>>, early january, we will get a lot of volatility. >> as we see global growth picking up outside the u.s., we think we see earnings to better outside the u.s. >> inflation still matters a lot to bond investors. >> you just need to cdc and economic statistics for that to broaden out. >> we think the economy could be above 3%. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. dani: good morning -- annmarie: good morning from new york city. jonathan and lisa are off today. i am joined by dani burger in london. i am in reordering. good morning to you. you and i obviously drew the short straws when it comes to this awkward moment between christmas and new year's, and obviously, that is completely reflected in the price action.

there is no santa claus rally. it's a santa pause rally. everyone is on pause, waiting for the slew of information they are expect from 2025, most notably what comes out of trump 2.0. you can see that with affected in the pause we are seeing this light friday holiday. dani: so much potentially to come next year, and the set up as may be an comfortable one, which is maybe why the end of year rally is not continuing. the point we have gone to is an increasingly top-heavy market. this from the s&p 500, since the november 5 election, the mag 7 accounted for 86% of the s&p 500's gains. if you were to take them out of the index, the s&p would only be up 0.6%. it is up 4.5% now. maybe it is difficult to justify buying these next few days. annmarie: that is why torsten's lock has -- torsten slok has --

the entire market seems to be tethered to that. markets relatively flat this morning, but they are a little bit softer. we did close down flat yesterday. this is the final friday of the year, the final friday of 2025. we do have european shares a little bit higher, not helping u.s. shares, but very light volumes. euro-dollar 1.0421. u.s. 10 year yield, there has been a lot of action in the bond space, especially this month. 10 year yield has written about 25 basis points of our this month as the market is looking at a fed cutting rates less aggressively than expected. and we have new york crude at $70 a barrel. coming up, on the first hour of "surveillance," marvin loh of state street, savy syth of

raymond james and the bifurcation of the airline industry, and dan ives of wedbush on his bullish outlook for tech. we begin with futures pointing to a lower open, but markets on track of 20% straight gains. joining us now is marvin loh of state street. you say in your note it is not as if the fruit has been easy to pick this year, but it will be invariably harder next year. makes 2025 so difficult? marvin: certainly, the list of unknowns you listed going into the start of the year is the top of the list. valuations, concentration of market, and what i really think is a yield story which still has a lot of layers to unpack. ultimately, i say all the time the most important number in the world is what that 10 year yield

is being priced at. and really the movement you laid out over the past couple weeks is saying there is a lot of uncertainty about that very important number. annmarie: when it comes to the 10 year yield, you have t. rowe price talking about 5%, maybe 6%. at what point does it start to take a bite out of the equity market? marvin: good question. it is ultimately really hard to unpack. one of the things we get to look at with yields is the forward compensation, the risk that bond investors want on top of what they see the inflation outlook to be. that is kind of called the term premium. it is the 10 year term premium that is the most important for risk. right now, it has been the term premium, more compensation for fixed income investors, that has been driving this yield higher. i think we start to really be concerned if we get another 50 basis points of term premium making its way into market. that is about where it was in

the late summer, early fall of 2023, when we had a lot of volatility in the market, and we saw her, treasury and fed -- we saw treasury and fed pivot. they can't now. the options they have to suppress term premiums are much more challenging, given how the fed has evolved, and with this new incoming administration and their view on how to issue debt. dani: even though they are cutting, you you have seen term premium increase, yields no higher, exactly the opposite of what the fed might expect from a fed cut cycle. even with that, this is a market that has priced in less than two cuts for next year. have we not already baked in some of the hawkish pivot from the fed? is there not some potential for the downside bias to be in yields? marvin: the most fascinating thing i think over the course of the past weeks is we have pivoted quite obviously. when you have a fed that says

they are not going to cut as much, that they will be more hawkish, you get an impulse that we are more comfortable with their inflation fighting skills. that term premium should be somewhat contained in that type of environment. we had the exact opposite. you and i talked about this off-line when i was in the studio, thinking about whether or not 5%, five prophetic -- 5.5% 10 year is what we were supposed to think about because of term premium around the amount of issuance, around the change in the geopolitical risk in terms of treasury buyers. that is what is driving all this rather than the fed at this point, which should unsettle investors a bit, because it shows there is a decoupling of the normal relationships we would expect in terms of monetary policy response in the markets. dani: i would love for you to weigh in on this debate, whether the fed has lost control of the

bond market. it seems to be what you are hinting at, but the devils advocate would say they have not lost control, this is a fed building in more optionality, that there is the potential of higher deficits and inflation next year. so it is not that they have lost control of the market, it is just a logical market. what do you think it is? marvin:2024 did not them any justice. the fact that we began the are dovish, what hawkish, went dovish with a 50, now ending the year hawkish, an environment where the data has surprised them. until they come out and say we understand the economy, which is the exact opposite of what they have done over the course of this year, it will be hard for them to influence the animal spirits of that drives the long end. at the short end, they still control the market.

two-year yields are sliding the way you would expect even these pivots, and that has been the normal domain for central banks, to influence the market at the shortened -- short end. the u.s. economy has become much more tied to the long end. we are a long-duration economy, if you will, and we are seeing how hard it is for them to influence the long end when they themselves do not feel comfortable in the data. just look at the change in the dots, the expectations over the course of the last year. you see how unsure they are in terms of the economy evolving and how hard it is for the data to interpret. they still do not have a handle on that. until they do, it will be hard for investors to get comfortable they can control inflation, that they can control a lot of the animal spirits that drive the long end of the market. annmarie: when you talk about

the uncertainty, isn't that just donald trump? you write that the incoming administration will have an outsized impact on the outlook. what are you expected from the trump administration, those first 100 days? marvin: for short sales -- its policies are something that are not the normal course of economic models. i think what we will do is get a sense of xavier becerra in two approach fiscal morning the first 100 days. the first 100 days is making permanent or recent spending a lot of the tax increases that would have come, that would have sunsetted normally, then debt ceiling, as we saw, they were not able to get a handle on that. in terms of where yields are going to go, the first 100 days

will set what the fiscal approach will be, and that is driving a lot of concern around the bond markets. annmarie: what are you exciting in terms of sequencing? you mentioned some fiscal spending. that will likely be a tax bill, but that will be challenging to get done almost immediately. marvin: yeah, for sure. tariff policy. whether or not tariffs are a means to an end or that end themselves, what we saw during the first administration, the first time the trump administration, was they used tariffs as a bully pulpit, a way to get other things they wanted. if they take that same approach, tariffs probably are not as inflationary as the worst case, where if it is a blanket tariff across the entire world -- and we are talking somewhere around 15% to 20% -- the pass-through

on the inflation perspective is much more direct and likely much quicker. if we wind up seeing a little bit of dealmaking as part of that process, i think retailers will pass through. i think there is an inflationary impulse. but the long-term impact of it becomes much clearer in terms of it not being something we need to build into our models permanently, if you will. dani: how much about next year is, in general, just about being able? when you're thinking how do i set up my per folio to end the year, what sort of windowdressing do i want to do, what does a 2025 portfolio look like? is it just sticking to certain philosophies, certain convictions you have? or is this a year where you cannot really have convictions? marvin: i think entering a market like this without convictions is ultimately dangerous. it certainly depends, if you are

a very aggressive trader, if you are looking at a hedge fund model, where you are looking to leverage. from that perspective, you have to be quite nimble. broadly speaking, from a more traditional investor asset allocation perspective, you need conviction, either in u.s. stocks, conviction in terms of mobilization, or -- globalization, or asset allocation generally in terms of the percentage of fixed income, which is quite low in this market. you need that to anchor you because we will have a lot of volatility. for me, u.s. exceptionalism still works. the market worry is there for a reason. these companies have performed and investors are always willing to pay for growth. and this fixed income underweight becomes one of the bigger questions. how much credit, how much sovereign debt, how much interest rate exposure do you

want in this market? that is probably the most fluid part of the discussion for me. annmarie: thank you so much for expending your -- some of your holiday week with dani and me. marvin loh of state street. let's get yahaira jacquez more with. yahaira: the bank of japan is signaling a rate hike is still possible next month, despite a cautious decision at a recent policy meeting. according to a summary of its december meeting released today, board members expressed both pro-and wait and see views. factors they consider include the trajectory of the u.s. economy under president-elect trump. 2024 was a year to forget for france's wealthiest, who saw about $70 billion erased from their collective wealth this year, this due to weak demand for luxury goods and a pullback

by chinese consumers. still, some investors are optimistic about the sector, citing the expansion of the middle class and increasing demand for high end products. kim kardashian is no longer assisting in managing skky partners, the private equity firm she cofounded in 2022. in a filing this week, the firm disclosed that the kardashian is no longer an exec at of officer. the website now refers to her as cofounder and senior operating officer. annmarie: thank you so much. up next in the program, next year's airline outlook. >> we are seeing an uptick in lodging, travel, experiences, which is also what we see in consumer data. there is still strength there and still some dry powder. annmarie: that is coming up next. you are watching "bloomberg surveillance." ♪

dani: good morning from london. your equity markets stacking up like this. another weaker session, the consecutive -- second consecutive, led by tech in a year that has been very tech heavy. little change on the euro versus the dollar at 1.04. 10 year yield coming under pressure, up three basis points despite strong demand for duration. yesterday, very solid seven-year year auction, volume light across the board. nymex crude sits at $70 a barrel. under surveillance this morning, next year's airline outlook. >> we are seeing an uptick in lodging, travel, experiences, which is also what we see in consumer data, so people are spending on memories, how they

take trips. we continue to see strength in the consumer in all cohorts. they are spending, and we see an uptick in holiday spending going into the holiday season. there's still strength there and still dry powder. dani: 2025 will likely be a record-breaking year for the airline industry. global airlines stand to rake in more than $1 trillion, driven by a record 5.3 billion passengers taking to these guys. savi syth of raymond james rights of the economy, in particular the health of middle and high income household consumers, will continue to be the most important factor for the group. savi joins us now. is there any sign of those cohorts slowing down in their airline spend? savi: you know, it has been a strong year for 2024. what we see so far is it will

