>> all right. thursday morning. paul sweeney in new york city,

we are doing the tv radio simulcast thing. >> people are in the studio with us. paul: in the studio, lots of people working for us. david, there's not a lot going on today. a little bit of weakness on the screen, but we will bring it for the next three hours. paul sweeney, david gura, special edition of "bloomberg markets." the s&p is off about 22 points. nasdaq is off 81 points. we will talk about these markets, the economic data, and the 2025 outlook for a lot of smart people who are thinking about it. 2000 23, 2000 24, you had more than 20% return on the equity markets. what do you do to top that in 2025? that's all coming up. right now, markets are moving out, seven nova joins us, she joins us here in our radio studio.

what are you looking at? alex: pretty quiet in the equity market, but there are individual companies on the move. alibaba, agreeing to merge south korean operations with an e-commerce platform that is intended to help the company better compete in the country's fast-growing online retail sector. the deal is creating a 50-50 joint venture according to a stock exchange filing by e-mart. our colleagues for the first to break the news. the company intends to make further investments. people familiar with the deal say the new entity could be valued at $4 million. shares of alibaba are flat in premarket trading in the hong kong listed stock was at 11% this year, the firm valued at more than $200 billion. paul: what else do you have for us? alex: taking a look at stocks with exposure to

cryptocurrencies. they are following -- falling after the torrid run on bitcoin since the trump election. names like microstrategy and riot platforms are down this morning, declines coming even as microstrategy said they were looking to increase authorized shares for more firepower to purchase bitcoin. not helping the cryptocurrency much, though. they already bought 561 million dollars in additional tokens and they have seen their shares under pressure, recently, all-time high last week before the token retreated. of course, the underlying value is tied to how bitcoin moves. david: any winners or losers in terms of sectors? alex: taking a look at what happened this year, the scoreboard, 11 of the sectors are in the green and some of those winners are the sectors that hold magnificent seven stocks like commute -- consumer

discretionary and communication services. netflix and meta platforms are winners, up 90% and 70% on the year respectively and we have names like nvidia and broadcom, of course, the ai darlings that led the market higher for the last year and a half. consumer discretionary, surprisingly the big winner is deckers out doran and tesla which has of course been recovering since the trump election with elon musk in the white house. then we have financials benefiting from expectations around deregulation and increased m&a activities, ipos, and utilities a winner of this ai euphoria. data center usage and the perception of utilities as a defensive sector. david: alex semenova, we will go to you throughout the morning here. sticking with consumer discretionary, joining us now is the founder and managing partner of belli otte.

martin is with us in our studio in new york city. let me just ask you about the environment that we are looking at going into 2025. there was so much enthusiasm and optimism after the election about how the environment was going to change. i'm curious from your vantage what it looks like. what will notionally be different in the new year? martin: thanks for having me, everybody. happy holidays. 2025 is going to be an acceleration of what we saw in 2002 that -- 2024. talking to our companies about acquisitions. the acquisition sector was up in 2024. it's going to be a fork -- flurry of activity in 2025 driven by $2.1 billion motivated

to deploy the capital. we are excited and optimistic about next year. david: private equity, lots of cash on that asset class, but levering it up, though, are the banks there to get deals done? where are you going to get the debt capital to leverage your equity? martin: we have a couple of companies and process of working with top investment banks and a part of the pitch was to do a leveraged analysis and see how they could get a lower-cost of capital, leverage up the assets for acquisitions. we are confident that it's there. we are happy to see the costs of capital coming down a little bit to support acquisitions. paul: mentioning the companies in your portfolio, when we look at them, what do they tell us about what companies are doing well, which ones have good prospects at this point, the success you have seen, how does that transfer or translate to other companies? martin: we are really focused on

the american family and making them healthier. if we are investing in an apparel there -- brand, it's fitness. rome has obviously grown. they just did a landmark partnership with the nba. so, anything that encourages outdoor activity, fitness, poncho outdoors is down in texas with a great flyfishing brand. just, you know, active outdoor. moving into the food area, better for you food. as parents we have to pay attention to what we are feeding our children and making smarter decisions around food in the healthy family. we also invest across beauty and retail. beauty is about cleaner labels, less toxic ingredients. we all know that this stuff is absorbed into the skin and has a ramification.

just thinking about that, new retail, the brands we work with have brick and mortar retail and e-commerce with wholesale. i think it's just like this omni-channel in retail and around consumer brands and families. it's going to be very important next year. paul: that's a healthy investment. david: i tell my children that. [laughter] paul: alix steel always tells me you have got to invest in your face. john tucker and i missed that memo. [laughter] how important is made in america? martin: i think it's huge. we did a kind of audit of our portfolio over the last few years as well as our household. so much stuff is made in china. as parents, we all know the stuff, the toys that come over, they are in the kids mouths, they gnaw on them, the stuff with the micro plastics. i think, you know, with this new

administration coming in and putting this emphasis on made in america, that's huge, and we are putting a big emphasis on investing in brands, we did one up in boston that makes a great english muffin called stone and skeleton. it's a generational story, they make their own up there. they make their own ice cream down there in brooklyn. we are invested in an organic hummus brand called little sesame that sources from montana. these are the stories the consumers want. authenticity, trusted brand relationships. they want that. i think that for the longevity of the u.s. economy, we have to start manufacturing more in the united states, so we are definitely putting a big emphasis on that. paul: i'm in new york partisan. i love living here. i know you have an office in nashville. how does that differentiate what you are able to do being here versus new york, the industry as a whole, i imagine that you see

it as an advantage to not be based entirely here. martin: i'm from tennessee and my partner, wendi, is also from tennessee. down in the southeast nothing looks like us. there's not really a private equity venture firm investing in consumer brands. friend of mine at revolution, steve case, what he instilled in me early on was this rise of rest effort. valuations on deals could be more interesting in the middle american markets. entrepreneurs can be just as savvy and exciting to back. so, we are looking all over the place in terms of finding companies based in like all 50 states. utah, texas, tennessee, colorado. those are great, of course. and i think a part of that is that any brand we get involved and has to be able to sell to middle america. van lewin be here in new york city or connecticut, but these brands have to be able to sell

into nordstrom, dealers -- dillards, these aspirational brands to become large. middle america brands are a top priority for us. paul: since the election it seems to me that from this -- in this country from an economic perspective there is a sense of often -- optimism. do you sense that out there? maybe just from a regulatory perspective or a tax perspective? i'm not sure what. but from a broadly defined economic perspective it feels like optimism. martin: we feel it. we have seen broad-based gains across the portfolios in 23 and 24 and we have great initial data from the brands helping the holiday seasons. this easing of regulation and the tax changes coming down, how tariffs may help kind of level the playing field a bit for these brands, and of course the public markets and how they perform, i think it really,

given our companies and our team , it's given them a lot of optimism heading into the new year. david: we have talked a lot about policy and certainty. what are you want to be watching in terms of what they do versus campaign bombast and rhetoric? martin: i think a lot of that is posturing to negotiate and these things will settle out. we are paying very close attention to how brands are reorienting their supply chain. a lot of them have moved over the past three or four years to diversify away from china and into sri lanka, india, vietnam. we want to bring a lot of that back to the united states. we are keeping a close eye on it . a lot of our ports of directors are as well. we believe that the u.s. consumer is strong, remains strong. definitely. i think that for these kinds of

health oriented brands, these family oriented brands, absolutely. paul: martin, thank you so much. appreciate it. martin dolfi, beliade cofounder, joining us live in the studio. appreciate his thoughts on the consumer. from pj t i'm getting one of the leading m&a bankers out there over the last couple of weeks saying he expects 2025 to be a big year in terms of economic deals in they are hiring bankers this year to get ready for next year. david: i think that that excitement and enthusiasm seems to be real from the folks have been talking to as well. alex: absolutely. the expectation is a good m&a and ipo environment in 2025, partially due to rates coming down a little bit, though we have seen the treasury market rate yields go higher, despite the fed cutting rates.

we will see how that plays out. the s&p 500, off 20 points. the nasdaq, off 73 points. it's all about one third of 1%. 10-year treasury yield's are a little bit higher, four point 3% on the bloomberg treasury market. it was a tough year for european luxury markets in 2024 with some optimism for rebound heading into the new year. we will explain all of that coming up next as we think about putting a bow on 2020 four and thinking about 2020 five. david and i are here in new york, helping you guy close out the new year and coming up into the next year. my purpose and passion in life. pursuing my degree gave me so many opportunities to grow don't just think about yourself. think about the lives that you can really change. snhu laid the groundwork. i am doing what i've always wanted to do.

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paul: -- david: this is a special edition of "bloomberg markets," en bloomberg markets and bloomberg radio. martin dolfi, ceo of beliade --

we had this exclusive interview from shanghai. >> it's based partially on real estate. but more, i would say, on oversupply. not only for real estate but many manufactured foods, too many to be absorbed. the chinese living in china and internationally by the western on shores and asian consumers. obviously, this cannot be resolved overnight because of the supply that's also related to a certain infrastructure investment that has shifted to different industries. probably more services with a bit less threshold distribution. we can anticipate that the

crisis in china may continue next year. as a country we will need a couple of years at least to absorb that oversupply of manufacturing and to evolve quickly to move economically as a service, rather than an economy that is much more in the advanced technologies that are already, they can do more. reestablishing a balance between supply and demand, which today is, is challenging. >> are you looking at opening more stores in mainland china? what is your expansion plan? >> we began with about 50 stores and we call it a solid network rate.

cities in those locations, i have to say that our first priority for this year and next year is not solely opening new stores. i think that our network is working well in mainland china. but to get more productivity from those stores on the one hand and on the other hand developed the areas where we have been curating the markets, e-commerce. not only the e-commerce that we do from our website, but the e-commerce that we do in consultation with the likes of t-mobile, ge, and this is obviously reaching cities where we don't have stores and where we don't necessarily need it. we are not having the proper mode of luxury. e-commerce is a smart way to reach the clients without the

city of china. -- cities in china. david: that was the ceo of bogue ari in shanghai. -- bulgari in shanghai. before we look ahead, let's look back at what this year brought. we heard him talk about the appetite for retail for luxury in china in particular. what stood out to you when it came to the demand for luxury goods in the retail sector? >> it's been a challenging year for luxury goods, european luxury goods specifically. big demand in china, they account for 15% of the global luxury market. massive stimulus was a big driver for that sector. goldman sachs has a basket that

tracks the sector that is up by 8%. nevertheless, we have notable decliners. for example, lvmh, a barometer of luxury segments, down by 14%. cure egg, which owns gucci, is down by 14%. in contrast, companies that serve the wealthiest clients, like mez, they are up by 20%. for us it's a signal that the wealthiest customers will keep spending and companies can still have the ability to increase prices, put on those price costs on consumers and can keep going. i would like to highlight one american brand for you guys, the stock is up by 60%. again, it's also a signal that american consumers keep spending

