressive, myopic bet.

going forward, people need to be a little more pragmatic out there and realize elon musk is a powerful guy, but tesla is not necessarily going to be the biggest beneficiary of musk's relationship with trump and as we know, sometimes these relationships president trump has, they go through rough periods, so it is really risky to just bad on one stock and expect this bromannc to continue. e>> tesla is the low hanging for you. when it comes to pragmatic approaches to challenges, i think about what is going on with honda and nissan. as an example of the m&a that we can expect. from where you sit, is this a pragmatic deal that has positive ramifications for u.s. automakers? >> i'm not an automotive

industry expert by do agree with everything you both said. this is a deal coming out of weakness and we know all the weakness that is going on in germany and worse, the auto industry there. you are looking at a situation where there are a lot of challenges out there in this world, and again, you don't want to see companies making deals out of weakness, but clearly that is what is going on here, so you have to think there is some risk out there. annmarie: obviously the auto industry is one of the biggest risks. what else is on the horizon? >> the overall enthusiasm for everything. bloomberg has this great article about the wildest trades of 2024 and whether it is the leveraged etf's, some of these other speculative trades you are seeing out there, these significant premiums to add value to some of these stocks and etf's out there.

there's a lot of optimism built into this market right now and that is not the say there are not things to be optimistic about, but when you start overpaying for them you open yourself up to this additional risk that if there is a bump in the road when you are for perfection, it can be pretty painful. annmarie: the market right now is pricing in good policy from the incoming administration, yet we haven't seen any of that policy yet. this term will begin january 20. however you thinking about the sequencing of next year when it comes to things like immigration, tax cuts and tariffs? >> that's exactly what i'm talking about. translating these policy goals to actual policy takes a lot longer than the markets pricing in at this point in time. anyone who remembers the first trump administration, he loves to negotiate and drive a hard bargain. he loves to push his opponents

to the other end of the table, so it is not going to be pretty in trying to achieve these goals. that is a key thing the market is risking. when you think of the sequence of policies, it is going to take time to play out. scarlet: i'm thinking about what is going on in the treasury market. we see yields steadily rise and there was some relief on friday but it does look like yields are inching higher once again today and that yield curve continues to steepen. how does that set us up for 2025, or do you kind of dismissal we are seeing in the final week here? >> i do think the 10 year yield is so important because the market prices off that. right now the s&p 500 earnings are about 50 or 60 basis point below the treasury yields. stocks are more expensive relative to your safe risk-free

asset treasuries then they've been in 22 years. that is an example of the equity market. what happens if we see this 10 year yield continue to rise? equities undoubtedly see selling pressure if that happens. there's also a little concerned about inflation uptick again and concerns about president trump having inflationary policies. so if we see this 10 year yield continue to rise, you are going to feel that reverberate throughout all financial markets. it is something we want to see stabilize. scarlet: what would be the catalyst that would send the 10 year yield to 5%? >> you had the fed last week conclude a 100 basis point easing cycle while increasing their inflation forecast for the next two years. basically according to the forecast they release wednesday,

it runs above its inflation target for six years which seems kind of ridiculous to be cutting rates when you are doing that. so that is what issue. obviously depending on how all these trump policies play out, everyone is concerned they are going to drive inflation. this was just the latest round of the selloff and like i said, we need to see them stabilize if they do push up to 5%. the s&p 500 is going to have significant pressure on it. annmarie: what is your base case for next year in terms of fed cuts? >> i'm going to go with the forecast at 50 basis points at this point. although the fed seems to change it every quarter. but i think we have a very strong economy. i'm surprised they cut rates as they did. gdp tracking 3%. gdp last quarter with 3%.

when you think about the higher rate environment the past few years, it has not slowed the economy. i'm not seeing it, you're not seeing it in the unemployment rate. 4.2%. it is really hard to predict what the fed is going to do because they keep moving their policy goals around and it doesn't seem to be tied to the economy. annmarie: higher for longer 2025. happy holidays and a new year to you. here is your bloomberg brief. dani: the fight over spending in washington is putting put on hold for another three months. president biden has signed a stopgap guilt -- built to keep the government running but does not include the suspension of the debt ceiling at president-elect trump demanded at the last minute. republicans had abandoned an earlier bipartisan deal under pressure from both trump and elon musk.

chinese automakers share of the european ev market dropped to 7.4 percent in november, the lowest level since march. new tariffs were added after e.u. investigation concluded that state aid provided china's ev industry with an unfair advantage. the tariffs added as much as 35% of the cost of importing cars. meanwhile apple is considering a challenge to amazon's ring. the company is working on a smart doorbell that would have advanced facial recognition that wirelessly connects to a deadbolt lock. the idea being that the doorbell can automatically unlock the door for a resident just by scanning their face, just like apple id letting them into their iphone. annmarie: basically like face id, but home id. scarlet: in a manner of speaking. this is a way for apple really to expand that franchise but also to get more people to pay to subscribe to icloud which is a huge moneymaker. >> amazon is way ahead of them on this. >> google and amazon half and

leading the way and apple is kind of playing catch-up. more on that later. up next, the trump demands for panama. >> the fees being charged by panama are ridiculous, highly unfair, especially knowing the extraordinary generosity that has been bestowed the panama. >> a lot of political fights are ready and it is not even january 20. more on that coming up next. ♪

we invent them, we design them, we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪ ♪ annmarie: welcome back to "bloomberg surveillance." it is holiday week. this is the last full week of trading of the year and you just see the s&p 500 futures flat. they were higher this morning so now we are in the red. red and green, on par for

christmas this week. euro-dollar, the euro taking another dip lower, now below 1.04. so many people say actually, analysts are saying if the wall is going up we could see parity. scarlet: i've been reading about that a lot. of course you have france with the political uncertainty, and now germany. dollar exceptionalism continues. annmarie: we are going to be speaking about the outlook from 2025. under surveillance, the trump demands for panama. >> the fees being charged by panama are ridiculous, highly unfair, especially knowing the extraordinary generosity that has been bestowed the panama, i say very foolishly by the united states. this completed ripoff of our country will immediately stop. it's going to stop. annmarie: panama's president is

rebuffing president-elect donald trump's threat to reimpose u.s. control of the panama canal. mike shepard joins us now for more. we feel like president-elect trump is already having all these political fights before january 20. panama, canada, mexico, china, greenland. some of these we've already seen the first iteration of trump. is he going to get anything out of any of these? >> that is a good question. he offered greenland as an idea. during his first presidency -- how about we buy this? and if course it was resoundingly rejected at the time and being very truly received that best by the danish government already. he will put these ideas out there because they are on his mind, because he wants to keep people on their toes. and we saw this of course right at the start, not long after he

won the election with a challenge to mexico, canada and china, the three largest u.s. trading partners over the flow of migrants and drugs into the u.s. over the southern and northern borders. and he's already seen some effects from that. in mexico, the crackdown is underway. president claudia sheinbaum has reached out to trump, spoken to him by phone. they had what both leaders called a productive conversation enter government is trying to take some steps to address those concerns. likewise, we've seen prime minister justin trudeau try to do the same thing on the border even though the border really isn't nearly as much of an issue between the u.s. and canada, but at the same time he is paying a political price at home, and some of the threats on tariffs have really upset his coalition, causing difficulties there. and then there is china. we see china moving to shore up its economy and had a potential trade war with the u.s., so we

see lots of different countries responding in different ways already to trump and he hasn't even taken office yet. annmarie: he also talked about tiktok and he said we did go on tiktok, we had a great response with billions of views. he then goes on to say they brought me a chart and they look at it and i said maybe we've got to keep this sucker around for a little while. tiktok is facing down this january 19 grand -- ban. what does it mean when he says he wants to keep the app around a little longer? >> it does keep the suggestion of the prospect that he may try to do something to slow enforcement or do something administratively to try to allow the app to continue operating in the u.s. however, there is a law passed by congress signed by the current president, passed by congress by a wide margin.

the app must be sold by its chinese owners. otherwise it will be band. the china-based company bytedance does not want to let go of tiktok. it is a lucrative venture for them and they also say it would be very difficult to separate the algorithm that makes tiktok so valuable for it to be sold very easily. so this would be a tough problem for trump and his team to try to solve. tiktok does have one last chance and that is that the supreme court. they are trying to overturn that and they have arguments scheduled on january 10 before the high court really in a last-ditch legal effort to maybe change their fortunes. scarlet: so we had that to look ahead too. all of this invites the inevitable question, where is joe biden right now? he is kind of absent in all of this and i bring this up because i did see a headline on the bloomberg terminal that says the

biden team is looking into investigating chinese chips, which would then set up trump for tariffs. it is an interesting move in that whatever they are doing, they know they can't get done right now in the remaining 30 or so days so they are kind of setting things up for the next white house. >> you bring up an interesting point about biden. he has been conceding the stage in many ways to the incoming administration, perhaps more visibly than we've seen in other transitions. the last transition of course was quite rocky from trump to biden, with trump essentially refusing almost to leave office and deny that he had lost the election, and then not really taking part in a lot of the official handover from his administration to the next one. so biden is doing something a little bit different. and of course we have seen more and more is depleted state

physically, and we've also seen how his priorities, we are seeing them take shape in the final days. he's pardoned his son, and he also does plan to meet one last time with pope francis at the vatican. so he is making his priorities clear. one of those will perhaps be on the china front, as you said. they will try to launch this investigation if they can pull it off by the end. they've already put on export -- expert controls to limit china's tech ambitions especially in hiring semiconductors, especially the advanced ones. that will lay the groundwork for perhaps even tougher measures by trump when he comes in. scarlet: curtailing china's tech ambitions is one area on which the current and incoming white house do agree. what other issues kind of fit the mold? what else could joe biden be teeing up donald trump for?