continue into 2025. it has been more of a mixed year by airline group, where you have a group making good profits and another group not, but that is more about internal factors in consumer demand. so the set up on the demand specter looks good. dani: i want to talk about those groups. on the downside, you have airlines that have less of a premium off and do not fly as many international routes. for those airlines, first of all, who are they, and what does recovery look like? is it possible at this stage? savi: it's a mixed group, but you have southwest in there, making a small profit this year, jetblue and spirit and frontier, either making a small profit or losing money. it's been a struggle. what you have seen since the summer is this group has really adjusted their capacity. the big difference between this group and the group making good

money is, as you pointed out, having exposure to premium traffic and international, the strong demand on the international market, but also the amount of capacity they added since 2019. this is a group that kept taking aircraft during the pandemic. given the level of cost inflation we have seen, the supply for that group is too high relative to what needs to be passed through in terms of cost. what you have seen since summer is an adjustment on capacity growth, and that is making a pretty good set up here into 2025 and probably 2026 for the group as supplies starts to balance back with demand. dani: this i find so interesting, because it has been a period of back and forth. you go through covid, their shutdowns, you do not need the capacity. then you get revenge travel and these airlines cannot get enough, they need more planes. and now, as you say, they are

getting back to equilibrium and not needing that much capacity. how close are we to equal egeland -- to equilibrium? how fragile are we that something could upset it once again? savi: the issue here is not demand, it is how much costs have gone up. you have seen mostly labor costs but costs across the system, including maintenance and aircraft costs, they have gone up and wiped out around 68 points of margin that was there in 2019. it is not about demand. the desire to travel is there, it is the price point at which you want to travel. what we are seeing here is capacity getting right sized to a higher level of fare needed to cover costs. i think we are getting there. and 2025 promises to be more of an expansion year, especially for those airlines that struggled.

we probably need another year for these airlines to see that recovering back to 2019 marks. dani: because what we have seen this year is people still complaining about prices. we here at all the time of what it costs to fly internationally. then you shortly followed -- you shortly here that followed with things are so cheap in europe, so week in japan, -- so cheap in japan, the yen is so weak. savi: it is a tale of two stories here, where international supply has actually been much more constrained than domestic u.s. supply. and so the supply issue you have seen in domestic markets have not been played out in long-haul international. international is actually very strong, one because supply hit a lot of wide-body aircraft that had been retired, and the airbus and boeing have not been able to

keep up with demand to replace the fleet that has been retired. and usa has been particularly strong. part of that is a post-pandemic zaia to travel, but also the very strong u.s. dollar. the strengthening we have seen recently, that will continue into 2025 and is a pretty decent set up for airlines. maybe not necessarily for passenger wallets. dani: and let us not forget where some of that strength is coming from, a new administration. i wonder if you have two things on the side of the airlines, both the strong dollar and m&a's return. how likely is that? after we saw many attempts that get shut down by regulators, what airlines could you potentially see mergers that benefit them, again with a more friendly administration? savi: you are exactly right. you did see two or three opportunities get dismissed.

alaskan and hawaiian did go through under the current administration. especially given how small airlines are struggling, i think we will see much more receptiveness to see mergers among the ulcc group, like a frontier, spirit, the more private airlines you will see out there. so see opportunity for that in this next administration, which puts up a pretty good set up. the other thing i would say with the incoming administration is there seems to be a little bit of regulatory overreach and their current administration, from an airline industry perspective. we expect to see less of that going forward, and some of the items being challenged in court today will probably come in the favor of the airlines as well. dani: before i let you go, we have to talk about some of the drama, or maybe attempted drama, lack of drama, over the last few days. you had american air very

briefly ground some flights, which did not last long, but may be ruined a couple people's holiday travel. you also had japan air suffering a cyberattack. in 2025, how much of it will be about these airlines rightsizing some of their technology and their offerings? savi: airlines have been doing a lot to invest in technology. it's almost a hamster wheel, because you are constantly trying to keep up. but there's a lot of investment going into technology. and also, a lot of airlines are moving to the cloud, which is a lot more stable than some of the legacy systems. i think we'll see a lot of improvement. you will still see tech issues, but i think airlines are getting better, and the technology is getting better come about reacting to it. luckily, the american tech outage was short-lived. a lot of people got delayed, but

from a cancellation point, it was very low, so it recovered very quickly. dani: hopefully everyone who needs to go back to whatever city they live and can do so easily after the holiday. thank you so much, savi syth of raymond james. coming up dan ives on his outlook for the tech sector. you're watching "bloomberg surveillance" on this friday. ♪ if your business needs a new application, then developers will have to write code. a lot of code. if an application needs to be modernized, then you'll need time, resources... and caffeine. if this sounds daunting, then use watsonx code assistant.

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annmarie: welcome to "bloomberg surveillance." it's a shortened week and you can see that reflected in the markets this morning. futures in the red. second straight session in the red. this comes after the s&p 500 up more than 25% this year. a lot of people are starting to calibrate what 2025 has to bring. volatility when it comes to policy out of washington, d.c. january 10, jobs day. 15th, cpi. january 20, inauguration day. the fed meets 10 days later. how important donald trump does that first week. dani: as you have been saying, it's about sequencing. we don't know what it is.

that is a point that is unknown. how do you set up a portfolio when 2025 has so made bipolar outcomes? one remarkable thing, what we thought at work already isn't. small caps. that is something like a broadening rally. we thought after donald trump that would work. so far it hasn't. annmarie: we have seen yields rising. we heard from marvin loh talking about the long end. that will be dictated by policy. 10-year yield of three basis points. this comes as strong demand yesterday. strong demand when it came to the debt sell. the euro. we have seen the weakness throughout this entire year. we came into the year with euro-dollar about 1.10. it is now about 1.04.

france has a new cabinet they must pass this new budget. germany will be dealing with fresh elections. they have a fresh administration to contend with. dani: it is a political vacuum in europe and around the world. perhaps the feeling is most acute in europe because they don't have the cohesion they might need to combat this. mario draghi, one of the big pieces was unveiling this framework to come together. more investment, more bonds. individual countries don't even have it together. what is the ability of europe to combat any potential tariffs? as of now, the outlook looks increasingly pessimistic. annmarie: a very challenging story 425. that is why people are -- for 2025. that is why people are saying we might get parity for the euro-dollar. south korea's parliament

impeached the acting president less than two weeks after impeaching president yoon for his brief martial law degree. han will suspend his duties in and the finance minister is next in line. this is another blow to a government already reeling from yoon's suspension. dani: we should remind viewers of what the setup looks like. they had elevated the finance minister, but he does not stop his job so he has to be the acting president, now the acting prime minister because the prime minister also has been impeached, and acting finance minister. that is nearly in impossible task for one person to do. in an economy facing issues, the latest surveys are extremely low in south korea. the same problem in europe. they might have more problems if you have donald trump trying to put tariffs on a country whose leaders are only acting leaders

and having to fill multiple vacancies at once. annmarie: you think actually germany, france might not look too bad right now. what we are watching, the azerbaijan airlines plane that crashed during an attempted emergency landing on christmas day was damaged by russian air defense systems. this is according to an azerbaijan government-backed news website. 38 were killed in the crash and 29 survived. absolutely devastating. the cause of the crash still under investigation. it shows the impact of the fog of war. the communication system was paralyzed by the use of electronic warfare systems used by the russians. dani: it brings back memories of malaysia air flight that was also struck down over ukraine in russian airspace. who still flies over russia? much of the west is blocked out. much of europe is blocked out because when sanctions were put

on, russia retaliated by closing airspace to a lot of these companies. it is fascinating to see you have a lot of airlines completing -- complaining about lack of ability to go over russian airspace. air france said the chinese are beating us out because they can fly over russia and cut their flight times down significantly and not have to pay as much in fuel. incidents like this, i wonder how much it turns to public opinion a lot of the western and lines and maybe others will decide not to fly over these regions because of their passengers and fear this might happen. maybe not just about air fuel cost at this point. annmarie: definitely the fog of war. we will bring you updates when the investigation is ongoing. israel striking multiple targets in yemen it said were controlled by houthis. the attack came as they have been launching attacks on israel, including ballistic missiles. israel has been intercepting most of them.

we have a tit-for-tat playing out. we have the who thes -- houthis controlling the red sea for much of the year. interesting stat. the red sea disruptions -- this has to do with the consequences of the houthis' maritime attacks, has caused egypt $7 billion in suez canal revenue. we see this be a headache for vessels that are basically saying we can no longer go through the red sea. we have to find different routes to get to our destinations. dani: a reminder this is still happening. please vessels, the target -- if these vessels and targeted attacks are still happening. some iranian-backed groups, the ones they made significant strides against, yemen is different. yemen is 1000 miles away from israel. a lot of experts said israel doesn't have the intelligence in

yemen for the houthis that it does for the other groups. wall street journal article said israel thinks it has the chance to turn diplomacy in its favor in arab countries for those that see the houthis that see the -- as a thorn in their side. the issue for israel is public opinion, especially in the middle east is at an all-time low. annmarie: and if they can get a cease fire hostage agreement through gaza. talks are ongoing. we will turn to tech. dan ives raising his apple price target to $325. "we believe apple is heading into a multiyear ai-driven iphone upgrade cycle that is still being underestimated by the street. apple is on pace to reach the $4 trillion market cap threshold and be the first member of this exclusive club." i'm so excited that dan ives

joins us now. thank you for spending part of your holiday shortened week with us at bloomberg. why now? why lift the price target now? this awkward week between christmas and new year's and you said i have a call to make. dan: the bears aren't hibernation mode. they cannot find ai in the spreadsheet. what we see across the asia supply chain, we are seeing strength into what will be a record year for apple. 240 million iphone units. this is going to be an ai-driven super cycle that is multiyear. they hated $2 trillion. they despised $3 trillion. four chilean dollars, -- $4 trillion, they will be yelling. annmarie: do you think the upgrade cycle will be lead out of necessity because people are desperate for new phones or that ai capability apple is starting

to introduce? dan: 60% to 70% is that. that is a pin up upgrade cycle that's unprecedented for apple. the install base continues to be the golden goose of cupertino. the ai-driven piece is just starting. that is why it is a get out the popcorn moment. the consumer ai revolution goes through cupertino. that is why the bears will talk about valuation, like they have for years. it's about some of the parts -- the sum of the parts. annmarie: how hard is it for the next upgrade cycle when so much as driven by software updates? the hardware has not really changed. dan: that's for iphone 17. that's later this year into 2025. that is a hardware driven new

form factor will be ai-driven. it is a one-two punch. 16 into 17. what makes this unique, it's about the increased service. you have hundreds of apps and development there will be on top of apple intelligence. the enterprise ai revolution is the godfather of ai. the consumer ai revolution goes through cupertino. we can see four chilean dollars potentially -- $4 trillion potentially today or monday. annmarie: a difficult spot is china. apple needs to partner with a local company to introduce all of this. dan: tim cook, 10% politician and 90% ceo. annmarie: he might have to be more of a diplomat. dan: it is what him and musk have had to navigate and china