. the company also does a really good job in terms of marketing, promotion, working with celebrities and attracting young customers. we have seen that from analysts and investors who really like this stock. david: yeah, just looking at ralph lauren, it has been such a solid performer. what's the expectation for just luxury spending in 2025? >> again, it all depends on consumer strength. here in the u.s. we always talk about china, right? we always talk about stimulus and how chinese customers are willing or not willing to spend, travel to europe, we know they buy a lot of luxury goods in europe and in the u.s. as well, but we are also keeping and i on the united states. first, the federal reserve is lowering interest rates. now donald trump announced a tax cut that could be the potential driver for that sector. a stronger dollar as well. overall, analysts are really

cautious. they say that you can't purchase all luxury stocks now, you have to be selective and as i mentioned, a few of those companies have been formed in such a different way. so yes, probably it will be a stock picker market in 2025. david: you mentioned tax policy shaping consumer habits and i can't help but think about tariff and trade policies more broadly that the president-elect has talked about. of course there are many companies not headquartered here in the u.s.. but when you look at the broader global landscape in terms of consumer goods and economics, how much is the potential for change to trade policy likely to change that appetite? >> absolutely. i think companies will be very cautious when it comes to global expansion. ralph n, it has -- doesn't have a huge presence in china, but the company is trying to expand.

now when tariffs come to play, they might be more concerned about how much they get allocated in terms of resources, sales production in china. it will be a big, big driver for the market as well and it all comes down to supply chains, number one, but also the ability of the consumer to spend as well as prices move higher and some luxury customers that we see not being willing to purchase some goods and they try to think about the value of those luxury goods, if it's worth it to pay $2000 for a pair of shoes. paul: i'm walking to penn station every day like i finally do when i get off the air at noon and i will see european broadly defined fifth avenue, madison avenue, they are there in force. i don't see the chinese consumer as much as we used to see pre-pandemic. is there expectation that that might change at any time or in

the near future? >> maybe not the near future. it depends on how willing chinese customers are to travel and move with the stimulus. you are absolutely right, we usually see so many chinese customers in europe and in the united states during the holidays. i haven't been in that area lately, but i will have to. paul: you'll have to get out there. anecdotal reporting. madison avenue, 5th avenue, sidewalks are packed with tourists. it's total pre-pandemic foot traffic, it seems like. and every language under the sun is spoken there. so it feels like kind of that tourist driven -- it's in the zeitgeist, smr want to say. again, you haven't seen a lot of the chinese consumers coming back and i know from your reporting, others, it's critical to luxury spending. really appreciate getting your thoughts, natalia. she covers all of the stock

market for bloomberg news and we appreciate getting some of her reporting here. futures are again a bit lower on the day. coming up, we check in with our portfolio manager, david sowerby, who joins us to try to get these markets open in a few moments and get his thoughts on the 2024 performance at where he sees 2025 coming in the marketplace. s&p futures are -20. nasdaq down 70. european markets, not trading. boxing day. i think we should do that in the u.s. this is bloomberg.

paul: all right, we are moments away from the start of trading this morning on this thursday, the day after christmas. they call it boxing day over there in the u.k. i'm paul sweeney, here with david gura in new york. itching to see how we kind of close out the year. again, 20 4%, 25% return on the s&p 500, that's darned solid. i can't imagine anyone complaining here. david: i'm struck by those we have spoken to who are not expecting those gains. paul: but the equal weighted s&p, only a 14 to 15% he will

return. only. if you were in those big cap tech names, you might've missed out a bit. let's take a look at some of the stocks moving under the surface with alex semenova. what are you looking at there? alex: price target upgrade this morning unsurprisingly from wedbush being raised to a straight high of $325 from $300. dan ives, writing that the company is headed between multiyear ai driven iphone upgrade cycles that he says are still being underestimated by wall street. the growth catalyst now seen from the multibillion-dollar annual analyst estimate stream. there is an expected upgrade across the board for 12 to 18 months with an outperform rating on these stocks. up about 4 -- .4%, more than 30%

this year referring to the s&p 500. paul: and getting aggressive and another stock you are watching this morning? alex: output -- outperforming raymond james, the long-term growth creation around large-cap growth investors, the moves you today were up 15%. pretty incredible. paul: bitcoin, tom keene, he wants is quote. alex: we have been watching those stocks closely. microstrategy, ryan platforms, these names are closely tied to the moves currency. the kinds come as microstrategy seeks to authorize shares to purchase more bitcoin, already purchasing 561 million for the

token, the stock has seen a bit of a retreat. those names are under pressure this morning. paul: interesting to look at the role the microstrategy plays in bitcoin. joining us now, david sowerby, portfolio manager here with us on this boxing day. i guess not in the u.s., but around the world. you're supposed to celebrate with a day off. >> canada, too. my neighbor to the south. what lessons will you carry over from the market performance this year? how much is the story the same for you question david: enough of the same, but never underestimate the ability of solid u.s. companies to deliver superior capital allocation,

shareholder value creation in the face of higher interest rates, questionable fiscal policy. time and time again, bet on u.s. companies. paul: am i going to be lazy or should i roll up my sleeves a little bit and take up -- take a look at some small caps, mid-caps sectors that haven't really performed over the past two years. david: you have to think more broad participation in the markets. value outperformed growth. back on the treadmill. small caps. 10% for small caps up.

7% for the s&p 500. it's one -- two steps forward, one step back, one step back in december? we are back to small caps having directed returns in 2025. paul: count me among those who hears those watchwords and wonders what to do with it. where are you looking when we talk about small caps? talking to your clients of interest in that world. paul: it -- david: a proven process for 20 years, two buckets to look into. first, spinoffs. spinning out a larger company on shareholder value. look at the spinoff index of 2024, up better than 60%, that's the first bucket. the second is under followed companies where there are only two or fewer wall street

analysts following the company compared to the previous story on apple. one example is national media, only two analysts follow that company. they do that advertising when you go to the movies. paul: hate it. hate it. david: when you get there early, that's national cinema media, over 1000 theaters they are in, fault -- filing small-cap stocks. paul: that stock is ripped, market cap of $620 million. that has worked here. how do you think about valuation? i've got a fed where i think maybe they will cut a couple of times in 2021 but that's it. feels like earnings have to be a real driver in this market going forward. how do you feel about earnings vis-à-vis evaluation these days? david: rich. no other way to describe it. if you go on a cash flow basis in value with that way, not as

rich. still opportunities for the investor. but you nailed it. it's a tug-of-war in 2020 five. earnings, free cash flow dividends, all up 10% or better on the upside. valuation is stretched. looking back to 1990, there have been nine years in the calendar year where valuation went lower and in those nine years, the market only finished positive four out of nine years when it slipped a bit. that's a tug-of-war for 2025. rich valuations, i hope they don't go lower. with earnings and free cash flow up double digits. david: i could detect disdain from paul to just -- do not discuss the federal reserve. what's the role it will play in 2000 25? i know that you were listening close to that press conference. how long is it going to continue to drive things forward looking at valuations? other facets beyond what is

being told to the market? david: you are in new york, let's borrow from reggie jackson. the fed is the straw that stirs the drink. even though the market only gets two interest rate cuts next year, i don't think the fed should be doing anymore. their number one mission should always be price stability. if the market doesn't like it in the near term and you have to grind through it, at the same time if inflation is not brought even a bit lower, just look at what the market did from 65 to 81. it was flat on an inflation-adjusted basis, dropping 40% to 50%. it has to be encouraging for the fed to stay committed to inflation. that's going to be the story of 2025 in that tug-of-war relative to the favorable earnings, free cash flow and free cash flow margins that exist. paul: i've been doing the wall

street thing since 1986 and one of the interesting markets to watch develop has been private credit. talk to us about aries. aries management corporation. david: they are one of the largest publicly traded private credit operations. bank loans with an insatiable appetite for pension funds. -- my alma mater, wayne state, i was the chair of the michigan state pension fund for a number of years. the demand for private credit continues to grow because the expectations are that you can get nearer to public equity returns without the same volatility, playing into a name like aries, which is one of the largest private credit publicly traded companies. david: let's take advantage of the fact that you are there in michigan. what issues were front and center in the election and what

does it tell you about what to focus on in the years to come? david: the economy, first and foremost. cumulative inflation was up 20% since early 2020, 2021. i think that is why michigan, perennial swing state, swung back for the incoming president relative to 2020, 2016. we end up voting with our pocketbook. the other factors matter, but that was i think the key reason for michigan going back the way they did in 2016. paul: when you and your team woke up the day after election day, did you change your investment outlook for 2025 at all? david: generally, no. i can't predict politics. my axiom on predicting politics is never expect wall street to do the right thing, they do the least amount to fix a problem.

that said, after the election you saw small-cap stocks the day after pop 3% to 4%, which was validation that animal spirits would be resurrected and we saw that in november with the optimism index taking a spike higher. that could be a factor voting well for the market, next year in particular, animal spirits in small-cap stocks. paul: can't predict politics, but geopolitics in terms of what you are watching and how it may be color to appetite for what's outside the united states. equities overseas, other opportunities, are you staying closely focused on the u.s. or are you seeing other opportunities? david: outside the u.s., it's interesting, but the bias is still in the u.s. domestic portfolios in since the end of 1987, u.s. stocks have counted 5% better, compounding that analyzed return, similar to what

goes back to the superiority of u.s. companies delivering shareholder value. the bar is high to have meaningful assets. you get enough diversification here, given the indexes. paul: what is your message to your clients for 2025? david: i'm generally not that creative, other than keep your head down, get good companies that generate capital and provide free cash flow to the investor and at the end of the day, i will have the same five risks that every wall street analyst has on the street. ultimately, it's always going to be the risk that you don't know that bites you the hardest. paul: do you still have the more conservative clients that are a part of that cash pile and are reluctant to get back into this market? if you do, what's the council you are giving them to jump in? david: generally, no, but if

there are some, you want to take a look at the potential for the s&p 500, the average stock in the s&p 500 compound 7% 8% over the next three years. you are not going to get that in treasury bills or notes. the probability is probably better than 80% that the u.s. in the s&p 500, the average stock will compound better than cash. i like those odds. the next calendar year, flip a coin. the next two or three years, you feel like equities will still meaningfully outperform cash. paul: david, always appreciate getting a few minutes of your time there from the midwest, david sowerby giving us his views. we need to get off of this rock every once in a while. if we can. [laughter] alex: david: exactly, exactly, we will have to wait and see how that plays out.