>> one thing is the rejection of nippon steel interest in acquiring u.s. steel that is something both candidates really railed against during the presidential campaign. we know president biden very much opposed the sale to a foreign buyer of pittsburgh-based u.s. steel, so it would be interesting to see how trump response to that, and how quickly biden moves. that would be one of the things we would see him trying to take action on as he prepares to go out the door. >> this is one of those things that they both agree on, that it should remain american-owned u.s. hands. thank you so much for joining us and merry christmas to you and your family. scarlet, he is ceding the

. scarlet: mar-a-lago has become white house south. annmarie: one other issue that potentially we will see before this biden white house leaves is sanctioning outright russian crude. and that potentially could be a problem or a blessing for the incoming administration. coming up on the program, the outlook for the oil market in 2025. you are watching "bloomberg serveillance" on this merry christmas week. good morning. ♪

♪ ♪ ♪ something has changed within me ♪

♪ it's time to try defying gravity ♪ ♪ ♪

>> welcome to "bloomberg surveillance." the final week of 2024. this is just that purgatory, christmas week, new year's week. if you are in the office, thank you for turning in. s&p 500 futures are lower. last week it closed in the red for the week. might get another down week. scarlett: doesn't change the fact it's up 25% this year. anyone who is long equities this year is pretty happy.

annmarie: we avoided a government shutdown. we were on the brink of that shutdown, federal government agencies actually preparing what would need to be done if they were going to be shut down. u.s. 10 year yields, 4.53. we do have at 1:00 p.m., a two-year bond option. scarlett: there's also three-month and six-month at 10:00 a.m. this morning. a lot of talk in the past couple of weeks about what and how far the 10 year yield could go up. 6%, seems a little high, it is out there. annmarie: in terms of what is going on in currencies, the euro-dollar is below 1.04. pretty incredible.

it has been this insatiable demand for the u.s. dollar. scarlett: the u.s. dollar has been on a real tear. it's only posted one down week since october. that theme of american exceptionalism really reflected in the markets. the economy growing faster than expect. the incoming government being -- if you put tariffs up that will only be stronger. under surveillance israeli prime minister benjamin netanyahu failing to act forcefully against the houthi's. benjamin netanyahu calling on israeli citizens to be patient saying it may take time. he's bowing to retaliate. . during that, there was friendly

fire. two u.s. navy pilots shot down over the red sea, they were rejected. thankfully no one died in this incident. you could see what is going on with the whose -- houthis controlling the red sea. controlling a big chunk of yemen. benjamin netanyahu accusing the houthis of affecting world shipping. shows no signs of clearing up. annmarie: u.s. military is there protecting the only vessels, which at this point i believe are chinese and russian vessels. president-elect donald trump addressing concerns about the outsized role yuan musk has in his incoming administration saying musk will not be taking

over the presidency and calling such talks a hoax. there's a lot of talk on x about how it's president-elect musk. a lot of democrats playing this up. trump said even if you wanted to be president, he cannot, he's a u.s. citizen. it is something we have all noticed when you look at how yuan musk -- elon musk's tesla shares have gone up since the presidential election. look what happened with the almost government shutdown that we had. he got in the way and tweeted up a storm. saying the republicans should vote down. annmarie: he also tweeted this morning taking aim at not only

jay powell but the fed saying there are too many employees. he is now in charge of a task force and is looking at slimming the government. scarlett: they don't have any legal authority? annmarie: it's a task force. it's going to give recommendations. maybe they will be targeted at the fed, we will have to wait until the mandate comes out from that until 2026. honda and nissan so -- signing an agreement for merger talks. it should be listed by august, 2026. the move reflects the panic mode at nissan. >> it is a desperate move. frankly, the synergy between the two companies are difficult to find. there is practically no

complementary between the two companies. the brands are very similar. in a certain way, nissan it is a desperate move. annmarie: fantastic scoop by manus on friday. is he right? is this basically a desperate move by nissan? craig: i think there are some minor points you could make to couple with those arguments. you could point to the idea that nissan is really lacking in hybrids and honda could help them in that regard. he's absolutely correct. these are two companies that are relatively strong in japan, in the u.s.. really struggling in china and have an ever shrinking presence in europe.

they have a lot of the same strengths but also the same weaknesses. if you are japan, you want to come up with some sort of means for putting a floor under nissan , how do you go about doing that. there are not a lot of attractive options to doing that. there is a bias towards it being a japanese solution. scarlett: we heard that foxconn was interested in investing or maybe buying nissan. how does that fit in with this eventual merger? craig: it really looks like this will be sidelined at this point. there was real concern it seems in japan about the prospects for that sort of a deal. it may be led to an acceleration of honda and nissan's conversations going back months.

there are perfectly legitimate reasons to be concerned in the sense that foxconn has been trying for years to build up a presence in the auto industry. it hasn't gained a lot of traction. it is an untested player in this market. there is a bias within japan of we want to protect japanese interests and if they swooped in not only do they lack experience but they were -- are a taiwanese company with a significant presence in china. do we want to see a national company as big as nissan and up outside of japanese hands? the answer will be a resounding no to that. scarlett: appreciate you joining us. we want to shift gears now to oil.

it is steadying after a weekly drop. traders are weighing donald trump's threat to reimpose u.s. control over the panama canal. we saw wti drop 1.9% last week and we are looking at brent falling more than 2% last week. currently we have seen them on a little bit of a slide. this latest comment about the panama canal charging exorbitant fees and wanting the u.s. to take that over. 2% of u.s. -- global supply passes through the panama canal. what does that mean for oil prices? >> i don't get changes anything overnight. we have to see what gets done. there's a lot of talk right now. of course, if that trade were to be disrupted, we have seen that

by the way over the course of this year. there were significant droughts that resulted in lower flows through the canal. they are the two biggest ones that get affected. it means the shippers will have to take the much longer route around africa. it is bullish for any shipping company. it is bearish for the u.s.. i don't necessarily think trump wants that. producers will have to discount the prices to accommodate for higher shipping prices. scarlett: it changes the cost input for a lot of companies involved. crude has been changing and -- trading in a narrow range. when it comes to supply, is it simply ample or is there a real risk that we are looking at a supply surplus that could

persist for years on end? amrita: that is the narrative with the surplus that you just talked about. it is interesting that oil inventories across the board are variable. we have seen some bills. most importantly, opec has come out and clearly stated they will delay the unwinding of the cuts. also more importantly what they have said is they will reduce the pace at which they bring back production over the course of next year and through 2026. i think the market has shifted its focus. it was all about the surplus but now it is shifting its focus to what trump will do. the belief is trump wants lower oil prices and he will get it no matter what. annmarie: there's a ton of spare capacity out there, isn't there?

amrita: i think that's fair. one of the biggest reasons why the market has struggled to rally. if capacity is high, a lot of people will say all of this is artificial. where is that spare capacity. the bulk of it is in saudi arabia. these are not countries that will put those barrels by cheating. if the spare capacity is concentrated, it very much depends on opec policy whether it actually comes to the market. we think sanctions on iran will strengthen up. you think the trump administration will take a harder view when it comes to enforcement? annmarie: the biden

administration may outright sanction russian crude, look at that due to prices? amrita: that's an interesting one. the current administration, the price gap was never really enforced. we have heard from multiple refiners where the state department said to them it is ok to come under scrutiny. elections are done, oil prices are low. we didn't lose any russian oil because of sanctions. what i do think a direct sanction on russia could do is tighten up a lot of availability in the east. we are already seeing lower availability in china because of certain sanctions the administration has come up with against iran. the asian market is already

tightening up. anything would make that significantly tighter. scarlett: the expectation of that might be driving hedge funds to take a more polished view on oil. how durable are these positions? amrita: this is the first time in a while hedge have been bullish, i think one thing we should not forget is yes, while we talk about fundamentals, it is really the dollar, the yield, lower interest rates. what we have seen in our quant team, it has increased because of the fed rate cuts allowing hedge funds to come back into this market long just like they were cutting long positions and going short when the fed started to raise interest rates. that has been a pretty big

driver. ultimately, if our view is right, it will remain fairly balanced year rather than being in surplus. the commercial speculators, the trading houses, in that kind of community still hold a record short position. there are shorts to be covered. funds in some ways are ahead of the game a little bit. if we do get it, i think you will see some of these other shorts getting covered as well. scarlett: it could very well happen. thank you so much. let's get you an update on other stories elsewhere this morning. check in with dani burger for your bloomberg brief. dani: christine lagarde said

that they are closer to reaching their 2% inflation target. she also expressed concern about trade frictions when president-elect trump takes office warning that retaliation is a bad approach that could harm the global economy. donald trump has named his -- stephen moran to his head of economic advisors. he co-authored a paper with -- accusing the biden administration of manipulating the economy via treasury issuance. nvidia reportedly plans to build an overseas headquarters in taiwan, if the -- favors taipei city as its location. the ceo had plans to increase investment in the country building a large r&d center. that is your brief. scarlett: traders are betting on

more cuts from the federal reserve. >> the most important thing for me was we needed to recalibrate policy. i feel we have that recalibration phase behind us. we could return to the more typical pattern of gradualism for the fed. scarlett: we look ahead to the post recalibration era, that is next. this is bloomberg. ♪ to go further, you need to be ready for what's down the road. as energy demand continues to rise, we're harnessing breakthrough innovations to increase production in the u.s. gulf of mexico. our latest deepwater development, anchor, produces previously inaccessible oil and natural gas, allowing us to deliver the energy we all need today so everyone can follow their own road.