-- in china. they announce a chinese partner, tickets rolled out in april. the china upgrade cycle in terms of ai coming to china, that will happen in april. this is just the beginning of a multiyear ai cycle that plays out from apple. annmarie: you talk about palantir and salesforce. i spoke with marc benioff about agent force. he says it is the most exciting thing he's worked on in his entire career. is that why you are so excited? dan: benioff, not rushmore of tech. it speaks to -- mount rushmore of tech. behind the velvet rope, benioff wants to see his name on the list. he's on the dance floor. software is let in. already on the dance floor from the use case perspective. that is one -- the bears came to

ai in the spreadsheet. they hated palantir earlier this year. despises senior citizens at 83. it's the beginning of the software age in ai. salesforce, palantir and others. annmarie: what names will be be talking about next year that were quiet during 2024? it was really about nvidia, tesla. what will be the names of 2025? dan: for large cap tech, up 25%, i think what has not been on the radar will be m&a, software, cybersecurity. with lina khan done at the ftc, it is done for tech. a lot of accelerated m&a when it comes to software and cybersecurity.

that will lead the ai cycle. specifically cybersecurity is an area that can ultimately be one of the biggest outperformer's when it comes. annmarie: another tech analyst said the same thing. it's going to be about cybersecurity. i want to end on tesla. elon musk was clashing with a far-right activist who has been close to president-elect trump, laura blumer. -- loomer. the crux was the h-1b visas. they are saying musk is not maga yet he is so close to president-elect trump. is it a risk he could lose the proximity to power which is one of the best bets of the ages? dan: it's a bet for the ages. that bromance gets stronger. trump needs musk. musk needs trump. whether it is ai, china, whether is the policy in terms

of doge, we will have these dustups. that will strengthen and continues to be for musk the best bet he ever made on trump. dani: this is -- annmarie: this is just a flareup? dan: it's one episode in a 10 to 12 parter on netflix. annmarie: dan ives, thank you for joining us. an update on stories elsewhere. here's your bloomberg brief. yahaira: bitcoin's rally is losing steam as trader's take profits after a stellar rise. there may be some volatility ahead for the cryptocurrency. a substantial party of bitcoin options contracts expire today. it is one of the biggest such offense in the history of digital assets. you could be jeff bezos' neighbor in south florida. a plot of land to his properties is in cell -- on sale for $200

million. it's about 1.84 acres in size and located in indian creek, a private artificial island. called the billionaire bunker, it houses properties belonging to jared kushner and ivanka trump, tom brady and carl icahn. the $200 million asking price is more than what bezos paid for any of his three properties on the island. india's former prime minister died yesterday at the age of 92. he was a key figure in the economic liberalization, serving as finance minister and prime minister. he is also credited with opening up the economy to foreign investment and increasing its size sevenfold. sayingh -- singh was commended for his simple lifestyle and commitment to education. dani: next year's commodity outlook. >> no growth isn't very good. commodity markets are telling

you there's not an expectation for bigger demand. dani: what is on the horizon and the commodity space is coming up next. you are watching "bloomberg surveillance" this friday morning on bloomberg tv. ♪

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dani: the santa rally has come and gone. "bloomberg surveillance" to end your holiday week. the second day of declines for the equity market. down one third of 1% for the s&p 500 futures led lower by the russell 2000. the euro strengthening versus the dollar. it is yields that move higher. 10-year yields at 4.61%. up by three basis points despite we had a strong seven-year auction yesterday. data continuing claims of the highest in three years. that is not putting demand into

this morning. nymex screwed up nearly 1%. $70.25. next year's commodity outlook. >> the commodity markets are going no growth is not good. they are telling you there's not an expectation there's going to be bigger demand. dani: here's the latest. traders looking to next year in the soft commodity market. coffee and cocoa -- after coffee and cocoa's tear this year. "the outlook for commodities will remain sluggish due to a potentially strong dollar unless china stimulus changes demand there." kona, great to talk to you. all eyes on china. what is the bar of stimulus to change demand, to change your outlook and have it more robust for the comm this hold 2024 we d various. it's with china -- various false

starts with china. a rally in hopes of something big only to be disappointed. the latest endowments are focusing on consumer demand and fiscal impasse. this could be a game changer. this is what you can see a bit more of a different impact on the global -- the chinese economy, which was concentrated on infrastructure, export and heavy demand type growth in china, which should have impacted industrial commodities but did not have an impact. now there's a consumer demand push. you might see water broad-based growth which might have the desired impact. we have been disappointed so far. dani: i was going to say this has happened quite a few times. we have seen this movie play out before. the specific data you are waiting for, maybe not the

announcements, but once we have the details and pronouncements of the stimulus that's coming, are we off to the races? kona: i think so. they've had a nice announcement just before -- a couple of weeks ago. we need to see more details come out of that. that needs to be followed through. we need to start seeing everything. export data, important data, property sector prices, housing stats, fai investment. that is to start taking upwards. -- ticking upwards. once we see all of the above and is been more than two month worth of data ticking upwards, that is when you could see some confidence in the chinese economy moving the right way and encouraging the demand they so badly need. dani: it has been a significant year with soft commodities with

whether -- weather and disease issues. in the last trump presidency we saw agricultural and soybeans of the front and center of the trade wars. do you expect a repeat of that this time around? kona: i think that will be a big headwind for the soft commodities. commodities generally. my outlook next year is not terribly bullish. i think it will be stronger dollar and that is tied to what you were mentioning before. the fact donald trump will be president and he has a pledge to maintain tariffs with china. you have an issue with that impacting china's growth projections. does that undo all the stimulus we were talking about a second ago? does that cause global trade to fall and the economy to fall? when you have tariffs, it does slow demand globally.

that is not necessarily a good base from which you see long-term commodity prices. going back to what you mentioned about tariffs and stuff commodities, soybeans got hurt badly. soybeans in 2024 performed extremely badly. brazil headed big crop. the usa had a big crop. now the u.s. faces a situation where you have -- you don't have your biggest market, china. chinese demand will probably move to resilient soybeans -- brazilian soybeans. the u.s. soybeans futures will have negative implications because they will not have a big market to export to. that means potentially big carri in -- carry in the stocks. dani: that is where i wanted to go. china has diversified away from the u.s.

what is their capability to just turn off the taps and demand in buying from the u.s. and go to places like brazil if they wanted to? kona: super easy, and they have been doing it already. they have to. that is a one or two tools to -- in which they can negotiate in which the usa. you want to put trade tariffs on me? i will no longer by your soybeans. they will use that tactic and they can and they have. they can do that with corn. the usa already struggles with agricultural commodity exports because it will suffer from a stronger u.s. dollar. i think that is a negotiation tactic they can use and i believe they will. it has already proven to be the case. brazil will be the net beneficiary of this. dani: quickly, gold?

does the rally continue? kona: the dollar is strong so that is not good for the gold. but there is no shortage -- the fomc going forward. gold could reach new record highs again, which it has been breaking throughout the year. there is so much uncertainty ahead of us. gold could do well. softs could do well because of the supply imbalance. dani: great to have you on this morning. kona haque, we appreciate your time. coming up, we catch up with dan greenhaus, rob casey and drew pettit of citi. you are watching "bloomberg surveillance." ♪

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>> early january, we will get a lot of volatility. >> we see growth picking up outside the u.s. we see earnings doing better outside the u.s. >> inflation matters a lot to bond investors. >> we actually think the economy could outperform again, maybe even above 3%. we expect more of the same as we enter 2025. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and anna reordering. annmarie: the final friday of 2024. this is "bloomberg surveillance ." jon and lisa are off on this shortened holiday week. i'm alongside dani burger in london. dani, thank you for joining me

this morning. you and i both drew short straws. what are we shaping up here? this awkward moment between christmas and new year's after really a stellar year in the stock market. we are seeing a pause and what many were hoping for the santa claus rally with equity futures just off ever so slightly. dani: there will be a lot of people that read into the negativity of the past two days and say, what is this mean? it could just be low-volumes, windowdressing, going into the new year. it is significant the santa claus rally has taken a pause. it has been such a stellar year. maybe it does speak to some holding back. tech has been so dominant. the market has been so dominant. there are so many unknowns for 2025. maybe we just sit back, take a breather and try to understand where we might go next. annmarie: i love the unknowns. torsten slok put this out. the risk to global markets, the first is tariffs at 90%.

also joining dani and myself with thoughts on was coming down, dan greenhaus. thank you for joining us. dan: i drew the shortest drop. -- shortest straw. the high was around 6100. we are at 6040. a little bit of a pullback. deeper for the equal weighted index because large-cap tech is doing a lot of work. it is not to concerning. -- too concerning. annmarie: futures are in the red today. it is the final friday of 2024. we have yields pushing higher today, even though dani talked about the strong demand yesterday on seven-year note. yields up 2.8 basis points, 4.61% on the 10-year.