the market, selling off a bit this day after christmas. boxing day, for our good friends in the greater u.k. coming up, we are getting smarter here talking to james seyffart over at "intelligence," he does the etf's and that was another crazy growth story. these are interchangeable and they just, they got all, it's everything you need to know about the etf space and they are in a business that just goes up into the right. paul: i could sound smart on etf's, if you needed me to. james is going to join us coming up in the next block. this is bloomberg. ♪

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watsonx helps you deploy ai wherever you need it. so you can take your business wherever it needs to go. ibm. let's create. paul: paul sweeney here with david gura in new york city. we are simulcasting on radio nt, that is what makes it a special

bloomberg cross-platform. it's great. i'm sure they will cut it up for some kind of podcasting interbred thing. david: winning awards as well, if we are lucky. paul: exactly. [laughter] looking at the markets in the first 15 minutes, the s&p, the nasdaq, off about 50 points. not much happening, as you would expect. grinding higher, that's how i'm going to continue to characterize this. the 10 year treasuries up. i'm not refinancing my mortgage anytime soon. the rates market is not cooperating. wti crude oil, study, around $70 per barrel. tom keene, the bitcoin quote of the morning, down. there you go, david. david: markets appear to be ending the year on a high note but there is this perspective on wall street that u.s. equities are due for a downturn. thomas holds that concern and recently spoke with sonali basak

about that in his thoughts on cryptocurrency. >> i am afraid that the markets are becoming overextended and that, you know, sometime in the future we will have a downturn in the markets. but i don't think it will be very violent or very far, it won't go very far. i'm extremely optimistic about the next four years and thereafter. >> the other thing where a lot of investors are expecting regulation is in the world of cryptocurrency. how do you feel about cryptocurrency from where you stand and do you think that when your clients go to interactive brokers, will it be something they are asking more and more about? >> cryptocurrencies are an interesting area. we've been there for about three years. we charge less on the cryptocurrency trade than any

other firm, other than robinhood. but robinhood has a big spread because they get their commissions paid by the market maker, who they send their orders to. so, i think that on balance our platform is probably the most efficient one for a crypto trader. otherwise, i am, to tell you frankly, i'm sort of scared of crypto's. you know, they can go to any price. it's basically just a figment of the imagination. [laughter] it doesn't have any, any, any underlying value. the only value that it has is the same as the paper dollar, which is nothing. >> but >> but through the etf's you saw the price of bitcoin get

to $100,000. will the investor of tomorrow be more likely to purchase bitcoin or u.s. stocks? >> well, that depends. for bitcoin, you can purchase u.s. stocks, right? for u.s. stocks it's more difficult to buy bitcoin. so, i think that anybody who does not have bitcoin should have some bitcoin, but not too much. i would recommend that people put maybe 2% to 3% of their net worth into bitcoin. me, for example, we will not allow anyone to invest more than 10% of their assets into bitcoin. i think that would be very dangerous. paul: that was the interactive brokers group chairman speaking on market outlooks here.

it's been a big year for etf's. we've been saying that for a number of years. the industry saw $1 trillion in inflows in 2024. that's a record, folks. 670 fund launches this year. for more on what to expect in 2025, james joins us, analyst for bloomberg intelligence. you guys were born on third base. thought you were hitting triples . you are just on top of this etf business like no one else we know. we appreciate you giving us a few minutes of your time. what are you thinking about for 2025 and the etf business? >> thank you for the kind comments. kind of backed candidate, in a way, but yeah, this industry is on fire. this is where the money is going in traditional finance. however you slice it, i guess you could look to private credit vehicles, there's a lot of money going in there, it's more

opaque, obviously, but as far as etf's, you mentioned it, one trillion in inflows in the u.s. with massive inflows around the world. it's a global story and there's a lot of different things we are launching. things are getting more conservative. launching products where people want to protect their downside and people that want to lever themselves up on single stocks. we think it will all continue and that we will see an increasing trend of money going from the mutual fund rapper into the etf fund rapper for a host of reasons. david: there's been a lot of thematic creativity in the etf space this year. are we seeing winnowing around what was launched over the course of the past year? what is the longevity of the funds created so far? what accounts for the degree to which they have been winnowed down, if at all? >> it's kind of the same thing that happens in most etf

industries. things get hot, people get a lot of interest, the money builds in and they overbilled, over launch. over time the products that are profitable, they will start to winnow those down and we are seeing those outflows on the thematic sector. still, we are bullish on themes. kind of what it does, we call it conversational alpha for the advisors. they could talk about selling robotics for getting you involved in infrastructure. these themes, you are not investing in the products, you are investing in the sector and they are going about -- across a bunch of different sectors. infrastructure, energy, industrials, materials, you name it. it's a kind of repackaging of sector investing into a more conversational way of talking about investing with some that have hit extremely hard. they tend to be volatile and risky. they are not always extremely

diversified, but people like to invest in these things. instead of thinking about it is people selling the etf's in the 100 but it's more like cryptocurrency instead of a single stock. it's more of a single stock substitution rather than a broad allocation substitution. paul: my clients on wall street were institutional mutual funds. what's the future of that? i don't know where they go a long term. seems like all of the fund flow is going to etf. >> yeah, no matter how you slice it, a lot of the money is coming out of mutual funds. some of it is finding its way into more private vehicles, these things that are more opaque. the private funds i was talking about before. look at the trend of flows out of the last 10 years. a lot of it has to do with money

leaving high-cost products and going to low-cost products. one of the things that we think is going to happen, there are 36 issuers who have now filed to bolt on mutual fund share classes. a lot of what they want to do is bolt that on. the vanguard structure has been like this. they've been vanguard it into this process. a lot of issuers will be following suit as soon as the sec allows it to happen. 2025 could be the year these things get the green light. the one thing i would say is that if these are approved, it can often take a year or two years before we see a huge trend of people jumping on at figuring how they want to do this, but there are a pile of issuers and asset managers that want to do this. we will see some really successful utis and they are bolted onto the mutual fund share class. if there is going to be a trend,

it's clear, high-cost to low-cost. it has been active to pass but that has changed as etf is extremely well. paul: james, great to speak with you about all that's happening in this space. james bringing up a moment ago process for approval by regulators with some of these more crypto based etf's getting through, these institutional investors who are watching that space and looking to see what happens and what he's talking about. the amount of growth we have seen in etf's overall has been astonishing. your question over what happens to etf's is a critical one, certainly a lot happening here in 2024 in that world. a lot happened -- likely to happen going forward. the ceo of pepper international will be joining us going forward as she looks at 2025.

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>> thursday morning. good boxing day morning.

i am paul sweeney alongside david gura. this is the special edition. david -- the nasdaq off the 66 points. all of that .3% cell appeared 25% -- sell off. feels pushing higher. wti crude oil steady, $70 a barrel. bitcoin down 3% on the cryptocurrency. not a lot going on out there. david: our output is steady. paul: looking at stocks moving under the surface, alex: a bit

of a down day in the market but apple up .3%. this is after a price target upgrade from dan ives raising it to $325 from $300. he said the company is heading into a multiyear ai driven cycle saying with all of the app upgrades from artificial intelligence, consumers are going to upgrade iphones. i am probably due for a new one as well. he has an outperform rating on the stock, the stock a very small move put up 34% year to date. an incredible rally. paul: on apple, he knows what he is doing. nobody is in the office and there is no news. when you raise the target, it gets us talking about it.

he knows what he is doing. i admire him. he is not only in tech stock split penn state football. i bet he will be at the fiesta bowl. david: we will check in with him shortly. i know you are looking at retail not inhere in the u.s. but in asia. alibaba in the news. alex: after they agreed to merge the south korean operations with an e-commerce platform and the move intended to help them better compete in the fast-paced retail online sector. this is according to a stock exchange filing which confirmed a report. our report is getting the scoop on the steel. people familiar with the matter say it is estimated to be at $4 billion. a little move on alibaba, up 11% in valuing the firm at $200 billion. david: my good from -- friend

from high school the creator of alibaba, he just retired and is having some fun. how about in terms of any sectors you are watching? alex: it has been an incredible year. it is taking a look at the s&p 500 leaderboard, 10 of 11 s&p sectors in the green. some are winners are consumer discretionary communications and the sectors that house the so-called magnificent seven companies, nvidia, tesla all in the names. financials is also a winning sector with investors expecting deregulation, and utilities benefiting from the ai frenzy, one of the sectors that got a boost from expectation from data

center usage. at some of the losers, even the losers in the green. your real estate, health care, energy underperforming but still up year to date. real estate down by higher interest rates, health care. investors opting for growth focused sectors instead of cyclical sectors. energy is well due to volatility . falling oil prices expected to hurt some of the oil company's earnings results and materials is the only sector slightly in the red but flat year to date. david: thank you very much for joining us. i will pick up on what we were just talking about. the ceo of care -- this ceo, carol pepper, bringing her in. there are those saying it is too narrow and we should be more pessimistic. carol, what are you thinking?

what are you allowing to seep into your outlook ahead? carol: i'm very optimistic. i think it is going to be a fantastic year in the markets. we are still in a relief rally and people are happy and the u.s. transitions successfully we are looking toward a very good 2025. so many family offices. i manage money for family offices and all of the 500 millionaires want to be billionaires this year. the way to do that is to invest in the market. this is no time to have your hands on the sidelines and think about what might happen. people who did that last year missed a tremendous share of the market. i think the leaders will continue to lead and we are only at the edge of what ai is going to be able to do period -- able to do. david: to be a 500 millionaire. i would take it. paul: a little follow up on

that, can you tell us, what is a typical client of yours and a typical family office? is it someone who owned a business and sold their business and now they have to think about what do i do with all of the proceeds? what is the typical account for you? carol: there are a lot of folks who have made an exit and ready to now go into the next stage of diversifying and moving away from the operating company. our real estate billionaires and multimillionaires transitioning to the next generation and ready to build a more robust structure for diversifying outside of the core real estate holdings. there are a lot of people and kids are getting ready to take over the business and now it is time for them to take over the family holdings because it is a much better way to organize all of your affairs effectively from attacks point of view.