that's energy in progress.

if your business needs a new application, then developers will have to write code. a lot of code. if an application needs to be modernized, then you'll need time, resources... and caffeine. if this sounds daunting, then use watsonx code assistant. built with ibm's granite code model, it's ai designed to multiply developer productivity, so you can generate code quickly. ibm. let's create. scarlett: good morning. we are looking at futures, equity futures fairly steady this morning. we averted a government shutdown. a drop of 1/10 of 1%. nasdaq futures looking higher by

just a hair. just under 1.04. so far this year the euro has lost almost 6% against the dollar. weakness after weakness. annmarie: everyone is talking about potentially parity. fighting against the growth prospect and potentially the walls going up with the united states. scarlett: that's why everyone is flocking to u.s. assets. the 10 year yield has been elevated. oil prices not doing a whole lot. traders betting on more rate cuts from the federal reserve. >> the most important thing for me was we needed to recalibrate policy. we have that recalibration phase behind us. looking at incoming information when we turn to a more typical

pattern of gradualism for the fed, we have to remain agile. we have to be resolute to achieve our dual mandate goals. they are the ones we always deal with. my projection is it will take many fewer rate cuts this year than we thought. scarlett: we had muted inflation data that inflated hopes of more data year after the fed trimmed its forecast to two rate cuts. joining us now is deborah cunningham. we heard the san francisco fed president talk about recalibration. she mentioned the word gradualism. what does the fed's next phase look like whether it's called gradualism or anything else? deborah: gradualism is a good term. simply because it is data

dependent and seems as though the data dependency aspect of it is going to rule the day. honestly, i think given where we are from an economic standpoint from a political changeover standpoint, i think the question is out there from the economy standpoint. you see two numbers either higher or on the screws with expectations. friday was a little bit lower than was expected. there are glimmers of hope and despair. that dictates the gradual listing approach. scarlett: you mentioned gradualism dictating everything and data dependency being paramount at this point. the economic projections the fed released tend to be more important especially in a day where everyone had priced in 25

basis cut. there was no consistency at all in whether the projections reflect incoming administration policies. jay powell said some people did take a preliminary step. all this seems really messy to me. doesn't it make more sense to be on the same page? deborah: i think it has to do with the inconsistency. it is a scatter at this point. expectations for gdp, inflation, where it will end up. i really do relay it to the fact that the information is not consistent. who you are, whether you are

glass half-empty, glass half-full. with different expectations, in the not near future but i will call that the little bit long-term future. annmarie: they said the fed flip-flop could risk u.s. long-term future, do you agree? deborah: i wouldn't call it a flip-flop, i would call it being in tune with the market, with the economy, i don't agree. i think the fed would like to be consistent and always follow its preassigned path and what its expectations are, they rely on the feedback loop. being i guess responsive to the

information they are getting is more like what i would call it rather than doing some sort of a flip-flop. annmarie: merry christmas and happy holidays to you and your family. deborah cunningham. it is interesting because some members of the fed said they were calibrating what next year might mean. we are just looking at the data right now. scarlett: it raises questions about whether they are on the same page. the next -- last fed meeting had one dissent. it will make for a much different debate as well. scarlett: she put out a statement saying it is individuals in her district. the lower income individuals dealing with higher inflation. coming up, another hour. annmarie: terry haynes of pangea policy, tom steyer of galvanize climate solutions.

clint henderson, the man you want to talk to this week if you are traveling. you are watching bloomberg surveillance. good morning. ♪

♪ ♪ ♪ something has changed within me ♪ ♪ it's time to try defying gravity ♪ ♪ ♪

>> we have seen such a frothy market over the last month. >> i don't think the cases have gone away. >> the former winners are going to start to decline a little bit. >> everyone has a little uncertainty at the moment. >> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz, and annmarie hordern. annmarie: good morning, happy

holidays, merry christmas. alongside scarlet fu today, i'm annmarie hordern. jonathan and lisa have started their holidays early. left me here to hold down the fort with scarlett. we are seeing no action. it is christmas week. what year it has been. looking into next year, the questions on the horizon about the fed and about policy. he talked about positioning and policy risk. drove a selloff to define the week. how many more of those selloffs could we see in 2025? scarlett: it was violent, stark, deep, big. days where we recover our kind of forgotten. it resulted in prices that have priced in great scenarios for

everything. we almost had a shutdown last week, it was averted. annmarie: third time we tried to get that deal through. federal agencies start to take all the precautionary measures they need to take in order for those shutdowns. could you imagine what a shutdown would've meant into january around the holidays for the faa. things get delayed. they do get paid but it gets delayed. scarlett: busiest travel week of the year. i know we will talk to the point sky about what that would have looked like. we are just dealing with the usual holiday travel mess. annmarie: if you are traveling, good luck to you. s&p 500 futures are flat. the s&p 500 closed down on the

week. it was a to mulch was weak when it came to trading. coming up this hour, sarah of cleo capital as stocks come off their worst week since mid-november. addresses elon musk's growing influence. the points guy on the state of holiday travel. the s&p 500 a little bit lower. sarah of cleo capital anticipating a big year for dealmaking. people have plenty of cash on the sidelines. ipos are going to happen. look at mag seven to take their seemingly endless piles of cash and go on a shopping spree. sarah, thank you so much for joining us this holiday week.

where do you think they should go shopping? sarah: i think ai is one of the top places. we have already seen this with microsoft. a lot of ai startups have been funded. what people are quickly realizing is it is expensive to keep funding them, keep scaling them. these big companies, they need that innovation. you will see a lot of tieups that have not been possible over the last few years. annmarie: how much of this is driven by change of leadership in washington, d.c. sarah: some of these companies were going to need to go out anyway. you see companies that in that dip they raised capital in terms and said hey, we are going to make it very painful for you if

you don't. it seems to be doing ok. i think we are going to see companies that had to ipo anyway. it's not the right time, we will not get great returns for you kind of feedback, it isn't going to hold as much water. we do have a new administration coming in that has indicated they will be a lot friendlier to ipos and a lot less hands-on, on the regulatory. scarlett: this time last year investors were waiting on certain companies to go public, notably reddit. are there any big names for 2025 people are anticipating with the same excitement that they were for reddit? sarah: people have been anticipating strike to go public. that certainly has been one of those names people have been salivating over for a while now.

i think car not will be -- klarna will be another bright spot. they have already massively price themselves down because they were raising in the private market that were totally out of whack. during that downturn a lot of them had to do some really hard, internal private repricing. they are not sort of so unaligned with public market comps. 500 billion dollar elephant in the room is spacex. will we see some sort of public market transaction? probably not the whole company but potentially with parts of it. there are some really big names people in the private markets are betting on to go public soon. those are some of the same big names people have been betting on in the private markets for a couple of years now. we don't know until they file.

scarlett: you talk about cybersecurity being a big theme for you. companies that will ipo. sarah: i think we will see a lot of activity everywhere. the internet is basically getting unusable for people. i use a bank where i can't send wires, i have to call them. this is a huge wealth manager in the u.s. because there's so much fraud they say it's better if you don't touch it. that is not a way to live. that is not sustainable. but we will see is a lot more consumer companies focused on cybersecurity. an area people said consumers won't pay to stay safe on the internet. you have to at this point because everyone is losing money to scams constantly. across consumer, defense, even infrastructure we are just going to see a lot more at the really

early stage. we launched a cybersecurity accelerator because we want to put our flag in the ground and say you don't have to just build for enterprise, you could build across the spectrum. everybody deserves to go across the internet. when bitcoin goes up, crypto goes up, we tend to see even more scams. you have entire countries funding huge swaths of their nuclear program with ransom to bitcoin. i think cybersecurity will be really big. they knocked the entire internet off-line. they are doing well because people need their product. scarlett: that's a good point. the big cybersecurity companies have taken a few knocks. people see blue skies for them. what kinds of companies will

they be looking to buy versus those they would form partnerships with, how are you thinking about that? sarah: they are going to be looking for ways to get new customers. what you need to do to have good cybersecurity starts to get into what you need to do to never lose your computer. if you have 25 character unique passwords for every service you sign into and you change them every quarter or every month like you should, you never have any time to get anything done. i think there will be a push for how do we make cybersecurity sustainable? most failures happen because an individual decides i don't need a password, i won't lose my laptop. how do you make it easier for the average human? for you and i to not accidentally expose our company, bank account, social security

number two these bad actors? they will be incredibly attractive to these companies. we have this encryption technology. we know how to keep things safe. it is really hard to keep things safe when it creates a burden on the end-user. annmarie: how much of this is also a concern for the u.s. government when it comes to state actors? scarlett: the u.s. government -- sarah: the u.s. government has come out and said don't use sms. they are saying it needs to be encrypted and to end. sending an sms broadly with the chinese attacks on everything, you have to assume your texts aren't safe. it is certainly a defense problem in the sense that government spends a lot of time