crude up just .8%. seven dollars. it's been trading at a near arrangement expect to go into 2025. coming up, rob casey on the challenges facing president-elect trump. drew pettit of citi on why he expect some more volatile 2025. and highlights of the interview with jamie dimon. we begin with futures pointing to a lower start but stocks on track to finish the year up more than 25%. dan greenhaus says, "i'm not that worried. certainly did not inspect the year and weakness given the strong seasonals and the economic backdrops, strong fundamentals and the incoming administration's business friendly leaning suggest the bias remains to the upside." what do you say to people who say a lot of this has to do with the fact that people are on the sidelines and are concerned

about the policies no one really knows how they will be implemented or the sequencing in the start of next year? dan: there is uncertainty about the policies and the sequencing. that is completely fair. the money on the silent argument i projected with you before and i project again. i find it impossible to believe however many years or quarters into this very strong, very public equity rally there are investors sitting on the sidelines. yes, there is trillions of dollars in money markets but that is not -- i reject -- almost $7 trillion. i reject the idea that will immediately transfer. it is there for a reason. it is called management. it is people in fixed income who are not transferring into equities for any reason. i don't believe there are many people sitting in cash. as for the policies, i take a

more optimistic view on the tariff side of thing which seems to be what most people are worried about. buying greenland might be something of a concern for some as well. on the tariff side, the consumer balance sheet is quite healthy. the tariffs are certainly going to affect core goods prices. we don't know on what goods, who's getting an exception, etc. when you look at the previous episode of the trump tariffs, there was not widespread discontent, not cats and dogs living together, not anarchy. yes, core goods prices reversed the decline. headline prices were relatively maintained. consumers in general were not particularly affected by it. if you have an offsetting move in the currency and some further downward pressure in oil prices, on balance throughout the economy it is not necessarily going to be quite as bad as some of the pessimists think. dani: we have seen this

concentration in the mag7, big tech stocks. do you think we could see a broadening out? dan: i could argue we've had a broadening out. part of the problem is the companies are so big, so much better from a profitability standpoint, both topline and bottom-line relative to the risk in the s&p 500. there weight makes it nearly impossible for other companies to register in the conversation. when you look outside of that, homebuilders have sold off before that they were having a good year. defense companies have recently sold off on doge concerns. before that it was a good year. a lot of travel companies, the idea that the consumer is constantly running out of money has been rebutted. some of the larger energy companies were having decent years. the industrial names that were ai derivative place were having very good years.

cumulatively they can stack up but individually they cannot. it is hard to get attention when so much of the online chatter and the media chatter revolves around six to 10 companies that are not going to get the same play butter have -- but are having good years. annmarie: there was a report saying in the year to november, 327 executives, chief executives at u.s. public company's announced they were leaving. that is a record exit in the public market. we have seen the high-profile examples, nike, starbucks, but is something happening on an individual basis that there is something else going on? dan: i have not looked into this. my initial guess is maybe with the rise of stock prices management found itself in an exceedingly secure position that they weren't some time ago.

some are having problems like nike and starbucks. a change in management will be warranted, if not celebrated. i have not thought about it much. with the multiyear rise in stock prices it is probably a good time to cash out. annmarie: i like the idea the way we find were all the executives have been is to hit the slopes and beaches and then find our answers for this. with the valuations that have moved higher, socgen's edwards says the last time valuations were like this was 2021, which is fine because yields were 1%. there's been a lot of naysayers. if next year will be the euro concerns of inflation and deficits, does it finally come for this equity market? dan: the freeze is doing a lot of work. as every strategist of any ilk will say when they are on tv,

valuation is not a market timing tool, and it's not. i don't know that valuat will be a concern next year. maybe it will be but forget my opinion. let's look at what happened. everyone likes to note the 10-year is up 100 basis points since the fed cut rates. 2019, the 10-year went down. 2007, the 10-year went down by as much as 100 basis points. you are seeing something of a unique development on that front. but people don't like to mention is both the market cap waited s&p and the eagle waited s&p are up -- weighted s&p are up. there's concern about deficits, about yields, etc. with the stock market is telling me -- forget my opinion -- what is happened is we have weathered the rise relatively healthily, relatively broadly.

my expectation is it will probably continue as long as the economy and corporate profits on full the way i think i had much of the consensus expects. annmarie: 10-year has been up 45 basis points this month. you point to a picture with the market has been able to weather the storm of rising yields. how much higher could they go? at some point does it bite? dan: 5% is not out of the realm of possibility. we saw it before. annmarie: it was this year. dan: a bit of a problem for stocks and it might be again. the equal weight is up 1% to 2%, which is barely up but up still and better than the alternative. if you go up another 40 basis points towards 5%, sure, equities might run into trouble. in a broader sense, why are yields rising? david's inflation concerns, that's a different conversation than if they are rising for

growth expectations, etc., which will be positive for profits and by extension risk assets. annmarie: dan will stick with us. dan greenhaus joining us for the entire 60 minutes. an update now on stories elsewhere you should be aware of. here is your bloomberg brief. yahaira: the turmoil in south korean politics continues. the parliament voted to impeach the acting president han in the latest blow to a government already reeling after president yoon's suspension less than two weeks ago for his martial law decree. it was sparked by han's refusal to appoint three judges to the constitutional court that could finally president yoon's removal from power. china is launching a probe into beef imports to decide if a surge of overseas shipments have hurt the domestic industry. china's beef producers have struggled with huge losses after local prices plunged to

multiyear lows due to oversupply and sluggish consumption. the country's ministry of commerce says the investigation will end within eight months but could be extended. richard parsons, one of corporate america's most prominent black executives who helped time warner and citigroup died on thursday. he worked as a lawyer for nelson rockefeller and gerald ford's white house. parsons was 76 years old. that is your bloomberg brief. annmarie: up next on the program, hurdles for the trump agenda. ♪ ♪

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just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. annmarie: hurdles for the trump agenda. >> he is looking for victories

he can demonstrate using executive power and and running congress. -- endrunning congress. what the republican trifecta you will not always get your victories quickly or easily through congress. you need to look to other venues and other uses of presidential power to achieve quick victory. annmarie: trump and congress looking ahead to what they can accomplish in the new year. rob casey says a red wave does not mean an easy road ahead for the incoming president. "trump comes in on january 20 with significant momentum and a clear agenda. but a republican congress will present a hurdle. not ideologically but functionally." thank you for joining us this friday morning alongside dan greenhaus. you say this is going to be challenging but that was on display last week. we had three iterations of potentially how they could avoid

a government shutdown. they did in the end, but what did the saga tell you about how trump is going to govern even with these majorities he has in the house and senate? rob: good to be with you both. happy holidays. it showed when you burn institutions down and run on an anti-institution campaign, you can't rely on those institutions to do your bidding. the republican house majority is a slim majority and a dis-unified majority. it will be hard for trump and speaker mike johnson if he gets the gavel to ensure they always have a majority vote. this is not the days of nancy pelosi were every democrat stated line all the time. it will be hard to wrangle these folks. annmarie: 38 republicans voted against donald trump. in that whole episode, take got brushed under the rug. what is said is that speaker johnson did not have trump's buy

in when he went to the floor with that deal that was negotiated with democrats. do you think he's able to keep the gavel? rob: he probably is, mostly because of not sure there's anybody else who could win a majority on january 3 for speaker. i would think the most obvious pick would be jim jordan, even further right and speaker johnson, even closer to trump. speaker johnson has done a good job and really has had donald trump's support. donald trump, his agenda will be difficult to enact. he is swinging for the fences. for mike johnson as speaker it is about the art of the possible. he can't get everything donald trump wants as quickly as he would like. what can he do and what can have trump's buy in for if he needs to cooperate a little bit? dan: i agree with a lot of what you are saying. we know it is a razor thin majority right now.

a couple of seats. some are departing to be in the administration. matt gaetz is leaving in general. when the tcga passed, it was a much larger majority. forget the ideological differences the group exhibits, mathematically it will be really difficult when you can have one or two or three republicans banding together to not pass no tax on tips or whatever it is the administration wants to do. has republican leadership talked about how to overcome that hurdle? rob: they are waiting on a few more seats to be filled and have a slightly larger majority. i think it will be a question of muddling through. this is the issue. congress is not built for big, fast change. dan: by definition. rob: that is the whole point. with republicans having such a

small majority, not only in the house but also in the senate they would need to unilaterally pass legislation, it will be really challenging. that is why we are not seeing the extension talked about in q1. it will take a while within the republican caucus to get that done over q3, q4. annmarie: everyone basically becomes king or queen of the hill. i think of one person in particular, congressman lawler of new york who basically is saying i will not vote for anything unless salt is included. he wants to run for governor of new york, i think. i think he pretty much said that in his christmas-hanukkah message. when you have individuals that are so tethered to specific issues, is there five issues that must be included in order for it to meet the demands of all these different vying factions? rob: the worst case for

republicans is a clean extension. if we get to q4 and has not been an agreement -- annmarie: base case. rob: if we get it clean and skinny. that is what happened last week. there was all of this discussion of riders and add-ons and a christmas tree bill with individual's preferences and priorities. none of that was in the final bill. there was an extension of the farm bill but the lowest common denominator is the clean and skinny package. given that it ends in 2025, the necessity is republicans will pass an extension. what in addition do they pass? no tax on tips or overtime? salt extensional relief? -- extension or relief? dan: for the same reasons we just discussed, i don't know how you do any of the other things.