you want to be one of the families that makes it past the second and third and fourth generations and you need a family office. i have been in this business 24 years and is seen tremendous growth in family offices because it is the right solution. each one can be tailored for each family requirements. david: you mentioned tax policy and talking about the year ahead when it talks about policy and the president-elect talking about his ability to renew them. what are you telling clients about how they should gain that out and what the tax picture will look like in the year ahead. how much of a done deal will that renewal be? carol: it is a fairly good done deal. i think the deductions are very popular and it is one of the lee reasons that people voted for trump, looking for the lower tax policy. that is a big driver in many family offerings.

offices believe in returning money and letting them see how they can invest it on behalf of society and themselves. we are probably going to get the tax breaks we want this year. we come to the midterms, all bets are off. we will see. paul: for 2025, is there a theme you are stressing with your clients this year? carol: sure. the become better. david: i like that. carol: stick with and -- apple, amazon, the winners are going to be bigger. you have to follow the massive trends and then you will win. it is not a hard market in that respect. but what will be hard is when they have the consolidations, stick to your convictions and stay invested. this is not a market to trade in and out of but just write it out

until the end of next year and we will be happy. paul: is there anything novel about the market we are in. if you look at the bull market we have been income we have seen it extremely narrow talking about the magnificent seven. broaden out a little. it strikes me it is unique when you look at history as a guide for with the market is doing. carol: that implies that there are fewer and fewer winners as time went by but in this case, a few companies started the ai craze and that is going to spread to larger sectors. we are seeing this with the spread of ai fever in tv utilities sector. who would've thought that sleepy utility as exciting but you are getting great dividends and a lot of new technology applied to that sector. this new technology, we don't know what it is going to me. it is in its infancy and going to spread. we will go from more narrow to

wider. that is a great observation. and that means we are going to have a very strong year this year. there will be a lot of enthusiasm to give the president trump a chance. let's see what he can do. it is not just him, it will be the congress and senate. look at the rest of the world, a massive inflow of non-us money. i work with a lot of non-us family offices and they love the market. in comparison our market is phenomenal and massive money continuing to flow our way. david: that point about international money is what you've been hearing. paul: what could trip us up? i know you have a bullish call. david: trying to get some pessimism. paul: other than a black swan, is there any risk that maybe you think about or your clients think about? carol: if you are a new yorkie hat -- if you're in new york, you can't not think about the

real estate. the rates are just not low enough to get people moving on real estate. real estate as a massive center in our economy and i hope we get more than two. it would be nice to get three cuts. that would help. keep your eye on real estate and be careful about real stable when it turns, a lot of pent up demand. it is just a question of will it break before it turns. that is the real question. david: we got the jobless claims data, the highest we have seen in a couple of years. when you look at the health of the overall economy, picking up on the fact you are very optimistic on the path forward, are there any flashing red lights that give you pause? carol: i think you have to watch the labor market. it was overall claims down 1000 but ongoing claims are up a bit. with that -- would that data

point have gotten so much if we were in christmas week, i'm not sure. but you have to keep your eye on the overall economy but also on consumer confidence and how are people doing. they are still going to shop and keep borrowing. it is the american way. i am not that worried about our economy. i think we did achieve a soft landing and this gives us a tremendous runway to start moving toward growth, now that we have inflation relatively tamed. if it were only 2% or 1%, probably the economy would be in much worse trouble than it is. inflation doesn't worry me. we are in a steady path. with some tax help we could have a really fantastic year. i am not terribly worried about this economy and i do see this propping up the market because the relative basis, we are still the best game in town. and the offices want to make

more money. a lot more money on the sidelines will come off. they were it was about the elections last year and now that we have gotten past that, green lights are going to be on and people who have been waiting around and missed the up swing and the nasdaq last year and missed 30%, that is a lot to miss and they will probably dip their toes in. david: optimism there carol pepper. some of the busiest travel days just happens this past week. let's talk about that. we will discuss coming up here on bloomberg.

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paul: it is a special edition of bloomberg markets, simulcasting on bloomberg green a and television. a little sell of on the market.

the s&p off by 19 points, .3%. the nasdaq off 95 points, .5 percent -- .05%. wti crude oil steady at $70 a barrel. that is a trading range for crude oil. gold higher, a great performing asset for you. bitcoin off 3%. member we were hundred 7000 on bitcoin just a couple weeks ago, lots of volatility. david: looking ahead to 25. let's talk about travel. carnival's initial outlook bolstered confidence that record levels of cruise demand will continue into the next year. the ceo spoke with carol massar and tim stenovec. >> if you think about what was our booking activity, how much activity did we generate in the

last quarter, from the period of september through the end of november, that beat last year, even though we had less to sell. we sold more for 2025 and sold at higher prices for is same time last year. at the same time we set a record for booking activity the following year, in this case 2026. things are moving positively across the board. and this is broad-based. when we look back at 2024 and look at our portfolio of world-class designs, we were heavier, mid single digit percentage wise in the eels in the revenue generated per day across all major brands and it trades. it is really gratifying. my global team has done a phenomenal job and really shot out to each and every one of them. carol: this may sound stupid, why do you think this is

happening? tell us about it. remind us, you have portfolio brands that reaches across different consumers, if you will come of your brand. give us that an idea of why you think you are still seeing record bookings. >> we will need an hour. there are so many reasons. the principal, and i remember being on with you a year ago and talking about what we will call the price to experience ratio read the price to experience ratio of a cruise versus the price and what you pay for a land-based alternative is nuts. the value you get from a cruise for what we provide is night and day to what you can get on land and people are recognizing that. we are casting a net wider into the general population for people who know consider cruising a vacation alternative. in 2024, we had over 10% more

new to cruise than the prior ear. becoming more mainstream and breaking down myths and the value gap is real. we can increase pricing as we have been doing and be an incredible value. paul: that was the carnival ceo speaking with carol massar and tim stenovec. i am not a cruiser. are you? david: i am not. i have never been on one. paul: charlie pellett is one and he goes everywhere but i am fascinated by the economics. it is good. i have owned this stocks and bonds. david: but never set foot on a vessel? paul: that may change in the future. the economics are phenomenal for these cruises. i remember the early days of the pandemic, day 1, 2, 3 they were issuing debt because they knew they were going to have problems.

david: they couldn't get passengers off of the boats. paul: people are traveling from what i understand. james ferrara joins us. i am not one of them. i am staying close to home. these people that are nuts out there. they are on the roadways and in the airports. what are we seeing in terms of holiday travel this year? james: it feels like you are the only one. happy boxing day and welcome to the busiest holiday travel season on record, ever. people are visiting family and friends. they are also getting away and we have had the busiest days, december 1 will probably be the busiest day of the year. the most traffic. the biggestcond biggest one of the year is tomorrow, actually, the 27th. then we will have another huge one on the 30th.

if you are traveling and you haven't made flight arrangements for some reason or you can move, move to new years day, because christmas eve and new year's day are very light days at the airport. david: paul invoking the end -- pandemic and i wonder when you look at the numbers for the past month, how does it compare to what we saw before the pandemic? our airlines back to where they were before and what are they saying about the ability to deal with and process and have that many passengers going through airports? james: we surpassed 2019 last year and this year we are about 6% ahead of last year, so setting another record. 2019 is in everyone's rearview mirror. but we get some reminders. you heard about the american airline computer glitch on

christmas eve. we had a couple of snowstorms in the northeast, heavy rain storms in the pacific northwest and the third of even a government shutdown, federal government shutdown. the system is fragile. any of these types of things can disrupt it. we actually to use a terrible phrase, dodged several bullets and warmed up ok so far. i don't see anything that indicates we are going to have the same kind of problems that we had let's say in 2022. many people remember the southwest airlines meltdown that year. paul: where are people going? it seems anecdotally young kids, including two of my offspring, barcelona. where did that come from? i have no idea what is going on. where are they going in 2025? james: domestically, not a lot

of surprises, new york, las vegas, orlando, of course. the big one now is in new orleans, especially with young people who love it there. honolulu is also on the list. internationally, people are going to put to, -- puta cana. dubai is a hotspot. the bahamas, london. those are typically what we have at the top of the list. there aren't a lot of surprises. the trend for this year, that thing at is new is more overlooked places, pushing more into the off the beaten path kind of mentality. this was driven a lot by young people and by a global wanderlust that everyone has. it is also driven by a concern for over tourism. you bring up barcelona and it is an amazing city but it is too

crowded and it has begun to push back. we saw over the last year protests and so on. so people are going to sardinia for a taste of italy, but it is not room or venice or the incredible tourist crowds. colombia in south america is very popular. new zealand, not australia, for fewer crowds. vietnam. slovenia for a taste of europe, off the beaten path. most people haven't been there and much less crowded. david: i see paul taking notes writing slovenia down. great to speak with you. that is james ferrara, the ceo of the travel company. it just brings up the travel fragility of travel in the

country. i think about that every time i walk the gate and ice notice that they are still using a dotmatrix printer. but that network of systems is very antiquated. another has been a lot of effort to modernize things. paul: it is as simple as do we have enough people in the towers and the airlines have enough people at the gates. i will get on a plane when someone pays me too. that is my strategy these days. david: coming up, an economist at itr economics will join us as we look at the economy and how it has performed in 2024 and how it is going to look like in 2025. this is bloomberg. ♪

paul: all right, good thursday morning. from new york city, bloomberg with a special edition of bloomberg markets. paul sweeney and david gura, simulcasting here on radio and television. kind of cool, looking at the markets here on this holiday after christmas. the s&p 500, off 11 points. the nasdaq is off .2%. not a lot of movement at the index level. volume is light, as you would expect. looking at the 10 year treasury, a little bit hige steady at $78r barrel. again, i'm watching, so i know

all about my guest's business. 70 bucks, they are making money, costs of production, i'm feeling good about my friends down in texas and louisiana, it's all good stuff. david: the incoming trump administration facing the worst trajectory for federal borrowing in modern-day history with the deficit projected to exceed 6% of gdp next year. something i spoke about with janet yellen, the current treasury secretary. >> i am concerned about the fiscal outlook and i believe the deficit reduction is necessary to keep us on a sustainable fiscal course. president biden signed into law $1 trillion of deficit reduction over the next 10 years. he did that in the agreement to raise the debt ceiling. our budget proposes an