and effort hacking and a lot of the big sort of you get a scam message and somebody hits you up on a dating app and all of a sudden wants you to help them trade crypto. a lot of that stuff is coming from government actors and they are using that to make up for sanctions. when you are home over the holidays this year, ask them if they know anybody who has gotten scammed. if you see how many 70 or ye 80-year-olds are getting scammed , this is a gigantic problem. annmarie: what also you looking for, for 2025? sarah: we are going to see a lot of money going back into startups. we had a huge amount of that happening in ai. there has been a slow down

investors, the venture funds haven't had those returns coming back. a lot of venture funds do hold different crypto, different tokens. as those classes heat up, what you will see is a lot more money going back into startups. i think they will be really hot. we are also going to see a little bit of uncertainty at the beginning of the year. once people have a sense of what is going to happen there, anything that is not directly impacted by any tariff, you will see a lot of growth. the intel's of the world are far from over, those legacy tech names in the public market. it will be more of the same. it might feel even faster paced like the last few weeks and last few years given the fact that there is a lot more money coming

off the sidelines and into investing. annmarie: thank you so much for joining us, merry christmas, happy holidays to you and your family. do you know what else will be a theme next year? consolidation in the auto sector. scarlett: nissan and honda signing the outline of a basic merger agreement where things will get going by january, 2026. i was looking at some old stories. it was interesting to see nissan officials were saying they have 12-14 months to survive. they were on the prowl already looking for some type of savior. scarlett: nissan's former boss talking about how this is really just survival mode. we will have more on that story. we will have an update on other stories we are watching this morning. dani: alleged united health care ceo shooter arrived back in

manhattan after being flown in from pennsylvania. he is currently being held at a detention center in manhattan. he has also been indicted on federal charges including first-degree murder, which could make him eligible for the death penalty. xerox announced it will buy lexmark in a deal valued at $1.5 billion. it will return lexmark to ownership as it struggles with sales. xerox expects the deal to close in the second half of next year and says lexmark would add to its ups and free cash flow. sonic three took first place in the weekend netting 60 $2 million in north america. the popular videogame franchise easily beat out mufasa. a total hall of $384 million in

the domestic box office after five weeks. that is your brief. annmarie: have you seen any of those movies? scarlett: i did see a movie on netflix. annmarie: i saw gladiator 2. the original was better. there were sharks in the coliseum, which to me is so unrealistic. it was a bridge too far. mr. trump: all of the different hoaxes, the new one is president has ceded the presidency to elon musk. that's not happening. annmarie: not happening according to president-elect trump. that is next on "bloomberg surveillance." ♪

annmarie: good morning. setting the record straight. mr. trump: all of the different hoaxes. the new one is president trump has ceded the presidency to you on musk. no. that's not happening. elon has done an amazing job. it is nice to have smart people we could rely on. annmarie: president-elect donald trump addressing concerns about elon musk's influence on the administration adding that the tesla ceo cannot be president because he wasn't born in the united states. terry joins us now, thank you for taking time out of your

morning this holiday week to join us. how much of a liability do you think trump is right now and is he overstaying his welcome? is this getting to president-elect trump? terry: it's a matter of how he does, what he does, and how visible he is. musk getting over his skis on a bunch of things is bad for president-elect trump. one of the things he does quite often is gives people rope, sometimes too much rope and has to reel them in. that is largely what has happened with musk. as much as he came out late last week and made federal spending much more difficult to come by, he disappeared rather quickly. it's a matter of calibrating how

and where he will be most effective. i do expect him to be around for a while. annmarie: let's talk about the shutdown debacle. we could have been having a monday morning right now with the government shutting down. we were on that trajectory. what episode did that tell you basically over how trump was going to deal with republicans in congress? terry: he has a job to do in putting the toothpaste back in the tube. it won't be perfect. the last thing trump needed was such small majorities. he's going to have to spend more time making it up to congress rather than congress making it up to him. you can't be in a situation where you are treating a coequal branch of government. that's what congress is and what they think of themselves as.

you are treating it as though they could turn on a dime, do one 80's on policy positions that many in your own party have been taking, when you don't get that, threatened to run them out of office. that's going to be a job that will involve the president personally. it's going to take a little while and delay all kinds of things. scarlett: i want to go to that idea that there is a handful of republicans who defy the president-elect. 38 republicans who voted against mike johnson's plan b funding bill backed by the president-elect before moving on to plan c. will that or will that not align with what the president-elect is

seeking? terry: you have 38 members of your own party. they went right ahead and did it. you have twice as many, three times as many who actually think what they express. it is much more difficult situation that may be apparent just by the votes. secondly, after all of this i continue to say i think the tax bill is about 80% today. that is volatile. the reason why is very simple. congress wants the tax bill. just like in 2017, congress gets to set the parameters and deal with the specifics and trump's influence is limited to some things he might want in the bill . whether those things are doable or not are up to

congress. they will be more willing to defy him on many of those things. the tax bill is going to take a while. it took a little bit longer thanks to what they did last week. scarlett: we will speak about the damage musk might have done to the agenda. he has been a drag on u.s.-u.k. relations. how much time does trump or his team need to spend to clean up the mess here as elon musk puts the u.s. in an uncomfortable position? terry: i'm not sure i've seen a situation where the relationship between allies has been upended and shaken quite as much as the u.s.-u.k. relationship over the last week. that has happened on both sides of the pond. musk offering to back the reform

party to the tune of 78 million pounds is an indication that trump himself thinks the existing political parties in the u.k. are somehow not worthy of being dealt with. on the other hand, the u.k. prime minister made a bunch of messes here too. sending lord mendelson to washington when he's known to loathe trump is a bad side for the relationship. mendelson also seems to be outsourcing policy to some extent by mendelson saying it could be brought into deal with trump. the u.k. is in a situation where they might have dueling ambassadors. actually being the conduit to

trump. this all-around is an untenable situation. it will take a while to shake out. scarlett: sounds like it's messy diplomacy in the meantime. it's the last week of 2024. a holiday week. this is trump world we are talking about. what is a headline you will be anticipating or bracing yourself for this week. terry: let me run a thread through a lot of things that you and anne-marie have talked about this morning. the panama canal, greenland, canada, and the honda-nissan tie up all have in common? the u.s. defense and u.s. national security in trump's sometimes clumsy way, we are

talking about the situation where he is very interested in drawing a united states defense parameter in the atlantic and pacific, the nissan-honda deal is the latest of the indications that the west is going to have to fight back against china's desire to dominate sectors and subsidize. annmarie: thank you for your time. merry christmas, happy holidays. coming up next, tom steyer of galvanize climate solutions. this is "bloomberg surveillance", good morning.

to go further, you need to be ready for what's down the road. as energy demand continues to rise, we're harnessing breakthrough innovations to increase production in the u.s. gulf of mexico. our latest deepwater development, anchor, produces previously inaccessible oil and natural gas, allowing us to deliver the energy we all need today so everyone can follow their own road. that's energy in progress.

♪ scarlett: good morning. i'm scarlett flew with annmarie hordern. let's get you an update on where things stand right now. after two straight weeks of losses, the s&p 500 indicated to move higher at the open.

this is annmarie: annmarie: a modest gain. small caps under pressure, there are some catalysts later on today. we have durable goods. treasuries, there will be a debt option today. annmarie: this is what lisa would start the show with. there was no government shutdown. scarlett: we have had a very different monday morning. yields continue to move up. they have been steadily rising. a lot of talk over 5%, maybe even 6%. annmarie: if we were to see the 10 year yield at 5%, 6% of what you were saying comes true, how will that push back on some of the fiscal policies the trump administration would want to do when it comes to things like tax bills? scarlett: it will increase our interest management expenses. a quick glance on euro-dollar.

the dollar has been on a tear, up 7% when you look at the bloomberg dollar index. we continue to see the euro weakening. clearly the euro is a direct victim of a threat to impose tariffs. this time not buying u.s. oil and natural gas. annmarie: right after trump won, ursula von der leyen said she had a phone call and said maybe we will buy some more. the u.s. is shipping tons to europe it but they are also buying from russia. that is how trump is going to try to enact deals. it will be a very transactional white house. scarlett: two hours away from the start of u.s. trading. let's get to your morning movers. dani: warren buffett moving some

equities this morning. on friday we learned of some purchases brookshire hathaway had made. these shares rallied on friday. happening again today. he's sitting on a paper loss on this equity since he started buying shares of it two years ago. he owns nearly one third of the company. eli lilly also off the back of one fda approval for the weight loss shot used for sleep apnea. this is the only drug on the market approve for sleep apnea. everything else is more mechanisms. it works because of the weight loss that it causes. this might help them get more insurance to cover it.

qualcomm had been alleging it was violating its terms of agreement. anyway, qualcomm has won that lawsuit. the judge saying it is well within the right to do so. back to you. scarlett: we will check in with her a little bit later on. honda and nissan taking their first steps for a merger. a holding company would be created to house the new entity. this would create one of the world's biggest carmakers and compete with toyota, also chinese ev automakers. that is the big one. annmarie: that is what is driving this and why we could see more consolidation.