there is no built-in constituency in congress. it is not likely spent years building up an argument for no tax on tips. to your point about the clean extension, i think that is almost her only outcome -- you're only outcome. i don't see how when you have two republicans that want one thing and four that are against that for something else, i don't know how you come to any sort of agreement on anything. especially if you try to get two reconciliation bills in this year. i think that is your base, bull and bear outcome. rob: i totally agree. congressman lawler and others will talk about salt. there is a small chance we could see at doubling of the marriage penalty. other than that, it is fair to say the skinny bill, the simple answer is probably going to be the most likely answer throughout the next congress. i totally agree. once you try to bring a few

folks on one side, you will lose folks on the other. what can mike johnson convinced donald trump is enough of his agenda to get through? annmarie: i want to talk about the fight living yesterday on twitter. it was between laura loomer and others. musk and the far-right are arguing over immigration. h-1b visas. rob: trump's focus is on the border. it is not that he has not thought about the h-1b question of skilled immigrants coming question. it is not his first priority. he wants to secure the southern border. annmarie: not his, but the priority of many he his putting in the administration. rob: and the priority of his base that got him elected twice. i don't think he has on the

question -- it will not be his parity. musk and ramaswamy want to talk about it. it's another rift in this bigger tent publican party. dan: for the viewers not online as we are, there is a debate going on among what we call the right right there wants to restrict immigration and a broad sense in what has been known now as the tech right, the elon musk world that agrees in journal with the idea of restricting immigration writ large but wants to increase the availability of these h-1b visas that provide for the "skilled immigration." those worlds are clashing for some reason. it happened over the reason. vivek ramaswamy got involved. i agree that i don't know president-elect trump has spent too much time thinking about the nuances but he has spoken in the past about the need for skilled immigration. he wants to make it possible for those people to come here. while this is a fun online conversation, the skilled immigration argument is going to

win out. you have musk sitting in such an important position next to the president. you have had the president discussing the need for skilled immigration. it does provide for the masses something of a bifurcation so you don't look as restrictive by saying we just want to close the border but we also want the skilled people to come here. is that not where this settles out? rob: i think it is is the hope for donald trump and elon musk. that is your perfect mix. we will close the border but also allow the best and the brightest into the country to propel our economy forward. the issue is that is not how the far-right sees it. changes to the h-1b program will be harder or easier said than done. it makes sense to many of us. it makes sense in the context of the economy as it sits today. you can have both. you can close the border. you can allow the most skilled in. there's no internal disagreement

there. the issue is maga republicans, it is not what they want. while trump cannot get reelected in four years, house republicans have to get reelected in two years and senate republicans every two come up fo -- two, four, and six years. annmarie: he is battling for those that are kicking up online what happened overnight. let's talk about january. we have 60 seconds. sequencing. immigration, tax policy, tariffs? rob: the first reconciliation package will be integration and -- immigration and energy. the second conversation is tariffs. probably you're up early, china early but -- europe early and china early but targeted at specific sectors. the bottom line is it is because

the republicans don't have the package around which they can form a majority today. dan: rob casey, thank you for joining us and happy holidays and happy 2025. coming up on the program, highlights from lisa's interview with jamie dimon in peru. you are watching "bloomberg surveillance." ♪

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annmarie: happy friday. john and lisa are still off. we do have a pause when it comes to u.s. equity futures. we should note trading volumes are very light and we have had an absolutely stunning year when it comes to this bull market. s&p 500 is up more than 25% this year. you can see across-the-board s&p futures down three pen tents of a percent. -- 3/10 of a percent. across as at this morning a lot of moves. 10 year yield at 4.6% this morning come up two basis points. dani was talking about how we

had such a strong demand for that debt sale. lisa will keep you in the loop on all the debt options for 2025. the 10 year yield has risen 45 basis points this month, about 100 since the first fed cut. dan greenhouse has been talking about the fact it is ok, equities have been able to rally. when it comes to foreign exchange euro-dollar sitting around 1.04. the euro will have a challenging time of the start of 2025. france has a new cabinet. germany will have fresh elections. all of this coupled with the uncertainty of these two political crisis is in the two biggest economies in europe is the fact they will have to contend with trump 2.0, whether it is the fed or financial markets or whether or not it is the european union, they are waiting to see what trump and the second iteration of his administration brings.

under surveillance this morning the bitcoin rally taking a breather with investors opting to take profits ahead of what could be a volatile stretch ahead. the crypto market is pricing for a of option contracts with warnings of a market to,. is it that the point of bitcoin? a choppy market. this is been on a tear since trump's election. i think he tweeted you are welcome. dan: if you are a bitcoin investor and you own anything adjacent, you should probably be. annmarie: are you in this space? dan: i don't think we invest in bitcoin specifically but we do own some stuff that benefits from mining, etc. i think it is hard to view this as anything other than a risk on asset. another a lot of people who treated as a store of value. annmarie: talking about may be a

crypto strategic reserve. dan: bob casey talk about easier said than done. that might be the case for this as well. those are the types of suggestion to get from the incoming administration. i know bloomberg has a story up talking about the rally fizzling. i would not call being down a few thousand from $100,000 fizzling. investor enthusiasm for bitcoin is as strong as it was yesterday and you have any number of people saying it is going to 200,000 or 300,000 in short order. if this level of momentum continues that could be the case. russian president -- annmarie: russian president vladimir putin casting doubt on the loss of russian gas flows to europe. it would force europe to rely more in alternative sources with u.s. ramping up shipments to the continent. we see the price action of

putin's comments but europe was talking about the fact they might need to buy more from the united states. ursula von der leyen, after president trump was elected said maybe we can blunt some of these tariffs by buying more u.s. lng. is this something you foresee happening? how policy can meet demand of the market? dan: i think so. europe has to figure this out because they are for lack of a better word subservient to this market. it is the great irony of the last couple years that in an effort to diversify itself away it ended up becoming susceptible to this type of market develop meant. say what you will about the united states and our slower adoption. we are in and in beal position relative to europe with respect -- we are in an and feel position -- in an enviable decision with respect to europe.

it is a story that will evolve. i pray as a citizen of earth they make the correct decisions. annmarie: also under surveillance christmas day bringing netflix -- bringing ratings joy to the nfl netflix debut as well as the nba. the nba's five-game lineup marked a five-year high and netflix to an average audience of more than $24 million for its two games late, setting a record for nfl streaming. a lot had to do with the fact that beyonce was there. netflix agreed to pay $150 million to broadcast two nfl games on christmas. that is $50 million more than producing a season of game of thrones for two games. did you tune in? dan: beyonce at halftime. of course i am tuning in. netflix is not hundred $45 a share. they are doing a lot right -- netflix is $945 a share.

it is one of those names that is mag seven adjacent. the nfl is the dominant live sports viewing option across streaming. to put $24 million in context, everyone love succession. one or two or 3 million people watched succession. the nfl dwarfs everything else. if you are netflix and your time to diversify into video games a live sports, the nfl is the best and the brightest. from a viewership standpoint it is the right decision although i will push back and say a lot of it did not have to do with beyonce. -- a lot of it did have to do with beyonce. 24 million watching and 27 million during the halftime show. a lot of people viewed it for beyonce. i watched it for -- what are beyonce people called? annmarie: the beehive.

one thing is for sure. there was the technical debacle when it to check pollen mike tyson. dan: none of that yesterday. annmarie: maybe that means the broadcasting rights will go higher and higher. jamie dimon says the next trump administration will highlight the most complicated geopolitical landscape since world war ii. he sat down with our own lisa abramowicz at the apec summit in peru and talked about his expectations. jamie: you had a big seachange that took place in the vote. whoever had been elected are entering and will be responsible for the most complicated geopolitical, military, and geo-economic situation the world has faced since world war ii. i wish them all the best. this could be a difficult thing.

policy will matter. who runs the government will be determined there. lisa: president-elect donald trump sends a message to you greatly but you will not be part of the trump administration as the treasury secretary. if that were something that was interesting to you. jamie: i wish the president well and that is a very nice note. i want to tell the president i have not had a boss for 25 years and i am not ready to start. [laughter] lisa: i want to start by also talking about the response of markets in the u.s., which has been this will be a progrowth shock with companies that will be investing much more. deploying cash. aggressive in terms of u.s. expansion. have you seen any signs that is the case? jamie: you've already seen how markets have responded quite

well. i think america needs a growth strategy. i applaud that. collaboration between government and business is the way to have growth. we spoke about a deregulatory environment. i am not just talking about getting rid of regulations. the rig the tory environment has become stifling and and a lot of country -- the regulatory environment has become stifling. in america it is why we've grown at 2% and not free -- and not 3% . i think it is a reasonable thing to have that reform. it has to be permitting and all of the related things that come with that. you are just mentioning there could be rare earth in the united states. 10 years and they have not got their permits yet. it is a shame. i applaud any government that says i will make government more efficient. inefficient government is one of the reasons people are frustrated.

they may look at big companies but they also know government is not spending their money wisely. dan: guilt -- annmarie: he also spoke to lisa about the ability of the incoming trump administration to loosen banking regulations. jamie: therefore more ability to do things like that. last time around president trump started by saying that for every new regulation he wanted three out. i think they will do something like that again. the banking industry, whether you voted for trump or joe biden , a lot of bankers are dancing in the street because they have had years and years of regulations, a lot of which stymied credit. you could've kept the banks equally safe but have them do more credit. the average bank in america, i think you used to have $100 of deposits and $100 of loans and out as $100 of deposits and $65 of loans. if that is what you want and the

regulators think that is the best way to run the banking system so be it. i think they did a lot of things that ended in that answer and did not know that would be the outcome. you can talk to any industry and they would give you examples of regulation that can be reduced and make them easier to do business while keeping the country safe, while keeping the air clean, and making sure the epa does its job. i applaud looking at those things. lisa: if you think there is less regulation, do you think there'll be steeper competition with banks getting back business from private investment firms? jamie: probably. if you look at private credit and private debt which i'm not against, it has pros and cons, i am always in favor of competition. part of the reason they are dancing in the street -- no social requirements, no aml, no

fiduciary, no reporting to the government, no insurance, no liquidity. it is a huge disadvantage. i think it will be more important to regional banks than jp morgan. lisa: there is also a question about whether it is banking mergers and acquisitions or more broadly whether it will be a more amenable administration to tieups. are you seeing from your conversations in the past seven days with companies that they are looking to expand their m&a pipeline to start putting that together? jamie: absolutely. a lot of emanate was stymied -- it is not just something you cannot get through the courts, but it takes two years, it takes three years. one of these deals took three years. it takes three years to get it done. you've done a deal that is binding and now you have to run the company. you will be losing people.