additional $3 trillion of deficit reduction over 10 years. i think it's necessary to make sure that our fiscal path is sustainable. now, congress hasn't really done anything to, you know, beyond what i mentioned, to improve the fiscal outlook. i think that's a shame. i'm disappointed in that. i think congress needs to work hard on that. there is a threat going forward that many of the provisions on the individual tax side of the jobs cut, jobs cut tax act, j cta, enacted by the trump administration and congress in 2017, they will sunset at the end of next year. many republicans have expressed a desire to keep all of those

provisions in place. cbo said that would costs 5 trillion over 10 years. so, that would be a blow in a situation where i believe an additional 3 trillion, you know, not doing the 5 trillion is necessary. and if, if, if the provisions or just extended, this will be a serious blow without finding ways to pay for them. we have proposed a lot of pay for's that we think would fairly ask corporations, wealthy individuals, to pay their fair share. we have negotiated an international tax agreement to create a level playing field, worldwide, for multinationals. the united states is not yet

joined, although many other countries have. that would, that would be a revenue raising measure that i think would be very valuable. there are certainly more. i do hope that the new administration and congress, if they extend features of tea cta to pay for what they do, and also make sure the benefits go not to the wealthiest individuals, but to middle-class families. david: joining us now is lauren seidel baker, economist. let me pick up on with the treasury secretary was saying. talking about what might happen when it comes to taxes. looking ahead to 2025, zooming in on that variable, how much could it define the economic trajectory going forward in this country, whether or not those so

called trump era tax cuts are extended in 2025? lauren: clearly there will be some knock on effects but the consumer is in a stable position . if we are talking about individual tax rates, we consider that in the spending but dollars tend to walk based on other fundamental factors. the big one right now is the strength of the labor market. we have been talking a lot about that recently with very low unemployment claims and low layoffs with other discharges. generally, if you want a job today with this low unemployment rate, you can typically find one. there are more job openings than unemployed jobseekers. at the end of the day, the tax rate matters, but having that strength from the employment perspective matters more. paul: we are starting to hear from the retailers and it seems like the consumer is in decent shape. is that what your data shows? lauren: that's absolutely what

our data shows. we like to complain about these factors, right? we have clearly been hit by inflation but overall, wages have been rising. our purchasing power is actually better off today than it has been at any point in history. the low single-digit growth from retailers, in some ways we were spoiled in the post-pandemic stimulus era where consumers how much -- had so much essentially windfall to go spend. the high growth rates were never going to be sustainable. what we are seeing today is the growth rates coming back down to something more sustainable and healthy for the retail sector. overall, its growth. slowing growth, yes, but still positive movement and many of the fundamental leading indicators that we see today are putting in place in even better growth picture in 2025. paul: i wonder what stood out to you in the most recent comments from the fed chair, jerome

powell, this adamant see that the fed's data point driven. what have you taken away about their approach to the numbers? to the economic data we have been getting and what they are going to treat as paramount and most important in 2025? there is the bce and all of that, but when they look at the panoply of data down in washington, d.c., what's most important to them and you as we turned the corner into 2025? lauren: the fed, with that dual mandate, there's always the seesaw. where are they putting more attention and focus? for a while it was inflation which had gotten away from us. once inflation starts to come down, and being clear, even the core numbers, we are not yet at their target rate, but we are moving enough in that direction that they shifted their focus away from inflation and towards the labor market.

the labor market, while some directional deterioration is happening, it's coming from such a tight starting point, it's still such a tight labor market. as we here at itr have been saying, we will -- we are expecting inflation to build in the back half of 2025 and it will be easy for the focus to shift quickly. that's something that we saw in the most recent dot plot. fed officials are starting to scale down expectations for the number of cuts we will get into thousand 25. this has been on our horizon for a while, mounting inflation pressures coming back. not to the recent highs, don't want to scare anyone, but building fundamental pressures, we will be comfortably at that rate and with the labor market relatively healthy, it will be easy to shift away from that dual mandate and i don't expect you will get rate anytime soon, but by the end of 2020 five it's

not unimaginable that we could even see rates not just level off, but start to decline again. paul: new administration coming in, we don't know a lot of other economic policies, but we know that tariffs are on the table, changes to immigration and migrant policies are on the table. some have suggested that those by themselves could be inflationary. is that a material risk for you? >> absolutely. we don't know a lot about those programs but historically they tend to be inflationary. tariffs, inflation is almost built into the goal. increasing the costs of foreign imports. we had seen domestic producers who felt like they had more wiggle room on the right, with the costs of the competition of products going up. we had domestic producers increasing prices in 2018. if we see mass deportations again, i mentioned that there are more jobs available than jobseekers, so taking however

many million out of the labor force, even if they are not documented today, that will cause upside pressure on wages. we don't have full details. it remains to be seen what is policy proposal versus campaign rhetoric, but if we tend in that direction, which seems like a good bet at this point, that would tend to put more upside pressure on prices. david: we know the fed is wrestling with various permutations of what could happen and the effect on the economy. let me ask you about this so-called neutral rate in the fed obsession that we pinpointed in real time. what's your sense of the struggle for the fed going forward? you mentioned that they had reached that inflation target. is it coming into better focus here towards 2025? lauren: we have to keep in mind that the fed is made up of academics and where the neutral rate is, that's an academic

argument. we will only know in real time. at this point it doesn't matter where the. what matters is how many of these fundamental factors will be increase in inflation with the add-on risks from the policy side just mentioned, what will it do to the inflation rate and how much did they need to do to keep inflation in check versus labor market issues that are long-term demographic problems? that's not easy for the fed to just put their hands on the scale and show balance. demographics is not something they can fight with birth rates. that's not what the fed is here to do. paul: lauren, what is your gdp call for 2025 and what variables could move that one way or the other? lauren: we were looking for about two point 5% growth in 2025 and a lot of those

fundamental leading indicators that we tend to follow are showing up turn. subdued growth lately in the manufacturing economy ended the industrial factor, but we have green roots go insurable -- going forward. businesses are now looking to invest next year. there will of course be added policy implications, but the general underlying fundamental factors, those are the ones we find a bunch more consistently important to business investment and the long-term growth of the economy. so, i'm looking for steady consumer spending to be on the edge of re--- refueling that growth. the government, beside gdp, they keep on spending, as we heard from janet yellen. i expect steady but broad based -- the broad-based programs of 2025. david: putting the u.s. economy in a global context, seems that here is much better than many parts of europe.

do you expect that to persist? lauren: the reason our economy is doing better foundational and it's a strong foundation with a lot of foreign investment coming into the united states. i don't think the tree off shoring story has played out. there's more moving in that direction. globally we are at a point of nationalism is a point to globalism. the pendulum is shifting that direction. we got a bit more boost in our pandemic era stimulus spending. yes, we are in a broad and strong position to encourage investment to flow this way. for the foreseeable future, the u.s. is a good place to do business. paul: lauren, thank you so much. appreciate it, as always, giving us your thoughts on economic conditions out there on the federal reserve and maybe a peak ahead to 2025. starbucks baristas, the strike

has come to an end. details on the fight that closed some cafés for five days with a look ahead to more consumer trending into thousand 20 five. i think that the baristas, i don't know about you, i think they do a great job, the starbucks i go to. here's my tipping thing, since we are being asked to tip for everything. if i stand, i don't tip. if i sit, i tip. david: i like that. paul: you had to come up with a new one. i figured that made sense. s&p 500, all 13 points. more, coming up. this is bloomberg. ♪

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technology, extraordinary. s&p 500, off 12 points. nasdaq, off about 40 points. i think david and i are the only people working here. quiet day after christmas. wti crude oil, unchanged for the day. bitcoin, off 3%. giving you constant on what's happening on all the markets across all the asset classes. what you got, david: david? the strike among starbucks baristas has come to an end. fascinated by the incursion of labor into starbucks. first, want to talk about the conversation we had a few you -- a few days ago with the ceo of cisco. >> challenges from consumers are the following, looking cumulatively over two years the

three years, menu prices at a restaurant are up 30% to 40% versus 2019. that's the pain that we are all feeling in a restaurant. we are taking actions with our supplier community to bring the prices down to help restaurants lower menu prices and still hit profitability pocket -- targets they are hoping to achieve. >> seems like consumers looking forward to deflation are looking at a december where cocoa and coffee are up 40%. there is something that you can do to bring prices lower. what is it at the end of the day? with consumers shifting preferences to goods that are cheaper? >> we have a four-part plan to help decrease the pain consumers are feeling when they go out to

eat. first and foremost is working with the supplier community to bring down costs. leaning and hard with suppliers to help them be more efficient. creating competitive environments for suppliers that might want competition for business, getting lower on that price with asset value being passed on to our customers to get a lower menu price. we offer private label products under our banner, it's very high quality and it enables our customers to save money. save time, save money. it may surprise you that 50% of what we sell to mom and pop independent restaurants are cisco branded products. we can lean in harder with the swap and save opportunities. we can clear it on the website and through our sales force to share that value with our

customers and educate them. number three is taking time out of the kitchen. help them with the opportunity to take labor costs out. we have prepared foods in the like that we can lean in, cutting in advance of arriving in the kitchen. those prepared foods are a good opportunity for our customers to fix labor costs. food costs are up, labor costs are up, we can help in providing both of those opportunities. last but not least, lower costs to opportunities. we can help the customer understand. shifting your consumer purchasing to a lower costs of food. paul: all right, that was the ceo of the food company cisco,

not the tech company. important to make that distinction, talking about food inflation. all right, let's go to starbucks. thousands of starbucks workers who walked off the job have concluded what amounted to about a five day strike against the coffee giant. for more on this we are joined by emily. thank you for coming into the studio. you get the gold star for coming in. a coveted gold star. emily: i did it. paul: why were starbucks workers striking? emily: they were in a bitter battle with the company and have been since 2020 one, the end of 2021, when the first store voted to unionize. they have a growing union presence at starbucks. about 5% of their stores are unionized now. they are in the final stages of negotiating a union contract. that's when you start talking about money, wages, the really contentious stuff. so, the company is alleging that

the union walked off, left the negotiating table prematurely. the union says starbucks came to the table with no raised offers. so, that led to this strike that lasted five days. the last day was christmas eve. this is a really important time for starbucks. people stopping in for lattes during the last minute shopping. purchasing gift cards as stocking suffers. only 2% of their stores actually closed as a result of the strike. probably not a huge impact on the business, but definitely a morale hit for the company. this is something we are all talking about that we all noticed. there were lots of headlines about it. it's unclear how many stores strike. probably between 200 and 300 between what the union is saying and the company is saying. it's a small ercntage of their 10,000 stores. definitely got a lot of attention. david: can you give us some