this is going to create the world's third biggest automaker. told manus last week that there was reporting that there would be a tie out. carlos ghosn said he did not see the synergies between the companies. said the brands are too similar. for nissan, it is desperate for long-term vision and potentially it will be good. scarlett: the trade ministry of japan proposed this five years ago and nothing came to pass. with nissan under further financial pressure it becomes a necessary step to take. elon musk, writing on x that the fed department is absurdly overstaffed. he says this from his position as cohead of doge.

this is not a clear-cut government agency. doesn't have authority to do anything about this beyond talk about it. scarlett: this is basically a task force. they will offer up ideas to congress. what is so interesting is i tweeted something about something he tweeted. someone said i am a u.s. citizen that pays taxes. why don't you care what i have to say? his proximity to power and he will be leading this task force. he doesn't have the teeth and some of the capital to actually do the work. it will offer ideas to the administration. he took aim at the fed this time talking about how it's the easiest job in the world. the fed employs 24,000 people. elon musk thinks he could scrap some of those people. scarlett: he needs to play to

what donald trump has already said. trump also threatening to reimpose u.s. control over the panama canal. calling its shipping tolls ridiculous and saying a sovereignty is not negotiable. the president of panama firing back saying it is part of panama and will continue to be. a big part of this goes back to china. china has a pretty big role here. annmarie: the chinese company has two of the five ports adjacent to the to now. in 2017, panama severed diplomatic ties with taiwan and declared there was only one china. this is actually trump's concern about china's influence in the region and less so about what is

going on with the panama canal. scarlett: we want to stay with what is going on in washington. the current administration is sending an ambitious pledge to cut greenhouse gas emissions. whether that is feasible is the question with donald said to resolve climate regulations. 2025 is not about climate, it's about energy demand. renewable should be at the center of an energy bill no matter your political persuasion. that parties persuasion, that they think -- see things similarly? >> i talked to a bunch of republicans advising the administration. when i am seeing is what's driving energy is market costs,

international competitiveness, national security. there will be a lot of political talk, the words drill baby drill are a part of the conversation. what we are really seeing is the differential in cost. renewables are cheaper now. if you are following where natural gas is talking about the demand for electricity in the united states and around the world, renewables are cheaper. they are getting much cheaper. at the same time, natural gas was three dollars 80 six cents. almost double where was. in europe, natural gas is $12.86. when we talk about exporting liquefied natural gas to europe, we want to sell something at

$3.86 for $12 80 six cents across the pond. that's going to push the cost of american natural gas. when we look at it in terms of cars. but we could see is the economics are driving us to clean energy. that is where we are going. that is what the cost say. scarlett: the cost structure you believe will make the argument for us. which industries will make that case to the incoming white house? they are looking at the energy industry, they are saying we will move forward. we will look for oil in all of these different places. tom: for all of the industry demanding electricity, they will want the cheapest electricity.

that is a huge driver. the cheapest electricity is going to be renewable. that is true here and true around the world. you talk about moving back to fossil fuels. they are not cheaper. they are already more expensive. in 2023, new electricity generation was renewable. they weren't doing it to be nice. it is all about international competitiveness and national security. this is something that is going to be driven by business decisions. i think the trump administration will get behind it. annmarie: republicans say they want the market to decide above all for energy across the spectrum. do you think deregulation will help renewables?

why do you think biden didn't lean into that? tom: i think he did lean into it. this is a difficult problem because it is a political problem. people on the left want to make sure things are done perfectly. i think the trump administration because they want to permit new oil and gas drilling will be pushing for faster permits and lower oversight. if that close including renewables, an explosion of low cost, abundant renewable energy. annmarie: when you said the u.s. is short energy next year, how?

tom: when you talk about crude, we are the biggest producer of oil in the world. we do everything they want to do in terms of alaska opening up, more than five years from now we will go from 13.5 million barrels to 14, give me a break. that's the big revolution? it's hardly any change. in the context of the world that uses 102 million barrels per day , when you look at what is going on, we will produce a lot more electricity. that is something that will come from renewables. if you look at oil demand, the developed world has already peaked. china will be peaking its fossil fuel demand. that's not something where demand will be growing.

gasoline usage is either flat or going down. annmarie: tech companies are now going after their own electricity. do you think there's more for nuclear? tom: the question in nuclear is simple. the question about toxicity, a question about making sure you don't have a true disaster. there is cost. we are talking about vision, the kind of nuclear decade -- energy france has been using for decades. every time people have tried to bring fission on in the united states, it hasn't been cheap. the last nuclear plant brought up was in georgia. it was something at least 4x the original cost. very expensive energy. in fact, that is energy that is

very expensive. it is more complicated. i'm just saying, the promise has been there for a long time. they have never gotten it to be cheap. scarlett: could they get the energy they need from renewable energy? tom: no question there's enough. the question about electricity for ai is it has to be available. the real issue here is how much baseload energy, how much stuff they could call on at any time. where will that come from? could it come from batteries? hydro, nuclear, fossil fuels, enhanced geothermal?

everybody's trying and everybody wants to get baseload energy. i have some opinions. proof of the pudding will be who could produce it, how much could they produce and could it be completely reliable? scarlett: appreciate you joining us today. let's get you an update on stories elsewhere and check in with dani burger for the bloomberg brief. dani: president biden is commuting the death sentence of 37 prisoners to life in prison without a chance for parole. his actions would leave just three inmates on federal death row, they were convicted of terrorism and hate motivated mass murder. rupert murdoch snooze core has agreed to sell fox tell to dazn.

dazn backed by billionaire len lafnick is a prominent player in live sports. the commander stormed back for a last-minute touchdown against the eagles. jayden daniels made up for a late game interception with a clutch drive for the wind. it ended philadelphia's 10 game win streak. that is your brief. scarlett: more exciting football games to come later on this week. record-breaking holiday travel. >> we are seeing an uptick in lodging, travel, experiences, also what we see in our consumer data. there is still strength there. scarlett: what you need to know before you get on the plane for your holiday travels. you are watching "bloomberg surveillance."

scarlett: under surveillance this morning, record-breaking holiday travel. >> we are seeing an uptick in lodging, travel, experiences. what we also see in our consumer data. people are spending on memories. how did they take trips? we see strength in the consumer. we have seen an uptick in holiday spending going back to the holiday season. there is still strength. scarlett: nearly 40 million people expected to pass through airports across the country this holiday season. joining us now is clint

henderson. it is good to speak with you. we are in the office because it is a monday. talk about the calendar effect. with the holidays on wednesday this year, is it a long weekend that spreads the travel out a little bit? clint: we saw the highest single day ever. it doesn't really impact things -- thanksgiving travel. the airlines got through the busiest part of the lead up to christmas fairly well despite a few storms. that is good news. i think the airlines in general are in better position. they are staffed up. they have the people they need to get things moving quickly.

barring a major storm like we saw in 2022, we will get to the holidays with flying colors. scarlett: no major storm at the moment. no shut down either. everyone could get through airport security. people obviously traveling to visit family or go home. they are also going away on vacation, where are they going to? clint: new york has been going through some incredible record-breaking crowds. places like florida, cancun. we are seeing interesting data that suggests they are going much further. they are being inspired by tiktok and instagram to have more exotic travel. tokyo is one of the top cities for international travel.

the strong u.s. dollar is helping. that will help push up numbers in europe. look for some international bargains. i just booked myself a trip to portugal. the u.s. dollar is so strong right now. a lot of people are traveling well into winter and of course for the season that we love. people are spending longer away, 5.5 days, people are going further and they are going for longer. annmarie: is it the strong u.s. dollar that they feel their money could stretch them longer? clint: people are really into experiences. the other interesting thing is people could work from home now. they are tacking on a day or two

because they have to be in the office. i'm able to work from home. more people have been able to do that. they are a bit stretched. annmarie: any viewers preparing to travel, what is your number one tip? clint: have the airline app installed on your phone. finally, that's where they will offer you cheap upgrades. you beat out travelers like me so you could get an upgrade to first class, who doesn't want that as a christmas gift? annmarie: what about -- scarlett: what about luggage? we are all trying to get by. when you get to the airport and you are at the gate, they make you check it in any way. everyone is trying to avoid that scenario. any advice on that front? clint: i hate checking baggage.

when i come from new york to california, i bring presence with me. i got an apple air tag. we would write about this and talk about it for years. it's the first time i used it. it is really cool. with the air tag, some airlines allow you to share the location with the airlines. maybe i have to look more into checking luggage into the future. pay for that extra seat, paid for that airline credit card so you could be on the first aboard. scarlett: the points guy, thank you so much for joining us. really appreciate it. we have jonathan miller -- a lineup of experts taking you through the next hour. you are watching "bloomberg surveillance."