you want to start working with common culture and common technology. a lot of companies will be looking much more aggressively acquisitions and deployment of capital and they should. annmarie: one of the highlights of the year. lisa speaking with jamie dimon. they are talking about m&a and a lot of people are talking about the fact that m&a has been sitting on the sidelines and there is a ton of pent-up demand. the regulatory environment looks more friendly now. dan: the regulatory environment cannot get worse. annmarie: the jetblue ceo also said that in terms of antitrust, it cannot get worse than where it was. dan: that's right. alternately what matters for m&a activity is if the economy remain strong and balance sheets remain healthy among the acquirers than that will be the biggest tail wind. obviously the regulatory change in environment not being there will be something of a tail wind for sure. in general i think we should

certainly expect an uptick. we've already seen numerous headlines of companies talking about potential mergers and acquisitions or acquiring targets. we have seen -- we have seen indications of what is going on with comcast and warner bros. where they are in some cases spinning out or sake you're linear business. i think the one pushback i have had on this topic is the idea that somehow the incoming administration is a traditional republican in ministration and thinking about mergers and acquisitions. there is a strain of thought in the jd vance camp -- the jd vance part of the republican party that thinks that mergers and acquisitions are not the great benefits that traditional republicans have thought. that consumers open harmed workers have been harmed to a larger degree than previously thought. annmarie: when it comes to big

tech jd vance said lina khan was one of the few people in the biden world doing a good job. let's get you in update on other stories we are watching. yahaira: escher airlines plane was damaged by russia -- the azerbaijan airlines plane was damaged by russian air defense as it approached kazakhstan. the report says the aircrafts communication system was completely paralyzed. meanwhile south korea companies linked to netflix squid game series fell in today's trading every disappointing season to debut. the survival thriller was a massive success when it first dropped in 2021 and top netflix most-watched titles on every continent. the new season released yesterday received poor reviews. in sports liverpool is marching closer to the premier league title after beating leister

city 3-1. it brings liverpool's lead over chelsea to seven points. chelsea dropped the key boxing day match to eighth place fulham. and nottingham continues their season with a win over tottenham. annmarie: poor dani was at the chelsea match. we are sorry for your loss. bracing for the new year. >> everyone is looking for the opportunity. in january we get a lot of volatility. annmarie: equity futures are softer. you are watching "bloomberg surveillance." ♪

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annmarie: friday morning. final friday trading day of 2024. what a 2024 it has been. s&p 500 up more than 25% this year though it does not look like the market will get the santa claus rally it was hoping for we have equities pulling back ahead of the opening in 90 minutes. s&p 500 futures down .3%. euro-dollar at 1.04. talking a lot about the political crisis is inflicting europe, whether it is germany or france, and how this lack of cohesion as they are dealing with the incoming trump administration, a lot of analysts are calling for parity in 2025 when it comes to euro-dollar which came into the air around 1.10. bonds this morning, we have the 10 year yield at 4.6% come up two basis points after strong demand from the seven-year boat and new york crude $70.35.

very narrow trading when it comes to crude. a lot of this has to do with the supply and demand picture and a lot of people are expecting that to continue into the new year. this morning, bracing for the new year. >> this year everyone has been looking for that opportunity to buy. i think people bought the dip. people will have to digest what it looks like in the new year with president trump, with elon musk. i think in early january we will get a lot of volatility. annmarie: s&p 500, russell 2000, nasdaq all looking to finish the year with double-digit gains. drew pettit of citigroup writing expect a more volatile phase of the bull market this year. good news is priced in which means first 100 a policy pushes could create bouts of volatility. drew joins us now and dan greenhouse is still with us.

what are you expecting that first 100 days of the trump administration since everyone coming on this program says we have to wait for the policies? drew: that is the beauty of the set up. i am not sure what to expect. i think that creates volatility. in conversations with clients we have heard a lot about immigration fears. they are worried about tariffs. on the others you have the deregulation angle. when we talk about a bull market entering a volatile phase, we think fundamentals are strong but trips of news here and there bounce you around a little bit and you see a little bit more aggressive rotation between sectors. dan: do you feel like investors you talk to are actively changing portfolio allocation because of the immigration concern? everyone is concerned about it and worried about the potential for inflation. is anyone doing anything about it? drew: i don't think so to be

honest with you. i don't think anyone is making a lot of aggressive deregulation trades. we saw the banks and some of these sectors pop postelection but you have seen that rally fade. they have not bought into the long-term trade. on immigration, the same thing. everyone is try to figure out what might hurt the consumer. everyone is sharpening their pencils so when we finally get the news event, whether it is good or bad. that is when we will start to see the trade. dan: you might not be seeing a lot of trading around the regulation side of things. is it fair to say when you look at the defense stocks, general dynamics, you have seen a doge related trait going on? drew: there is a lot of concern about government spending in general. you can see that showing up in bond markets more than equity

markets. i would say you have seen some of that. that is completely fair. we still think there is risk on the industrial side. honestly could be a rate thing, could it be a debt thing, could it be doge? pick your narrative. dan: when you put it all together the question for investors into next year's we have had two strong years for the s&p 500. 20 plus percent. for the equal weight index more moderate but still good back-to-back year. i sense a lot of hesitancy into next year. i cannot be too bullish because we have had such strong years. obviously there is uncertainty about the administration, but the two years gives a lot of people pause. is that a fair way to characterize how people are thinking about it and do you agree? drew: i actually do not agree with that.

i think investors might be saying that. they might be talking about that on the fringes but when you look at the data, look at margin, look at trf volumes as percent, look at some of the other sentiment gauges including our index composite, i think markets are still euphoric. where we get concerned on this front is everyone is talking about their concerns but not trading them. they are telling you one thing and doing another. everyone might come on and talk about volatility, they might talk about being concerned, they might talk about having no real corrections in 2024. at the end of the day they are buying equities. they are bullish. annmarie: thank you so much for joining us in happy new year. drew pettit of citi. dan greenhouse, thank you for joining us this hour. your number one advice for 2025 after being in this market in 2024? dan: have a friend with you in

the new york city subway. that is my number one advice. outside of that. annmarie: i mean and financial markets. dan: sometimes you have to clarify with me. i take an optimistic view of the landscape. there are things about which one should be concerned. there always things about which one should be concerned. while i am taking an optimistic view of things, we base that on data and reality. we saw change in administration. my bias is to the upside. annmarie: thank your spending your shortened holiday week with us. the final friday of the year. coming up, kate mcshane of goldman sachs. this is bloomberg. ♪

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>> in early january we will get a lot of volatility. >> as we see global growth picking up outside the u.s. we think we will see earnings to better outside the u.s.. >> inflation still matters a lot to bond investors. >> you need to see decent economic indicators. >> with if the economy could outperformer dan. we expect -- two -- the economy

could outperform again. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. michael: annmarie: welcome to the final friday of 2024. i am annmarie hordern alongside dani burger joining me in london. good morning. the santa rally is not shaping up to be one. we are hitting a pause after yesterday's session although it is a very shortened holiday week and we cannot negate what was a stellar 2024 when it comes to equity markets. the s&p 500 up more than 25%. the year is drawing to a close and drawing to a close on a red note. dani: it is. it has not changed opinions. you were just talking to dan greenhouse saying he has an optimistic view. the outlook is a strong one with calls as high as 7000 to end the year. where you get less consistency is the bond market.

you have very different views, you have a bearish view from deutsche bank that 4.7 percent is there target for 10 year yields, then you have someone more positive like morgan stanley. so much will depend on policy but is a torn bond market despite the cohesion of the equity market. it has been the enthusiasm of the equity market that has called this economy right for the most part of 2024. annmarie: even though we have seen this month alone 45 basis points higher in yields. the fact of the matter is equity markets have been able to deal with it. it is point number eight on torsten slok's risk to global markets in 2025. u.s. global interest rates move above 5% before midyear. his top risk, tariffs at 90%. nvidia earnings disappointing another 90%. u.s. economy re-accelerates, 85%. what is last on the probability

list and has a 0% chance -- a u.s. recession. dani: because hominy people call for u.s. recession at this point last year in 2023? we were saying a u.s. recession is coming. we will get something like six cuts from the fed. all of those were upended. bond investors were punished for those that put that trade on. we have learned that betting against the american consumer has been a losing bet. for now fears of economic weakness have been turned elsewhere to china and europe. annmarie: how much is that u.s. exceptionalism going to withstand the test of 2025? especially when we have all of these unknowns. s&p 500 futures, it has been a stellar year but futures are down nearly .4%. euro-dollar, one to watch in 2025 as many are calling for potential parity as we see

paralysis in the court of europe and france and germany. 10-year gilts up two basis points. new york crude and nymex crude, $70.30 this morning. coming up, anna rathbone the santa claus rally taking a breather. kate mcshane of goldman sachs. in chuck lieberman of advisors capital management on inflation risk in 2025. we begin with stocks on pause after a blistering rally for equities in 2024. the s&p 500 up more than 26% year to date. anna rothbun seeing upside ahead next year, writing "assets will go where there is higher relative value. from this perspective we are constructive on u.s. equities and even tack despite the how valuations." anna joins us now.