context into how this holiday retail season went and how they pieced it together online and in stores? all of that. what are you tracking or following here in the waning days of 24 and how the consumer performed at the end of the year? emily: that's a good question. we are seeing a lot of what we have seen throughout the year, we call it the bifurcation of consumer spending, where we e the upper income consumer, households making 100,000 dollars or more per year, doing quite well. they are splurging on gifts. they are getting out there and shopping. the stock market is doing well. there houses are worth more than a year ago. they feel pretty good and are shopping. at the lower end, we have shoppers pulling back, not shopping, not splurging. we had a great story last week, the ceo of newell brands, the maker of sharpie, rubbermaid, mr. sharpie, saying they are

having a much easier time selling $300 coffee makers than they are selling $30 coffee makers, telling you everything you need to know about the economy right now. upper income households are spending, lower income is pulling back. paul: what about tariffs? what's the expected impact on the consumer? i wonder if the folks who voted for donald trump, are they aware of that in some scenarios tariffs result in higher prices that we pay for stuff. is that a concern for the consumer out there? emily: it's a good question. it's ironic that we saw a lot of voters really frustrated with the costs of their groceries and how much they were spending on things come out and vote for trump because they thought he would lower prices. meanwhile, his platform has been open and honest about his protectionist policies, the core of that about increasing tariffs. if you know how tariffs work, most of the time they get passed down to the consumer and raise

prices. that is going to be a big theme of the coverage and what we are looking for next year. obviously, tariffs are really complicated and we don't know what industries they will hit first, the types of products they will hit, how big they will be or the countries they will affect. it's all still unknown. generally speaking economists think that tariffs will raise prices for consumers and slow economic growth, which is ultimately not great for the consumer or the companies that we cover on the consumer beat. you know, we had a bit of a preview of this in the consumer confidence ratings that were just out a couple of weeks ago. they tanked for the first time in a while, in part because of this concern and uncertainty over tariffs. david: what about companies themselves as you listen to the ceos and their earnings calls, they concerned over what tariffs could mean for the bottom line?

-- emily: some are. some that were planning on moving production outside china or closer to the u.s. are speaking out about it. a lot of companies are saying they just don't know. walmart, obviously, saying yes, tariffs will ultimately raise prices for us. so, it's different answers across the board. it will be really interesting to watch. i think there is a lot that we don't know that we will learn soon, once the new administration enters the white house. paul: and emily will be watching it closely. getting that gold star from us in the studio, not worth nothing, we promise. 2025 and what it will look like across a variety of sectors. coming up, a broad perspective on the stock market and fixed income with the chief market strategist at fs investments joining us next. this is bloomberg. ♪

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paul: all right, good thursday

morning from new york city on this boxing day. how do we get that boxing day rolling here in the u.s.? they are on the something over there. david gura and paul sweeney, live in new york city, simo case -- simulcasting. the s&p is off five points, six points here. the nasdaq, .1, point 10% here, kind of the highs of intraday trading. 10-year treasury yield's are up a couple of basis points on your 10. wti crude oil, absolutely steady at $70 per barrel. gold, a little bit higher. but point is off per token. a quiet day, as you would expect. david: it is there a better take on the classic 60/40 method? bruce richards think so. he spoke to sonali basak recently about his strategies in the signals he's seeing in the

banking sector. >> the 60/40 model is alive and well. it's how every investor, whether you are a wealth investor, high net worth, or institutional, should think about investing. within the 60, that's a release for public and that's what we think about traditionally, but public equities had back-to-back years of 25% gains. we only have that twice in the 90's and the 50's. it's probably not going to be repeated next year, we brought forward some of this price action. i think that this is the time where you want to save up the equities and make that 7% historical return to lean into private equity. so, think about public and private equity, that model, that's how you want to think about that. >> you told us that you think that the basel three endgame is dead and that it has serious implications for credit markets.

your conversations with the banks right now, bring us inside of them and what it says. >> i do believe it's dead. part of the regulations that we are going to see, it's also going to transform into what's happening in the banking system. rather than having these rules placed on the banks, i think the conversations that jamie dimon, donald trump, and other people in the administration, the incoming administration is having with the bankers, that will lead to that. the fed in the vice chairman has a lot to say about this, but i believe it's dead. so, what does that mean? it means the loan ratios at the banks that are pretty strong and pretty large, it will unleash a lot of ability for the banks to be able to lend. the number one place they will want to lend to is across the board, loan on loan. folks like marathon, that's

attractive financing in the form of lower rates and it will help to drive our private credit returns. so, getting back to the 60/40 model, that's not only 40% fixed income, but half of it should be in private credit. direct lending, we are seeing twice the yield flow. more now this last quarter than we did in the last year. asset-based lending is alive, well, and taking off in a big way. having that financing available from the banks is a big boon to all of us in the private credit markets. paul: for more on that, we are joined by the sf investment chief market strategist, he knows that the time for alternatives is now. great to have you here with us on this day after christmas. talking about what we heard from bruce richards about private credit, we would love to get

your sense of where the runway goes from here. we have seen such enthusiasm and excitement 2024. tell us what you think 2025 looks like in terms of where private credit goes from here. >> fixed income has been a tragic place to be. this year you will be earning your yield with capital appreciation on the back end of the curve selling off. thinking about the last several years, to his point, a lot of that was focused on creative receivable financing known as asset-based lending. helping the really high quality companies make it through a tough patch where you had exceptionally high rates on the short end of the. borrowers lifting assets off of balance sheets with other creative financing sources to keep the yield attractive for investors. what we have seen, and we expected this, what we have seen

since the election is an enthusiasm for private mergers with acquisition financing coming back and standard lbo's. the public for private coming back really strong. the outlook is really robust over the short and long-term. the one factor that we are really focused on with the supply of credit, because demand for credit is clearly hedging off on the supply side, it's how aggressively banks get back to lending. bank lending stagnated for almost two years. particularly after bank failure. you had assets with gdp growth and stagnant lending. you start to see it picked back up and it's still relatively placid, so to speak. we are hoping that banks can begin to lend to lenders as articulated and allow private lenders to provide financing to the private -- broader u.s. economy. paul: earlier in my career i was

at chase manhattan and we were lending against air. there were no assets, no inventory. we would lend money to fleet calls. frequencies that didn't even exist. why did they walk away from that business? leveraged lending, we made a fortune in that. why did they walk away from that and then create the demand for private credit? >> yeah, so many of those opportunities that were created for ourselves and driven by regulatory reform, it was sarbanes-oxley that really started the trend of companies preferring to stay private because of all of the additional regulatory oversight. now you have a really private economy in the u.s., 96% of the companies with 100 or more employees that are private. a megatrend for companies saying private, creating demand on

private credit. to your point on banks, the hangover is where it started to get implemented with dodd-frank, etc., creating a long amount of time were banks were entrenching from core businesses. one of our core strategies for commercial lending, it's a strong term but primarily they stepped back into developing a transitional landing that allow private credit to step in. more locally, people forget this, the banks lent very aggressively coming out of the pandemic. they were growing their own books at two times to three times base, which is historic. bank failures completely arrested it. gdp growth created a great window. with mergers coming back, acquisitions coming back to private transactions, longer-term it was close to 2 trillion in dry powder needs to be financed every year.

david: let me ask you how you and others in the dealmaking space have been looking at this transition time before the new administration comes in? i know there's a lot of object -- a lot of optimism around 2000 25. what are you watching for most closely? when we get president-elect back in office again? >> there's a whole host of policy issues that need to be addressed. the facts cut jobs act, there's a left tale of political dysfunction. one negative i think would be higher yields on the back end of the curve through expanding fiscal policy tied to that. but in terms of excitement, you

should think about last year with the unusual time where capital markets and public equities the inflated dramatically. i know that this team has come out of the russell, which really has core earnings with cash flow properties and there's been this huge expansion and valuation, publicly at least. in private equity we had two years of progression and i think we are due for a catch-up, there. looking at it on a deeper level, you can always remind people that if you are investing in equity, you are investing in growth. where do you get growth? the u.s. had strong nominal growth. different sectors of the u.s. had 12% consistent revenue growth in middle-market private equity, six in the s&p. only 2% in the russell. internationally it's been negative for a long time. you are getting revenue growth.

you are getting earnings growth. maybe you are at a much more reasonable valuation relative to the russell in particular. so, there is this whole concept of growth at a reasonable price that used to be a thing back in the day. when you look at public equities, you have growth that's elevated at reasonable prices. growth isn't the most important part. paul: one of the things i think a lot of dealmakers are thinking about with the trump administration's -- boy, the regulations, whether it's the department of justice or federal trade communications, it's going to be a lot easier to get deals done. do you buy into that? >> 100%. that's mainstream at this point. everyone was expecting mergers to come back regardless of the election outcome. but because of this much more business friendly, s.e.c. friendly when it comes the

acquisitions. looking at the landscape that will be under pressure from an acquisition standpoint, it's one of those few areas of bipartisan d.c. consensus. a hard line on china, not allowed to buy anything ever again. but other sectors, like airlines or manufacturing, it is clear that m&a is coming back strong. it affects different strategies in different ways. private equity allows you to have exits with reasonable prices and higher valuations. in private credit you create a lot of deal flow for financing. in the more liquid strategies it's on an environment for emerging arbitrage, one of the few that struggled last year because of the very aggressive. intervention. typically, 5% of mergers break for whatever reason. during peak fcc intervention it was around 9%. so, we are optimistic about that

drive. this is a reminder that sometimes the best time to invest in strategies is after a rough patch with a transformational outcome. in this case, a much more friendly government approach towards mergers and acquisitions. david: 30 seconds left, i'm stealing this question for -- from paul, what's your theme for the year if you can put it short and sweet. >> cash to work. that was our theme last year, to . cash balances are extremely high and you have multiple choices for putting it to work. one is capital equity, one of them is private credit. put the cash to work. you know, don't expect that are fixed income returns. you could rotate some of that capital into private credit. lastly, when you think of alternatives, right, there's a big difference between large and mega cap private equity, just like there is a big difference

between vintage, private equity strategy, and those who are lending aggressively in 2020 1, 1 of the first vintages ever in that space. david: troy, always great to talk to you therefrom from fatah -- fss market strategy. known for his campaign, the time for alts is now. bringing up a lot of the themes that we talked about this morning, private credit chief among them and i think it will persist moving into 2025. great to speak with him and get his perspective once again. cautious optimism on a cfire deal in gaza, rising. that's ahead. this is bloomberg. ♪

paul: all right, david gura, paul sweeney, live here in midtown manhattan for a special edition of "bloomberg markets."