♪

♪ >> data on inflation has been coming in slower. i would say that progress has

slowed. >> the fed has to reiterate its commitment to its inflation target. >> the market at ms have -- every step has had worried about inflation. effectively, where people are starting to get nervous is from the positioning standpoint. >> the big question to me would be how high can these yields actually go? announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. annmarie: good morning on this christmas eve eve. this is bloomberg surveillance alongside scarlet fu, i'm annmarie hordern. thanks for keeping me company this morning. you are not used the 3:00 a.m. wake-up call scarlet: i woke up at 2:00 a.m. because i had to make sure i was fully awake and ready to go. annmarie: the appreciate it especially as we are on the shorten holiday week. thank you for working as we are as well.

you are one who has continued coming into the office, not taking the early holiday. tariffs coming. the risk to global markets, tariffs coming at 90%. number two, nvidia earnings disappoint inflated expectation, 90%. and the u.s. economy really accelerates an animal spirits come back. scarlet: it makes for a pretty volatile 2025. the u.s. economy will continue to grow and that is perhaps the issue because inflation is going to be the bugaboo. he thinks there is a chance the federal reserve actually raises interest rates in 2025. last week they revised their projections to only cut rates two times instead of three, now they are talking about tightening policy. annmarie: that's right. number seven, fed raises interest rates in 2025, 40% chance how much of this is because of fresh policies coming in from the trump administration? the tariffs are coming.

are they going to be inflationary? scarlet: we don't know in what form, we don't even know which country because every day it seems to grow. panama has been the latest to get caught up in the mix. mexico, canada, china. it just continues. annmarie: coming up this morning, stocks look to start a shortened trading we hire. jonathan miller on the housing, estate of the housing market heading into the new year. and wage trends to watch in 2025. we begin with stocks higher, investors waiting to see if markets can clinch a santa claus rally to end the year on a high note after paring back major that induced losses. dana doria saying the fed delivers the cut with a but. january is more than likely off the table for another cut going into 2025. the base case should not be more than another 50 basis points

with the potential for inflationary policies next year. why potentially ruin everything just to squeeze another couple of rate cuts into the cycle? you basically are recalibrating after the fed recalibrated, is that fair? >> i think it is definitely a recalibration although i will say that i think the market has overshot all year. i wouldn't say i was calibrating as much market has been. we've gone through a year of market overshooting expectations of fed cuts, and that was happening in spite of the market being great, unemployment being great, no reason to think that even gdp was in danger, so it's not surprising that we kind of came into the end of the year with higher expectations for next year than what the fed had in mind, and it's not surprising at all either that the fed is going to give itself some room to breathe. we are getting toward the end of this rate cutting cycle, do beget every single meeting probably didn't make a whole lot of sense anyway and of course as

you were talking about earlier, there is a lot of uncertainty into 20 toy five -- 2025 around the fiscal side. if there's anything that the fed can do that this fed would consider a fail, it would be to let inflation take hold again. it really shouldn't surprise anybody that we are probably going to skip january. when i say base case going in, that is almost meaningless. that is the base case today knowing what you know now. but what has to happen is we have to see all the data that is coming in 2025 and determine what we are going to see through the course of the year. annmarie: it is a good point and it is fair that you say this. this time last year it was going into 2024 that the market was expecting at some point, 6, 8 rate cuts. torsten's lock talked about the fact that fed raises interest rates in 2025 may be at a 40%

probability. do you think we could see hikes in 2025? >> you can't take it off the table. because of the fact that the fed will fight hard to keep inflation down. we got 86 reading on friday. we don't have reason to think that inflation is rearing again at the moment. it's not coming down as abruptly as it was. there is to a certain extent some ambiguity about what inflation is actually going to do, so i would say a rate hike is not the base case, but if you saw inflation coming back, don't think the fed could afford to hesitate to try to tamp it down especially if it is coming back because they are combating what is going on on the fiscal side, inflation being created by

tariffs, by decisions around immigration, things that are just out of their control. they've got one hammer, they have to use it. scarlet: that mix of concerns is what is keeping yields elevated and there's increasing talk about a 5% 10 year yield, maybe even 6%. not to hammer on what they've been predicting, but he does talk about the odds of a 10 year yield above 5% before midyear at 40%. if that were to happen, and he's not the only one predicting this, what does that mean for different parts of the stock market, whether it's the s&p 500, the nasdaq, or small caps? >> we know that higher for longer and higher rates in general are not good for areas of the market like small caps that are interest rate-sensitive, and there is the assumption about what happens with the rest of the curve depending on tenure. obviously very bad for real estate. small caps are much more interest rate-sensitive because

they are depending on going back to capital markets for money. so if we have the situation where rates are higher, and then of course stocks in general. the 10 year north of five, this is going to impact everybody to a certain extent. mag seven, these big tech companies that really aren't dependent on capital markets, they are very much cash-funded, those remain the defensive plays in a case like that because you can hide out and they are not going to have that impact. but as a general rule, systematic market overall risk is going to rear its head if you are seeing 10 years north of five. scarlet: they've certainly seen a resurgence over the past couple of days in this idea that you have a broad market rally being a more durable rally than one that is on nero breath, and that is certainly what we have been getting more and more.

how do you think through leadership positioning for what people expect president-elect trump to do in the health care sector, the tech sector or anything else? >> it's interesting. it was such a very clear, codified trump trade as we went into the election. if you created around that, you made money on that because the short-term impact was priced into the market. trump winning it, this is great for financials, pharmaceuticals. and then he has a pick of rfk that all of a sudden is this isn't so good for big pharma. you were just talking about how it is very hard to tell where in the market trump is going to potentially want to levy some tariffs, so again, going into the election where everybody thought they knew what he was going to do, you could trade on this, but coming out of the election, you have to predict where he's going to go, things he is going to do that may

offset your earlier predictions. but in a market now where it is known that trump's president, you have to outsmart the market collective price around what those things are going to do. so it is not only figuring out where he is going to do and what he is going to do, but also saying to i know more about what i think trump is going to do than the rest of the market, because the rest of the market is already pricing that in. i think trying to rotate based on some assumption in forecast of what trump is going to do is very difficult. the big thing was that binary does he win the election or not? annmarie: terry haynes joined us in the last hour and he said trump burned up some market credibility in the last week when it came to the whole shutdown drama. we entered this week not having a shut down but it definitely took a lot of work in terms of speaker mike johnson having to really corral's party to get this over the finish line. do you agree with terry haynes,

do you potentially think trump burned up some of his market credibility in the short instance? >> the shutdown didn't happen and i think memories are short. i wouldn't say the shutdown because it didn't happen and the overall outlook is going to be they pulled it out, right, and how much trump did or didn't have to do with that is kind of behind the scenes. i will say that what i think, and this is pursuant to what we were just talking about, it is hard to predict what trump is going to do. from the perspective of a market that doesn't like uncertainty and doesn't like to have to price in this work, i think it is going to be great for bitcoin. and something happens with the fed decides we are not actually going to lower rates as fast as they thought because trump's policies are visionary. i think the credibility less than just trying to predict what is going to happen here, i think the market has a little bit of unease around that. that is going to be the case.

annmarie: do you think bitcoin is going to be the asset that the follows trump policies? you're right in your note bitcoin haters feel the pain. >> notwithstanding last week but what we've been seeing since the election, trump really drummed up his interest in crypto, he was going to be the best president for crypto, so i think that is one way to look at it. but crypto is a really risk-on asset. very volatile. and again, could be just the vagaries of the market in general, and that might not even be specific to trump policies. so i don't know that i think there is one asset you could really track and follow based on trump, but i do think bitcoin as a very risk on asset tells you what the general zeitgeist is at the moment. annmarie: thank you so much for joining us on your holiday week. let's get you an update on stories elsewhere making news this morning.

dani: prime minister benjamin netanyahu said israel will act forcefully against the houthis. netanyahu called on israeli citizens to be patient, saying that it may take time. apple is considering challenging amazon's ring. the company is working on a smart doorbell that will have advanced facial recognition that wirelessly connects to a deadbolt lock. the idea being that the doorbell can automatically unlock the home for a resident by scanning their face just like face id that lets them into their iphone. and in sports, a thrilling upset in washington after the commanders stormed back for the last-minute touchdown against the eagles. rookie qb jaden daniels made up for a leh keen intersection improving the record to 10-5 and ending this phillies 10 game win streak. elsewhere the vikings improved to 13-2 after beating seattle by three on the road. that is your brief.

annmarie: jonathan miller of miller samuel on the state of the real estate market in 20 when he five. that's coming up next. you're watching "bloomberg serveillance."

♪ scarlet: let's take a look at how markets are faring right now. about an hour 15 minutes to go before trade begins in the cash market. futures mixed at the moment, s&p 500 little changed, modest gains. euro-dollar has been a consistent weakness for the euro. anything trading against the dollar for that matter. annmarie: how much strength do americans feel like they have

right now using this dollar? they are looking for deals elsewhere whether that is in europe or japan. scarlet: treasuries, we are seeing a little bit of decline in yields. and of course, that has been on the back of -- excuse me, declines in price, moods higher in yields. that red up arrow always confuses me. nevertheless, the theme here for treasury yields is that they have been rising and that has not stopped. new york crude down half of 1%. still plenty of supply. annmarie: and a lot of spare capacity. so even if there's not a ton of that glut right there, the fact of the matter is there's two countries sitting in the gulf that can turn the tabs almost immediately. scarlet: let's stay with yields and rates and turn out to real estate because a challenging market is expected to continue in 2025 thanks to higher mortgage rates as well as limited supply. jonathan miller of miller samuel saying optimistic. he says what we don't expect

sales to rise to normal levels, they will be higher than last year. those who can afford to buy at higher rates will probably do so. mortgage rates will probably end up lower, but not low. jonathan joins us now. donovan, you've actually noticed an uptick in existing home sales, particularly in high-end markets in places like new york. >> that's actually been the story. many potential homebuyers have been waiting for about three years since the initial fed moves, and i think time is sort of running out for people as life moves on. we are already seeing in some of the markets that we cover really begin rising back in the summer, not just after the election. but of course on the national front, existing home sales for the last couple of months have been up, which means that with