thank you so much for your time. with all of these uncertainties into 2025 what are you most keenly looking for? anna: morning. the santa rally may not be here but maybe santa is telling us we had a lot of returns in the last two years. from that perspective it is difficult to imagine a 2025 where you will continue to see this type of return. going into 2025 we are still constructive on tack because we see that it is not just a want to have in terms of ai and other developments, it is a need to have, especially for corporations developing ai. if they are not on top of that they will lose out. from that perspective i think we will continue to see r&d and new developments and we will see ai development filtering down to other sectors and potentially seeing something that is

increasing productivity levels more than we may have anticipated in the past and that will catch up with us quickly. dani: great to see you this morning. for investors who buy a simple index fund, they have a lot of nvidia in there. this is a point torsten slok makes, that the big have gotten bigger. he says it is a risk that investors are under appreciating they have a portfolio leverage to nvidia. is he right? anna: that is always a risk. concentration risk is something that if you are in index investor you cannot help. at the same time we've been talking about concentration risks for two years. if you are not in the index you would have missed out. there a lot of active managers that have been underweight those names that have missed out. despite the fact that nvidia is a big holding their may be a reason. it might be investors telling us

that their exposure to ai and their advancement in ai may be something the valuation can actually justify. dani: also if you had bet on valuations and use that as a market timing tool you would have missed out massively. we still constantly hear the calls they cannot sustain themselves even as you see yields going higher. that will be an issue that at some point valuations need to come back to earth. is it different this time around when we are talking about ai in future promise of earnings. do we need to recalibrate would valuations can and should look like? anna: whenever people say it is different this time it never is. i am not going to join that camp. at the same time certain things are different. when the internet came out it did not exist. we had to readjust. it is the same for ai. in terms of valuations this is

why you have to diversify in your portfolio because we are capital allocators. we do not bet on a single sector or a single stocks. we make sure we are diversifying because at the end of the day market timing is -- while we recognize there are risks in valuations we actually do not try to time the market with it. dani: i love that you call inflation the fed's favorite child -- annmarie: i love that you call inflation the fed's favorite child when it comes to the dual mandate. where they burned by the transitory episode? is that driving what we saw this month's fed meeting? anna: two years ago the fed was using data and judgment. they were saying this is transitory because this data movement we are seeing may be short-term. they did get burned.

i think they are over correcting and they are responding to short-term data movements. all it took was two or three months of cpi data coming in hotter than expected. they were talking about a little hotter for them to say inflation is front and center despite the fact that we've been telling you for the last six months that it has been employment that has become front and center. i think going into 2025, even if we have a little weakness continuing in the labor market, they will look at inflation and say this is still our priority, even if we see labor markets starting to deteriorate. dani: you mentioned the reaction of the fed to every data point. this is something mohamed el-erian argued, saying they've become hyper dependent on the data and a problem for the market and the economy. is it a problem? anna: i do believe so.

data do not move in a smooth way. data are by nature volatile which means their perception of how the economy is doing and potentially communication and monetary policy will be volatile. for the markets that is very confusing. for the economy, if you are data dependent, that means you are relying on lighting information. you have to accept the fact that if there is no judgment involved in you're constantly looking at backward looking data you might actually be late and it is the same mistake the fed made when inflation was going up, maybe the same mistake the fed makes when inflation is going down. annmarie: thank you so much for your time this morning and happy new year to you and your family. anna rothbun, we thank you for your friday morning contribution. here is your bloomberg brief. yahaira: israel struck multiple targets in yemen it said were

controlled by the houthis including military infrastructure and power stations. the strikes led to at least six deaths. the operation was in response to repeated attacks against israel capped off by a ballistic missile strike on a tel aviv playground. the who these -- the houthis have pledged to continue attacking israel as long as the war continues in gaza. pregnant women affected with covid-19 have been found to have a higher risk of complications including death. 14% of infants born to mothers who tested positive for covid-19 showed problems -- showed signs of developmental problems. researchers cautioned larger studies are needed. in sports the seattle seahawks keeping their playoff hopes alive after defeating the chicago bears and thursday night football. seattle needs the l.a. rams

toulouse to keep their playoff hopes alive. that is your bloomberg brief. annmarie: thanks so much. coming up, kate mcshane of goldman sachs and her top retail picks for 2025. that is coming up next. you are watching "bloomberg surveillance." ♪

dani: it is the friday after christmas and before new year's. if your trading today, hats off to you. it is an equity market on track for its second consecutive day of declines. it is being led by small caps. your s&p 500 down one third of a percent after a strong 2024 and optimism for 2025. europe versus the dollar at 1.04 this morning.

stronger euro by about .1%. it just under 4.6%. it was a strong duration bid yesterday. a seven-year auction that went off without a hitch despite fears of a hitch despite fears of the deficit for 2025. how much longer to the strong auctions keep the bond market chugging along? nymex crude just under 1% of a rally. when it comes to the holiday season bloomberg economics reporting a slight drop in holiday shopping compared to a year ago. retailers notating -- retailers noting a bifurcated consumer. kate mcshane of goldman sachs joins us now. this holiday season is no exception. it is the bifurcated consumer we keep hearing over and over again. is there any reason to expect we might hear anything different in 2025? kate: we do think we could see

slight improvement in the lower income consumer in 2025. what we are looking at which is our discretionary cash flow analysis we put out four times a year is measuring how much cash flow the consumer will have going into 2025. overall the consumer's cash flow should increase about 5.2% in 2025. that is being led by the higher income demographic which is expected to grow about 5.5%. lowest demographic is expected to grow 4%. there is healthy growth there. disposable income is moderating a little bit for the consumer. you are seeing easing of financial obligations within easing interest rate and seeing dissipation of inflation. dani: what consumer companies benefit from that?

one of the fascinating trends has been companies usually associated with lower income consumers. walmart being able to get greater market share. if the lower starts to participate more is a broader rally? kate: it is a great question. for sure walmart has capitalized on being able to address a wider array of consumers, both lower, middle, and higher. the ones that still cater to the lowest income consumer which are discounters like dollar general and dollar tree have actually been impacted by the fact that that lowest income consumer has been dealing with such high inflation with most of their dollars going towards consumables versus discretionary or more decisions within consumables. the lower income consumer is that a bit healthier in 2025 and you could see slightly better

trends of the discounters who cater to that lower end consumer which is around $30,000 income and below. dani: for the walmarts and costco's that have been winning market share come in time past it has been used as a signal of not a good thing. people are more concerned about their wallet in savings. that has not been said this year. why is this time different? why is it not the signal that things are deteriorating among the consumer? kate: the success of walmart and costco is a testament to execution than anything what is going on in the macro economic environment. walmart, if we can take as an example of what is happening there. from an execution standpoint they have benefited from improving their general merchandise category, their overall store experience, they are omni-channel.

being able to be online and brick-and-mortar retailer. given all of those things, including fulfillment and walmart plus, which is their subscription service, they have been able to cater to this much wider swath of consumers which has resulted in quite a bit of growth. they are also very focused on price, which in an inflationary environment did attract a few consumers as well. walmart's success can be more attribute it to the fact that they have been investing in their business in technology, in building out their fulfillment optionality for consumers and it has been more execution. dani: the building out of online , i'm interested in this for a different reason. online shopping has been so popular since covid. the figures for the holiday season show robust growth for adobe analytics. with that comes things like

returns. for these companies that is a problem because not only do they often have to pay for the return. a lot of times they get these products back that you cannot sell again. all of that would eat into margins. is that a problem for companies? do companies need to think of a strategy for dealing with margins in an increasingly online shopping world? kate: that is the benefit of being a brick-and-mortar retailer, being a true omni-channel retailer. i joke around that i am a retail analyst and we believe in the existence of stores and the need for stores. physical retail is really important. think about this holiday season. there were five less shopping days this holiday season than last year and everybody was talking about what a big rush there would be because there were five less shopping days. that will be fulfilled by stores that can stay open until 10:00

or 11:00 on christmas eve. the physical real estate is important and we are seeing that with regards to the optionality it gives the consumer, whether it is buying that product or returning that product. if you are to look at some of the big box stores like walmart and target that have thousands of points of distribution through their store network, they are able to get to the customer online. that customer can get it by picking up in the store, they can get it delivered to their car where they can get it delivered to their house. that is been a game changer for anyone and brick-and-mortar retail that has been able to improve customer service in terms of the optionality they are providing for that consumer and it goes for returns as well. dani: possible headwind a lot of these retailers have into 2025 and it is no surprise heading into the election -- it is supply chains.

the risk it will get a lot more expensive, not just from china but where other companies have migrated, to south america, to mexico. how nimble and ready art some of these retailers if tariffs are put on and their ability to move more locally. kate: we have seen with our retailers some change in supply chain and's tariffs were less implemented in 2018 and 2019. you've seen production taking out of certain countries and move to others. there are going to be categories that are not quite as nimble or cannot move as readily as other categories. consumer electronics comes to mind and is still very much imported from china. for the most retailers we cover you have seen some diversification in that supply chain the last six years. there is some reduced risk than

there was six years ago. i think inevitably it will raise costs for those that are producing products out of china, including products from china. you will see price increases as a result, just like we did in 2018. dani: along with those costs you have seen some labor discontent this holiday season. starbucks and amazon -- you have seen strikes ongoing. our wages also going to be a stress for these companies? is this discontent among the workers likely to get more widespread in the coming year? kate: it is hard to say exactly. we have seen at least in retail some moderation of the wage increase we saw since covid. you are still seeing wages increase but is increasing at a more normalized rate between 2%

and 4% versus what we have seen in the last few years when wages were increasing a little bit faster than that. if inflation is dissipating there could be less pressure that wages would have to increase more because wages right now are increasing faster than prices. our modeling and most of our retail models are anticipating wage increases at a more normalized rate of around 3%. dani: ahead of that there is a specific deadline they will have to contend with, the deadline for the dockworkers to reach an agreement. what inventories look like ahead of that? as some of these companies and tried to front run any possible disruption? kate: yes. we do believe some of the companies have tried to front run the disruption. we did see that with the threat of the strike a couple months ago as well where some companies

brought in inventory earlier just in case the strike was prolonged. you have also seen divergence containers go to other ports, changes like that is so springing the inventory earlier. inventory levels overall, if you were to look at what everyone reported at the end of the third quarter did not look highly elevated to us. inventory growth is still in line or slightly below sales growth. dani: we saw goods popular during covid. that has gone to services. you that that will be the trend or could we have a rotation back into goods? kate: we think we will have a rotation back into goods in 2025. that is our call in the broad line space. we just talked about the health of the consumer which we think will remain strong into a 25

given the employment backdrop. two, it has been a couple of years of negative growth in most discretionary categories. consumer-electronics, certain apparel categories, certain home goods categories. we do think that the -- pent-up demand will result in more discretionary growth in 2025. dani: will have to jump in. thank you so much for joining us. kate mcshane of goldman sachs. you are watching bloomberg tv. ♪