markets, quite absent, to borrow a term from tom keene. not sure what it means, but i get the gist. really, no movement on the index level. yield space, 10 year treasury, four point 6% is what your u.s. government is paying you for your money for 10 years. crude oil is flat. gold is higher, it's a heck of a year for gold. bitcoin is lower here, just under $97,000 per token. david: love the quiet ascent shout out. the middle east, recently growing hope for a cease-fire deal in gaza that might finally be close. we sat down with antony blinken and asked him what the chances of a cease-fire were before the end of the biden administration. >> the reality is that we should logically be able to get this. i say this with all the caution that comes with that statement, because we have been very close

before and we have had those of lucy and the football moments where you are ready to kick it and lucy pulls it away. what's changing? thomas knows that the cavalry is not coming to the rescue. for months and months they were hoping for a wider warsh for more countries coming into create problems. we now know that's not happening. they know it's not happening because of the important work that was done with us and with others dealing with the unprecedented iranian attacks on israel. dealing with hezbollah. that's concentrated minds among hamas. having said that, it's incredibly fraught and it's hard to get decisions made, it's hard to communicate. for all of those reasons, even as close as it is, he could still move in the other direction. but we have all been fanning out, working with all the different partners who could make a difference.

we have leverage in communications with. hamas, qatar, egypt, turkey, or just last week it was the fundamental question -- right now, is hamas finally prepared to say yes? and if it does, we get the hostages back, we get a cease-fire, immediate dramatic improvement in the lives of palestinian women, children, and men who have been caught in this horrible crossfire. if they really purport to care about the palestinian people, they will say yes and do it now. >> let me ask you about that horrible crossfire. it's something you have written about. millions have been displaced. tens of thousands have been killed. gaza has been reduced to rubble. you have made 12 trips to the region. how much regret do you have that a sustained level of humanitarian aid hasn't made it to gaza over the course of this conflict?

>> from day one we have tried to do several things. first, stand resolute with israel to make sure october 7 never happens again. second, prevent the war from going wider. if that happened, other fronts opened up, it would be more death, more destruction, and it would probably prolong what was going on in gaza. three, to do whatever we could to make sure the people of gaza were getting the assistance and protections they needed. we have been on this virtually every single day and have seen more moments where assistance is getting through than moments where it has ebbed and flowed, but it has a dramatic effect on the lives in livelihoods of the people of gaza. in the last week, 10 days, it's been a noticeable improvement, but we have seen that before. the best way to finally deal with the needs of the people would be to end the conflict. get that cease-fire and get the hostages home.

that's the best way. you know, an environment that is unique. there's a population trapped in gaza with nowhere to go. in most other conflicts, people can become refugees. it's not a good thing but it's better than being caught in the middle of a hot war. and you have an enemy with hamas fully enmeshed in the civilian population. living in and under apartment buildings, school buildings, mosques, hospitals. that doesn't obviate all the responsibility israel has to make sure that assistance gets to the people who need it and that people are protected as best possible. we have been pushing on that every single day. we have also seen what's possible if there is real, sustained focus on this. there was a polio vaccination campaign to make sure the children of gaza got these and it was very successful. what we have been trying to impress upon the israelis is the need to bring a sustained focus

on getting assistance to the people who need it. >> you have said of the new administration that you want to pass the baton so that they can get off and running. forgive me, it seems like they are off and running. president-elect trump met in france with zielinski, macron. trudeau in florida. his special envoy to the middle east was there. does that create problems for the work you are doing, having these set policy voices in the region? >> look, there is one president and administration at a time, but we are in close contact with them. >> you used to talk about the logan act. these collect different circumstances. >> there are a few things going on. i've spent a lot of time with senator rubio, michael waltz. his successor, we have had very

good not only conversations, but are trying to make sure we are as coordinated as possible and they know what we are doing and the remaining time that we have. i want to be able to hand off to the incoming administration the best possible hand to play. the world doesn't stop just because we are in a political transition. it's normal that countries around the world want to hear from the incoming administration and want to know what they can expect so they can get ready for it. as long as we are communicated closely, working to make this handoff as effectively as possible so that they can get moving and on the run, there is no time to wait. i think it's a good thing. look, on the east, sticking with that politically, we have been working really hard to make sure that as best we can, we actually start to implement plans for a better future in the region. if we don't have time to fully do that, to be able to have them off. that was the conversation that

secretary blinken had with me just a few days ago. he talks a good game about the conversations he's had with his would-be successors. marco rubio was nominated to be secretary of state. other nominees from president-elect trump are making the rounds on capitol hill. marco rubio is a known quantity many, having sat on senate foreign relations committee years. you can detect from that conversation a sense from the secretary of state that he knows senator rubio well, that they have had conversations over the phone and in-person. when you look at the list of nominations that have been made, senator rubio stands a good chance of being confirmed there. but the other thing that stood out to me is the way that trump has been conducting foreign policy in parallel with this administration, we haven't seen that to this degree before. i brought up the fact that trump made a trip to paris to extensively see the reopening of the notre dame, but while he was there he met with the presidents

of france, paris -- france, spain, prime ministers flying to florida to talk to him about his tariffs. so, it's not just politics. i think that what makes it the most glaring to me is that they are not seeing it met by folks like the secretary of state, blinken, who is doing the work, but there's a vacuum and you don't have the sitting president speaking as much on foreign policy -- foreign policy as you might have seen in the past. >> it's a unique situation. it's a president who comes back and knows the buttons to push, knows the players. why not get involved now. one could argue that this is vacuum of them not taking a more public view of these issues.

a unique set of circumstances there. >> in he knows the players swell at the g20 summit. there isn't the uncertainty then. they knew who he is and how he governs. paul: it will be interesting. on the real estate outlook, we are speaking with russell, managing principal at crescent heights. alix steel and i on "bloomberg intelligence," we try to stay on top of that commercial real estate business. there are a lot of variables there. that's coming up. this is bloomberg. ♪

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paul: all right, good morning here from new york city radio studio here in the bloomberg hq on the east side of manhattan. we've got a special edition of "bloomberg markets," simo casing on radio and television. how cool is that? s&p 500, off 29 points. not much movement on the index level. volumes are low, as we would expect. yields are higher off the highs of your treasury, crude is flat today, $70 per barrel. that seems to be the trading range on bitcoin.

off, just below the 96,000. david: new home sales rebounded last month as builders and consumers sealed the deal's delayed by storms in the south and buyers took advantage of heavy sales incentives. here is what brown harris stevens had to say about the market. >> all real estate is local. depends on where you are, the demand. one example, something like palm beach, if you put something on the market there's a swarm of people who want to buy it, but that's more typically high-end and expensive. connecticut, there's no supply. when someone puts a home on the market, people are lining up to put a bid on the homes. after more supply, it comes down. once the buyers get into the market, you start to see fluid myths with supply and demand intersect, that's a healthy housing market that we didn't have. >> palm beach, connecticut, i'm

selfish and asking about manhattan. what does supply picture look like there? >> decent supply. the market in the city has been pretty flat. the high-end has done well. it's discretionary. the bonuses have been incredible. driving the real estate market here, it's been frothy. is there a bubble coming? do we know? it's not clear to us. i do think that it has been moderate and decent. i would like to see a pickup in that market. a big portion of this market has been cash. remember, mortgage rates don't necessarily impact the buyers and sellers as much, though it does play into it. >> when you think about the push pull, the tension between renting and buying, you are so close to the ground. what are they choosing for now? is there a reason to rent and

wait to buy? >> they see renting like dating. it's temporary. if you don't like it, she's on the upper east side right now, doesn't like the neighborhood, she's moving out. if you want to connect to economic security and build intergenerational wealth, buy a home. if the plummet -- if the market plummets and your coinage goes down, you are looking at your portfolio and going -- i have less money, this stinks. if you buy a home in the value goes down, you have a roof over your head and places to eat, sleep, have dinner and fun. it sort of goes up in value. i think we have to think about the housing market as a long-term investment. and it is still the american dream, a commitment to your future. paul: that was bess freeman. ceo of luxury real estate. keeping on that story here, residential real estate, doing that with russell, the managing

principal at crescent heights. thank you for joining us here. south florida, is there any reason for this market to not continue to be strong going forward? seems like everyone appear in manhattan -- up here in manhattan is going on to florida. don't know what's going on. >> you are right, we are very fortunate in south florida. not every city is borne equally, correct. not every state is equal. we are very excited about what's happening in south florida and are cautiously optimistic. things seem to really be going away. >> tell us about what it is going forward, i know there's been enthusiasm for large companies to move offices down there. see for the weather that we are all in, what are the draws and what has south florida done to move companies down there? >> capitalism and business

follows the path of least resistance. florida has created that path. we have spent so much money on infrastructure, creating the schools in the housing. all of the other things that are necessary. such as our cultural centers of excellence and support for more housing. we are very pleased to be in south florida. as i said earlier, we have 1000 people coming to our state every day and are doing incredibly well. paul: i don't know where you are putting them. where do you build more communities? can't build on the coast, since the 50's the coast has been full up. where are you putting people? >> in land as well, putting them all over. south florida, you know, we still have a great amount of land to build and we are really creating urbanism. in the last 10 years in miami for the first time we have a true urbanism. the way that we started that was

with our cultural centers of excellence in the downtown edgewater areas. and we have a new train now that goes directly to orlando, with numerous stops between, as well as public transportation that is second to none. we put a lottery school system in including private and charter schools and embraced the concept of excellence, something other states have forgotten. we are very proud of what's happening in the state of florida. david: let's talk about those other states. pulling back to look at the health of the residential real estate sector more broadly, where are you seeing bright spots and growth? maybe not as strong as in your beloved south florida, but where are you seeing positive signs? >> i often joke that our greatest real estate salesman was de blasio. to some extent, it's true. he sent a lot of people to sell florida. i think that between florida and

texas, we are truly growing states. the reason is we welcome entrepreneurship. we make it easy to form your companies. i think that what happened here is with covid, so many were working from home, creating businesses from home. it used to be you weren't allowed to say you were a capitalist. things have changed. elections change things. today people are proud to say that they are capitalists working at home. when you can work at home, why would you not want to be in an area with beautiful beaches, sunshine, and incredible weather? that's places like south florida. paul: the federal reserve is cutting rates. how do you think that's going to impact your business, your market, over the next 12 to 24 months? >> first of all, i think the fact that interest rates are stable is very important. the public is starting to feel