all the people holding waiting for lower rates, i still think there is thinking that perhaps a year from now, rates will still be a little bit lower and those that can afford to buy are buying. the challenge is supply. supply continues to be a problem. it's less of a problem in sun belt states where there's been a lot more development activity, but still, a year from now i think housing prices are going to be higher than they are today, and so you have to sort of make the decision of do you wait for rates to come down at some point, if they will? doesn't feel like the incoming administration's economic policies. scarlet: you mention the sun belt and his idea that it is rising, the inventory available. people point to that and say they want to move somewhere or perhaps housing is more affordable but it is misleading when you look at supply

increases as well because we are coming off a pretty low base. how often is it that people go over and realize actually the picture here is very different from what they had anticipated and if you compared to 5, 10 years ago, it's completely different? >> i think post-pandemic, there is still the expectation by consumers when they go from the northeast or california to the sunbelt that they are going to get a very low price and the affordability is going to be dramatically improved. however, a lot of the price appreciation has been concentrated as people with work from home are looking at other places to be situated. one of the things that we are seeing in markets like florida, especially south florida, is that the higher in threshold, meaning pricing north of $1 million, not to be cavalier

about the numbers, we're seeing a tremendous uptick in activity. perhaps that has more to do with elevated financial markets than it does to the factor of higher mortgage rates. >> given the fact that there are higher mortgage rates, are there deals to be had on the price when going out and buying a home? >> i think the simple answer to that is no. and that is because even in markets where inventory is rising or there's parity with pre-pandemic conditions, the demand is still pretty strong that people have been kept on hold for several years. we are still seeing bidding wars, we are still seeing a fairly tight market. we are just not seeing a lot of discounting going on, and i think that is what consumers

were hoping for. annmarie: and you expect an uptick in 2025. where exactly do you think we could see an uptick in some of this? >> the basic math is where the inventory is the tightest, that is where you're going to see the most uptick in price. i would say that the biggest uptick in price is not going to be in the sunbelt, it is going to be to the north of that because that is where not as much product has been built to come into the market. that's one of the challenges in markets in the sunbelt, is that there's been more new construction as developers are anticipating the boom coming off the pandemic, and it has been a little bit overdone. scarlet: we talked about single-family homes, what about multifamily homes with the idea that mortgage rates will be lower at the end of the year by

anyone's measure of what tends to count as low? how does that affect the decision to rent and what does that mean for those who do own or are looking to buy multifamily properties? >> one of the problems that we've had particularly in the condo market is that housing prices have risen quite a bit in affordability. the problem is in the multifamily, there's more supply or excess supply, which means potential softening or more potential softening. so from a single-family perspective, i think it is a little tougher to get a deal on a condo, maybe a little bit more. but not in a high-end market. we are talking about more normal price property i think seeing less price -- price growth because supply is not as excessive as many consumers were

thinking. scarlet: ed moving away from residential into commercial property, there's been a lot of discussion about an incoming trump administration being good news for real estate overall, but in particular commercial real estate with transactions picking up pace or at least conversations about transactions picking up pace. are there numbers that bear this out? >> the way to think about commercial, the part that i still am amazed, because the narrative about commercial is hey, it is coming back. work from home maybe is going away because we are seeing various firms ending work from home or severely reducing it. but really, the conversation is almost entirely about classe. if you think about commercial office as class a, b and c, a is doing just fine with relatively

high occupancy and relatively stable and elevated leasing prices. it is a best in all the rest scenario. class b and c are still being punished by the work from home phenomenon and many of my colleagues including myself believe that work from home is here structurally for indefinitely, and that is where the opportunities are. in fact, we are seeing a little bit more in the bmc, a little bit more residential conversion activity which is difficult in high interest rate environments, but we are still seeing it beginning to occur. i think that is where the upside is in the class b and c. it is not going to be leasing out normalized prices. one other point about that is a lot of that, the bmc, the

problem with high vacancy in those markets is that the landlord can't reduce their prices to market level. and that is a condition that has stayed since the pandemic era, and i don't anticipate that changing in the near term. scarlet: jonathan miller, thank you very much and happy holidays to you. coming up next, we got neil richardson of adp and vishel khanduja of morgan stanley giving us their take on the financial markets and the move up in rates. this is "surveillance." ♪ (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course!

you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com 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, can leverage your trusted data, be easily trained on your workflows and integrate with your apps. it can be tuned to do just what you need. because the more ai knows about your world the more it can help you do. ibm. let's create. it's our son, he is always up in our business.

it's the verizon 5g thhome internet i got us.do. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

♪ annmarie: just about an hour from the start of cash open this morning. it is the final week of 2024 and this is what we are seeing across the trading markets volumes are going to be like. most people are either at the airport already home for the holidays. s&p 500 futures are flat. last week they closed down on the week. nasdaq is up 4/10 of 1%. we closing out the year with the s&p 500 up more than 20% this year. it is remarkable because if you look at the different indexes, the nasdaq has led the way and

we are going to end the year with the nasdaq leading the way as well. that rotation had its moment. i'm not sure if it is over but for now people are going back to the safety of big tech. >> and couldn't come back when they see the actuality of the trump policies? not just what they are trying to, wishful thinking. across assets what we are seeing as well in the bond space, scarlet has been talking about this theme of rates going up. they will be going higher. the 10 year yield, 4.5%. we do have an option today. i sound like lisa abramowicz now. a two-year bond auction, but you brought up t. rowe price earlier. potentially 5% on the five year yield. how much more difficult will that make policymaker jobs in washington, d.c.? scarlet: it will be complicated and raise the cost of servicing our debt tremendously and is already the budget. something that all the government officials will be

taking a closer look at, especially since we have an incoming treasury secretary. t. rowe price talking about 6% potentially. it is an outlier, but it is out there. of course in currencies this morning, the strength of the u.s. dollar has been a theme of late, a fever 2024. but look at this. euro-dollar 1.0394. as many analysts are talking about parity going to the next year, the points die earlier today as everyone is traveling saying foreign travel is more attainable now and more exciting to americans around holiday time they're going to japan, one of the top five destinations on the christmas list. how much of that is because of the strength of the u.s. dollar? scarlet: if you want to go skiing is going to set you back

$150, $200. if you go to japan you have to pay for the airfare but when you get there, things are more affordable than they are here. under surveillance this morning, the biden administration lodging an investigation into chinese made semiconductor chips, coming across a wide range of industries. the move teeing up potential tariffs on the sector from the incoming trump administration. so passing the baton when it comes to china. this is one area where you see both parties and is talking tough on china. scarlet: if the incoming administration were to take up the action, this would be the same action the donald trump used in his first term office to impose tariffs on china. the u.s. take here is that china has expressed this ambition to dominate the global chip market

and unfairly subsidizes that industry so the u.s. needs to take action immediately. the fear is that china will flood the market with really cheap chips and make it so that it is uneconomical for anyone else. annmarie: and the head of 301, someone who is basically a a mini lighthizer. he talked about decoupling from china so you can obviously expect the incoming trump administration to potentially take this provision. also this morning, honda and nissan taking their first steps towards a merger. really all this is about china as well setting a base an for talks. a holding company will be created to house the new entity and should be listed by 2026. the merger would create one of the world biggest carmaker's computer with toyota and chinese automakers. how much more are we potentially going to see in this space because of that, because of

china, and how cheapened efficiently china can pump out ev's? you can get a chinese electric vehicle for $12,000. scarlet: there's a reason we haven't seen it in the u.s., because it would put u.s. automakers out of business. not that that is even a possibility given the tariff the people talk about. nissan has lost a lot of market share in china. a stronger honda with nissan may blunt some of that market loss and at home they need to compete more efficiently against toyota. annmarie: also this morning apple considering challenging amazon's ring. the company is working on a smart doorbell that can automatically unlock a door by scanning a face just like face id letting them into the iphone. what do you think of this? more tech. scarlet: apple has this play that it always goes to consumers, which is that we take your privacy more seriously than the other big tech companies that i think is placed on that

idea. annmarie: a lot of apartments are retrofitting so you just have to show your fingerprint, kind of like the bloomberg terminal. but i guess this would be easier. >> this is also part of apple's ambitions to on the smart home space, or at least get into it. certainly amazon has done a better job, google has done a better job as well. annmarie: new home sales later this morning with this year's last round of weekly jobless claims. you have a piece out, what is your top concern? >> pay growth, and it has to be goldilocks.