that they know where interest rates are in the near future and maybe it will come down a few quarter points, but that's the most important thing. i will tell you, next year will be 50 years of my building condominiums. my first was in 1975. in 1981 interest rates were 16.1% for condos. you know what? they still sold then. the average over the last 100 years has been 6.5. the median is 5.6. so, we are right in the range. yes, we have to come down another point or two next year, but i think we are ok when it comes to interest rates today. david: you are in the building business and there is so much speculation and concern over what tariff policies might mean for a number of goods. i imagine timber and construction supplies are high on the list. is that something you're thinking about with any real seriousness? something you are just

monitoring? how are you looking at these policy proposals and announcements? >> governance is extremely important. when you see how our governor has run state of florida, streamlining processes, creating the local, a great law that allows for workforce housing, you see the level of competency exercised by the legislation, the bodies, the senate and the house, it's terrific. compare us to states like california, where they have builders remedy, it's the difference between day and night. government does count. another benefit in south florida, with the recent elections in mexico and south america, columbia, so on and so forth, we will get a huge influx . south florida, miami especially, is such a culturally diverse community. it's the most culturally diverse

community in the united states, i think. paul: i would say there is an extraordinary story there. part and parcel two that is, i think, in the construction business, you go to any site around the country and it feels like there is a lot of migrant labor there, legal and illegal. how concerned is your industry about what might be stricter immigration, forced repatriation of certain people out there that may be critical to the workforce? >> the workforce in south florida is extremely important and we have a culturally diverse workforce as well. but we believe that most of them are fully legitimate and are welcomed into our country. the great thing about south florida is that it's been building now, through the last four years, with other parts of the country that have been stagnant. therefore, we have had a lot of immigration to florida of great

construction workers. the quality of our product has been maintained. we are the recipient of that. now, it may cause problems in states like new york and other states that receive so many illegals. thank god in south florida we were not recipients of that. in fact, our recipients are the people economic substance. the people who want to search for excellence and want to have great schools and infrastructure. places like new york may have gained illegal immigrants, florida gained the wealthy and medium wealthy who wanted a change. paul: let's talk about climate. that's something you have to keep front of mind as you undergo the developments you are going -- undergoing in south. making light of the weather, but you have to be inking about climate change, rising sea levels and the like. how is that shaping the development projects you been

undertaking in the way that you think about what residencies look like long term in south florida? >> that's a great question. we do follow all the issues around sea levels. buildings will have to come higher out of the ground, get taller and be more open space. that's what you are seeing in south florida. people recognizing that climate change is real and there are ways to deal with it. we certainly have a legislature and the governor relentlessly focused on new legislation to ensure the safety and welfare of our residents. some of those laws, like live local, where inspections will have 40 year, 45 year certifications. that type of leadership is what makes south florida different. paul: one of the challenges i hear about florida around real estate is insurance, getting

that insurance against the weather, the floods, hurricanes, it's a challenge for the state. how would you like to see that play out? >> that is probably one of our biggest challenges and we know that every day. the state itself will have to get more involved and they are. by the way, the increases in insurance are becoming less and less each year. paul: interesting. we have heard from a lot of insurance companies that that continues to be a challenge there. you are right, though, folks are coming down there, have to figure that out. russell, thank you for joining us. >> just thriving. to your point, insurance and the context of hurricanes earlier this year, the number of individuals in the news who said they had seen their premiums go up by a ton and had to worry about it, if it's not an issue

for everybody, it's like 51. paul: a lot of private insurers pulled out over the years. warren buffett, his business made a pretty high profile re-engagement with florida a couple of years ago, thinking that there was an opportunity there given the risk, to make good return, but i know it has been a challenge for the growth in south florida. paul: mr. galvin highlighting how many people moving down there, showing no signs of stopping. coming up, netflix, pushing into live sports. perhaps you like me watch the game yesterday. one of the latest moves in the streaming wars. more on that, coming up next. this is bloomberg. ♪

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paul: all right, good thursday morning. david euro, paul sweeney, live with you this morning, doing a special bloomberg markets

simulcast. it's a fun thing, looking at the markets here, ticking up into positive territory after being negative for most of the day. the s&p is up two points. the nasdaq is up two points. again, not much changed, as one would expect. 10-year treasury yield's where you would expect. wti crude oil is just below $70 per barrel and in a tight trading range there. yesterday, a couple of nfl games, where did you get them? netflix. netflix christmas day football debuted without a glitch, yesterday. i thought it was pretty darn smooth. bolstering their standing in the ongoing streaming wars. management -- jason spoke to annmarie hordern on the future of netflix. >> the consumer pays half of one cent per minute to watch netflix today. on the legacy linear side, you get about a penny per minute.

just advertising revenue that netflix is generating off the games is probably a penny per minute. something like the super bowl is two cents per minute of ad revenue. what they are doing is moving up the value chain in terms of where consumers derive utility and they will keep moving in this direction. >> why do you have a neutral rating on it? >> my gosh, this stock is up almost 100% this year. >> i know, 90%. >> i can explain about half of it. they had upwards earnings revisions at 20% this year. the street also rolled forward from 25 to 26 estimates. that's reasonable. the balance of others is at 40%, around there, i can't explain it. there's nothing fundamental in the results that transpired that warrants that kind of multiple expansion. mistry on the supply side was penciled in 25 times eps.

now they are at 30 times on 26 numbers. could the multiple go out? sure, it could. but we are not seeing anything fundamentally that different that would warrant a higher multiple other than market euphoria. >> is this one of those situations where the aspect around what netflix does, taking one piece and now being dominant in the space, people are paying for the exclusivity? when we look at the multiples across a variety, there seems to be real strength in those and even if they came down a few, they wouldn't be cheap. some of these giant tech guys get bigger and they become the one in the space. you see that with booking, you see it with amazon. is it just paying for that exclusivity where the mega cap is winning as opposed to something specific going on with netflix? where there is growth there? it seems outsized, relative to

the actual fundamentals. >> there is a winner take most in a lot of these tech names. the thing that is a little bit strange to me is that that was true in 21, 22, 23, 24, will still be true and 25, but nothing has fundamentally widened the gap between netflix and the rest of the industry. if anything i would argue that a lot of their stream appears have started to turn the corner and generate profits. not at the level of netflix, but if anything the gap has tightened a bit. >> when you see things like you two raising prices and areas where it's more expensive to liberate yourself from cable it is cheaper and of the individual pieces are getting more expensive again, does that put netflix in a better space with people trying to pare down and it isn't necessarily the first thing to go? or are watching the arrivals

increasing prices dramatically, does that help them as they go along? the switch was different. the password sharing deletion was different. now you have other areas where they can raise the prices. >> that's 100% true. the bulls on the stock would say that netflix is still cheap relative to linear. we talked about half of a cent per minute versus a cent per minute. they also say -- look at the other streamers, they have raised their prices. if you had asked to about either prong, they would frown and shaved -- shake their head and say that's not how we look at it. they looked at it in terms of what you just played, engagement . if engagement is up, they feel they have earned the right to raise prices. that's why that pushing into sports, those engagement levels, the share of streaming has been flat over the last 18 months, even as the climb of content goes up.

so, what is sports designed to do? to pursue a different vector river content costs per hour is more expensive, but the consumer response in terms of engagement will be much deeper. >> it is more expensive. netflix agreed to pay $150 million to broadcast two nfl games on christmas, $50 million more than producing a season of "game of thrones," just for two games. is that worth the money? >> it is worth the money. because consumers values for its more than scripted or unscripted content. i used to go on tv years ago, when the pay-tv bills were rising in the commentary was that it was the fault of sports. i would always say no, you have it backwards. the thing that is underpriced in the bundle, sports wasn't expensive enough. sports because of the consumer to pay $100 per month for pay-tv , it wasn't the other stuff.

our preferred way to think about the netflix push into sports is not to buy netflix, it's to buy the sports leagues. that's where the value is going to accrue. the value of sports rights will continue to go up. paul: that was the citibank media analyst, one of the best media analysts on the street in my opinion. he does follow full work. talking about streaming, that was a seismic day, yesterday, for netflix. since the beginning of the company they have said they don't have any interest in sports, that's not our thing. as jason pointed out, it is their thing now. i think it wasn't their thing in the past because it was so expensive. and when you weren't as profitable as they are today, it probably wasn't a good investment for them. they would rather make a of thrones or house of cards or whatever, license some other

content. now they've got as deep a pocket as anybody of not more so. david: help me understand the perspective on deals like that from the leagues. does the nfl care if they broadcast christmas day on netflix as opposed to cbs, abc, or a traditional network? are they jumping in on getting on board or is it just a simple as who is going to pay us the most money? paul: the nfl is the master, globally, including the english premier league, cricket, anything else, the nfl is the best at that. they create as many partners, broadcast partners as they can. the more, the better. it used to just be the three networks and that was a good thing. then fox came along. that was an even better thing. espn, even better. now you've got the streaming services that are innumerable. the more bidders you have for your content, presumably the

value goes up. that is again they have always played and they have played it better than anybody. they don't care that somebody of an older demographic is complaining they can't get the game on cbs, fox, or nbc because they don't subscribe to peacock or netflix, they don't care. that hundred $50 million for two games is more -- $150 million more than they had. that's where they are going. they know it's going there and they are happy to take it there. >> there was that fight that was beset with technical issues, they've improved on that. is the goal here to show that they can do it, to make sure that their systems can do these events? or is there a world in which maybe not next year but here down the line we see them picking up a significant series? paul: you will see the super bowl on netflix in the not-too-distant future simply because they will be able to spend the most on the rights.

traditional media companies are having a very difficult time growing their business. they are in fact seeing shrinking because of the court cutting. the economics haven't gone to netflix. it will continue to go to the streaming companies, ultimately that's where these high profile properties will go. that's the way it is, kids. david: exactly. the chiefs pulled it out last night, 29-10, got the score at the end of that pioneering broadcast -- do you call it a broadcast? a stream? by netflix. we will see if there is more that the comments we move ahead into the new world of streaming. that's it for today. i'm david guerrero with tom -- with paul sweeney. boxing day and the u.k., and the commonwealth, companies celebrating by being here with you in the studio. joe mathieu is on the air next with "balance of power." this is bloomberg. ♪

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>> from the world of politics to the world of business, this is "balance of power."