we're looking at the one thing in the labor market that we want to be confident in, that wages are going to grow high enough that consumers can keep spending resiliently, but not too high that we trigger inflation. we've actually seen pay growth level out at higher levels and in adp's own data we saw pay growth increase for the first time in 25 months. if this continues in 2025, it makes the job of the federal reserve in tapping down inflation that much harder. annmarie: so you think the fed was actually right and some of the language they came out with last week? >> i think they are right to be cautious and to be wary of inflation. they got some good news with the pce on friday. the month over month look promising. hopefully that continues into 2025. while i'm saying is wage growth is that bridge between the labor market and inflation and if wages continue to be at higher levels, it doesn't mean that

they can't get back to 2%, but it does make it hard to stick had 2% for an extended and that of time. i think markets are overly concerned about hitting 2% that one time. we really need to focus on the long-term trajectory of inflation, and what role wages play a part in that. scarlet: when we talk about wage growth, are we talking about high-end salaries or salaries of hourly workers, for instance? >> they are two totally different things and it is great that you highlight that because we have been looking into both. i will start with hourly because they are 60% of the labor market and what we've seen is that hourly workers are working less. so yes, hourly is growing but hourly worker annual pay, they are actually seeing less pay growth, not more. and on average, that is 2.8% pay growth for hourly workers over a worse of the year. you match that with inflation,

you get an hourly worker that is barely treading water. and that is not good news going into 2025 for lower paying jobs. this economy is being supported by a lot of high net wealth individuals who have seen house prices go up, stock prices go up and wages. so on the others about of that, less than 1% of workers are making $500,000 or more. still, that is over one million workers who have these exorbitant salaries and they are in every metro area, every industry. that masks so much that is underneath the surface. we were talking with jonathan miller earlier about the outlook for commercial real estate and how so much of the office building outlook depends on work from home vs. remote work vs. return to office and there much -- therefore how much companies commit to commercial real

estate. there seems to be an accepted compromise that if you are going to work from home or have remote work, you will take lower pay. how worth it is it to those who seek to stay at home, what is the number that turns it for them? >> we see housing affordability a big part of labor markets. this remote work was an opportunity for workers to move to low-cost areas. so what we did is we dove into the data. we look at the same employers to seek what remote workers were making relative to their teammates, and we found they are losing about 3% less on year than the rest of their teams. but they are actually benefiting because they have such lower cost of living that on net, they are doing better. so it is almost like a cost sharing employer and the worker area when employers goat through those same areas, they still pay

less than the workers that moved there a year ago. so there is some sense of cost-sharing between the employer and the worker and that is because of high housing costs. high housing costs, the take away is it invades the labor market and it causes us to different their time and our location then we otherwise would. annmarie: so remote workers find the lower pay worth it. and this trend you think will continue? >> but your guess just said that he expects high housing prices to remain with us, and actually climb higher. so what is unique about where we are now, high house prices youth to just be a coastal phenomenon. now there's really no strong labor market that you can turn to and not see higher house prices. so where are those low-cost areas going to be? are we going further and further remote to get that cost-of-living decrease, that is

the question. annmarie: do you think work from home as a phenomenon is going to continue? people feel the need to go back into the office? especially if you want to revise the rates -- banks, how do you do that remotely? >> learn to work without actually stepping into an office? most jobs you can't do that. maybe you tried it one point. annmarie: it was terrible, never doing it again. scarlet: out of necessity and then we move on. >> i actually like coming into the studio. do you have to work every day in the office? you guys do, i don't. it is a compromise for some jobs, not every job is plenty of jobs you can't do that. but the question is, the big question is what compensation change involves because some people have this remote option and some people don't. but you get paid more in 2025 for coming into the office every day. that is the question. scarlet: what is the biggest

risk in your mind to wages in 2025? >> hiring is going to be de-risk. we are seeing a slowdown, a stabilization in the job market this is a market like every other market that is influenced by uncertainty. so if you are not sure what the fed is going to do or what tariff policies are going to mean for your business, you might change your hiring plans, you might adopt this wait-and-see mode, and that will also influence the compensation that you have for new workers and your existing staff as well. annmarie: thanks so much for joining us especially on this holiday week. merry christmas and happy holidays to you and your family the let's get you an update on stories elsewhere this morning. here's your bloomberg brief with dani burger. >> cvs is reporting the former congressman matt gaetz pay numerous women for sex and bought and used illegal drugs

setting a final congressional investigation report draft. he reportedly purchased and used drugs from his capitol hill office. he's denied having sex with a minor and using drugs in his written response to the committee. amtrak passengers traveling ahead of the holidays are dealing with delays and cancellations in the northeast. amtrak says it is facing signal power issues that travelers should embrace for a significant delay in and out of new york's penn station. at least eight services have been canceled and two others were suspended because of equipment issues. and shares of nordstrom, those are trading lower by 1.5% in the premarket. the company announced it has signed a definitive agreement to be acquired by members of the nordstrom emily of a mexican real estate operation. the deal is expected to close in the first half of 2025 put a subject to regulatory and other concerns. >> and have a lovely christmas. up next, setting up for your day ahead.

you're watching bloomberg surveillance. ♪

♪ scarlet: let's take a look at where things stand right now. treasury yield are moving higher and certainly at the long end of the curve. a lot of that is tied to the federal reserve, indicating that it is not going to cut rates as much as previously planned. only to cut for next year rather than three. the euro under pressure, that has been the case for a while now. just below that 104 mark. s&p futures have been flopping around in little bit, currently lower my two cans of 1% after it whining week last week. in fact, two straight weeks of losses.

in oil prices remain under pressure as well. >> they spin this narrow trading range when it comes to oil prices and that has to do with supply and demand fundamentals area it's not about the glut of next year, but there is a ton of spare capacity out there. so if they had to, the taps could go on and china is just not having the demand that they normally do. >> even with a fiscal stimulus it has not actually materialized just yet. let's turn back to the u.s. economy because san francisco fed president mary daly says he's very comfortable with the media projection of two rate cuts in 2025. morgan stanley is writing data and policy dependence will remain the theme for the fan in 2025. tengion was building between the persistence of inflation in the forecast and the policy rate outlook that calls for far fewer cuts than before. good to speak with you. thanks for speaking with us today, and of course one of the

big issues here is that the fed favors both forward guidance as well as data dependence that you referenced. which to some extent are kind of at odds with one another. there's a natural tension there. at this juncture of the federate cut campaign, which is more important, data dependent or forward guidance? >> data dependence is definitely more important for us all the time and even now continues to be the case. i think the market is getting slightly ahead of itself on the others this time. i think right after they cut the 50 basis points in the first meeting, they cut 100 basis points total, and the market was over pressing about 250 basis points of cuts to the end of 2025 after the first cut, and now the market is underpricing what the fed has done here,

which from our perspective, absolutely not, and that is why we started to find that part of the curve very attractive on that part. and then one last point on that one would be they are normally data-dependent that they are policy defendant as well. not only the fed, but other central banks have held off some of their actions this month because they want to have a little bit more clarity on the first 60 to 90 days of the new administration. i think we heard very clearly from the boj, they want to wash their inflation signals and how they are coming through and then also look at the first step of policies from the u.s. scarlet: the boe basically did the same as well. it is something brought up at the fed press conference and may be still a concern given how we are seeing treasury yields continue to move up, which is why cut in december if there is still such a cautious outlook for next year for further rate cuts?

turned out the last cut was a pretty close call and people question whether it was necessary at all given the economy. >> they are fair questions, and they are questioning whether the fed is behind the curve. so we do think that around this level is a fantastic camp spot rate now for the fed. yes we can go back and forth weather this last cut was warranted were not given the data. i think the labor market is still not completely of the wood to a. who are still seeing some 100 private payrolls to improve which is very different than the middle part of the year, so there is some part of that monetary policy or slightly not as loose fiscal policy during certain parts of 2024 that led to the labor market weakening,

if you will. weakening coming from a very strong trend, so let me be very clear that that is still in that four decade low unemployment rates. so yes we can go back and forth, but we still think that 5.5 was very restrictive. 4.5 is right in the middle at the moment, not the easing policy that some market participants might be alluding to at this point. and yes, there slightly more over exuberance and our point of view about the progrowth policies that the market is worried about, or the pro-inflation policies the market is worried about. the administration still clearly needs to watch the 20 and 30 year part of the yield curve in the u.s. to make sure that they are not overdoing it from a policy perspective. annmarie: was it appropriate that some members of the fomc took trump all of these of 2025 on board while others didn't?

>> yes, that is your independence of each fed member. we saw very clearly one dissent coming out from the new member who joined in as well as in for others that showed up in the dot plot. that tells you even within the fan then there is quite a bit of that independent thinking. and i think that there is still a lot known and unknown from this policy. the agenda from the administration, we also very clearly now that the deficit situation is not policy effectuated at the same rate or at the same magnitude. flatley insisted in terms of how the policy rate. very clear in terms of the foot pole -- the push and pull that is why the last cuts were not as clear, but i think the forward-looking market is

slightly ahead of itself completely pricing out the fed at this point. scarlet: thank you so much. there is a two year yield option at 1:00 p.m. today. annmarie: markets are still open. i know everyone is excited about the holidays but there is going to be a bond auction today and we are back on tomorrow and thursday. scarlet: let's count you down to the opening bell with just over a half-hour to go. here's the trading diary for the week. 30 minutes after the market open, we get the consumer confidence as well as home sales. whether they move the market, these are probably second-tier data points. you are off tomorrow. get some rest. u.s. markets are open for half a day. equities closing at 1:00 p.m. and bond market closing later

than equities at 2:00 p.m. certainly want for our coverage here. no trading and therefore no bloomberg television on wednesday. this coverage from new york. we will be back. can't miss jobless claims. high-frequency data point and certainly the labor market may not be out of the woods just yet. coming out tomorrow, we've got a lineup you will not want to miss. talking about the economy, talking about equities. lots to discuss here as we see equity futures currently indicating a mixed open. nasdaq futures higher but s&p futures lower. yields are moving higher right now and oil prices lower by 4/10 of 1%. and we are looking of course at the dollar right now. look at that. this is "bloomberg serveillanc "

." good morning, everyone. ♪

it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

announcer: this is "bloomberg surveillance" with tom and paul sweeney.