>> good morning. welcome to "bloomberg surveillance." what you are contending with today is the final friday of 2024. the awkward moment after christmas, and head of new year. many people were hoping for a santa rally, but we have hit pause. s&p 500 futures are down -- there they are, .4 percent. this comes after a muted session yesterday. dani, though, 2024 has been a stunning year for this equity market, especially in the tech space. dani: yeah. so many people got it wrong. so many people heading into 2024 said, it was going to be small caps that take it away, there is going to be a recession. risk is not going to do as well. that is not at all what happened. we get some of those calls

coming into 2025. that there will be broadening. that small caps will do well. guess what has happened over the past couple of months since the election? the russell 2000 is flat and it has been tech that led the way. annmarie: in the bond space even though we have seen rising yields the equity market has been able to deal with rising yields. you have a 10 year now just below 4.6%. we are hovering. we were higher than that across the yield space yesterday and today. you have been talking about that demand we saw in the seven year notes yesterday. i keep going back to the risks of last year. risks from torsten's lock, number eight on his list, in your interest rates move above 5% mid-year. 40% of putting a probability on that. dani: he also sees a potential for hikes next year. you could scratch your head and wonder why we are not seeing

more of a bid into this bond market. labor market data that was not the strongest, continuous claims rising to the most in three years. you can make the argument that there are some labor market week this is that regardless of where inflation goes will force the fed's hand to cut. the fact that we are not getting it speaks of the term premium being built in, that speaks to the concern not just about inflation, but higher deficits and what that means in terms of how much yield investors are going to demand in 2025 on the long end of this curve. annmarie: higher deficits and potential iteris and what that means for every inflationary environment. tariffs coming. president-elect donald trump is already trying to negotiate them. what we are seeing is a little bit of strength on euro. when you look at the entire year, the story has been weak

euro, weak european union, political paralysis in germany and france, and u.s. exceptionalism. dani: so much has been about the strength of the dollar. the problem is politically in germany and france, south korea, romania, problems abroad make the dollar more attractive. the difference is this time, europe would probably welcome the weaker euro. the s&p cutting 50 basis points. surprise cut because they were concerned about the strength of the franc. how much about 2025 will be about central banks playing defense? when it comes to fiscal governments, they do not have the cohesion to combat some of the things that might be coming from the u.s. like tariffs. annmarie: the u.s. dollar on track for the best year since 2015.

we are one hour away from the cash open. here are your morning movers. >> we start with the ev battery maker getting quite a boost in the premarket up more than 70%. since monday, it is up 500%. while i cannot find any real catalyst for the move, this is a company that could benefit in the future from the transition to ev. still, the stock is down 80% from the high reached, all-time high reached in november 2021. next, we have tesla. those shares are down about .8%. it continues its fall from yesterday. there was a report yesterday from hertz saying they are so desperate to shed there tesla inventory that people could keep their rentals. the stock is up 80% year-to-date.

finally, we have apple, we are on watch for apple to hit $4 trillion market cap milestone. the stock is down slightly but the number to watch out for to hit the huge milestone is around $264 brief annmarie, you had that great conversation with dan earlier today and he says the rest of the street is underestimating apple's ai potential and ability to sell iphones because of it. at the same time, you have strategists suggesting history suggest near-term weakness for the stock. >> dan talking earlier about apple raising the price target per-share. it was at $300. he is certainly bullish going into 2025 on the potential upgrade cycle. the market is expecting fewer rate cuts next year with questions about the impact of president-elect donald trump's

policies. they write that we do not see much data to justify further rate cuts in an environment of strong rope and sticky inflation especially if the extension a policies of the new administration are factored in. while the stronger economy naming that rates stay higher for longer, this would also be supportive of many areas of fixed income. joanne joins us now. torsten is talking about the potential for interest rate rises in 2025. 40%. a lot of people are saying the fed might not be unpause, they might actually have to raise rates driven by fiscal policies out of washington. what do you make of that? >> we certainly think rates have to stay higher for longer. it has been a remarkable move in

the 10-year since the fed started cutting rates. it is almost 100 basis point higher in yield. the market does not like the fact they have been cutting rates. this means long-duration assets can continue to be volatile, yet there are still a lot of areas of fixed income that can take advantage in the strong economy. the number one area in our view is credit. >> number one is credit. spreads have been so tight. how much tighter can the market get? at what point does that make you feel uncomfortable? >> there are reasons why spreads are tight. they are tight because we do have the strong economy, because we have companies that since the pandemic have been focused on shoring up their balance sheets in terms of refinancing debt so you do not have the same kind of

excess building in credit markets that predated past down cycles. we are in a better quality environment, particularly in the u.s. high-yield market. there are more double b's than ever. the triple b market is healthy as well. investors can take advantage of that. spreads are at the tight end of the range but they can persist. history has shown spreads can persist at tight levels under the right conditions for even years at a time. >> this i find interesting, the makeup of the credit market, how much more healthy it is because credit markets used to be the canary in the coal mine that when spreads start to blowout, it means something bad for the economy and it is a big risk. is it different this time? is the credit market not as much of a signal as it used to be

because of the makeup of the companies now? joanne: it is the focus by the companies on shoring up balance sheets and refinancing debt, not taking on too many risky expansionary capex projects. there are a lot of reasons why the credit markets are healthier than they have been. i have a long history in the credit markets and i have seen areas like telecom, energy, and health care, they have always been specific areas that have developed excesses that ended up repricing the whole high-yield market. we are not facing that now. that is not to say that there could not be excesses that develop. right now, everything points to another strong year in 2020 54 credit. dani: the trades are credit and short duration. is there -- short in duration. is there anything that can make

you by longer derated treasuries? is there anything that could make it attractive in 2025? joanne: i guess it would have to be another significant backup in rates. it would make sense to go out longer duration especially if you had a longer-term horizon for investing. annmarie: when it comes to the credit market, with spreads so tight, where else are you seeing opportunities? joanne: we see -- our main focus for next year and what we are telling all our clients are number one to buy credit and number two to stay short duration, and finally to be tax aware in investing. what that means in fixed income is there is a lot of different choices in fixed income. sometimes, paying taxes on higher-yielding investments is better than buying only

tax-exempt securities. there is a lot of different areas. it is about precision. it is about figuring out where you want to be in fixed income to reduce your volatility and take advantage of the higher yields. dani: with yields high this year, do you think the 60/40 portfolio will be making a stronger come back in 2025? joanne: 60% equity? we think it should be 62% fixed income. [laughter] annmarie: ok, fair point. let's talk about what you are expecting in terms of fixed income when it comes to the treasury market and what we got out of the fed in the final meeting of the year. jay powell went from not assuming too many members assuming when it comes to truck policy. at that point, how do you decipher how the fed is incorporating all of the

incoming data coming at them? joanne: there always so many uncertainties and things can change direction. now, all information is pointing to their could possibly be reseller ancient in inflation. it is not continuing to come down towards the 2% target. it seems stickier. they have to adjust. what they wanted to last year in terms of multiple rate cuts, it does not look like they will be able to do that. it would not be good for financial markets if they did. dani: to play devil's advocate because goldman sachs came out before christmas saying they still expect three cuts next year. the reason is even if we get tariffs that come with inflation, it will ultimately result in weaker growth. it is not immediately clear the labor market is completely

healthier or on the right trajectory either. weak growth, weaker labor market means they will get cuts. i am wondering what you think of the argument. joanne: i think we do not necessarily see the current level of rates as restrictive. maybe if you continue to see rates back up from here, maybe they start to be. but they have not been restrictive enough that they are curtailing economic activity. in the labor markets, there has been some softness but they are not falling off a cliff. annmarie: thank you so much for your time this morning, joanne bianco. let's get you updates on stories we are watching this morning. >> openai's board is evaluating a plan to create a conventional moneymaking corporate arm alongside the nonprofit arm. it would turn the business into a public benefit corporation meaning an entity free to pursue

income but with the goal of bettering society while retaining its nonprofit side as part of a new structure, the nonprofit arm would hold shares in the moneymaking side. the nba pulled in its best holiday numbers in years on christmas. the netflix debut also had an impressive showing. 65 million viewers in the u.s. tune in for at least one minute of one of the two nfl games with the numbers peaking during the on-site's -- have to -- beyoncé's halftime performance. they achieve a five-year high averaging 5.2 5 million viewers per game. kim kardashian is no longer managing the private equity firm she cofounded in 2022. in a filing this week, the firm disclosed she is no longer an executive officer. website refers to her as a cofounder and senior advisor. she was previously listed as a

managing partner. annmarie: thank you so much for all your work this morning. dani, you track private equity. has this firm made any big deals? dani: they bought one thing and one thing only. that was part of the problem. it was a luxury sauce company called truff. they also did not raise nearly as money as they had. i am disappointed. i thought it was a brilliant idea. it did not work out that well. annmarie: i did not know there was a huge market for luxury sauce. dani, i know you have to go. thank you so much for joining this morning. happy holidays and happy new year to you and your family. i will still be here in the "surveillance" chair. charles lieberman will be joining me. we will discuss 2025. you are watching "bloomberg surveillance." ♪

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annmarie: good morning and welcome to the final friday of 2024. this is how u.s. futures are shaping up ahead of the trading day. s&p futures down .4%. it has been a stellar run for 2024, but we are not getting the santa claus rally at the moment. but if you are on the trading desk, you are seeing a pause. pat talk to you for being in the office, those awkward days between christmas and new year's. euro-dollar at 104.36. we have seen strength of the dollar. it is going to be one of the biggest dollar strength years we have seen since 2015. you have 10-year yields sitting low 4.6%. 4.59%. crude is $70.27.

the 10 year treasury yield hovering near a seven-month high in the post-holiday trading. check lieberman writing that the economic environment should be slightly positive for stocks and negative for long-term bonds. it would freeze monetary policy for longer but rates would increase. thank you for spending friday morning with us. how are you thinking about the start of 2025? especially when things like policies will be important to how the bond market trades? >> i agree with you. happy holidays as well. in my judgment, there are things to be nervous about. the possibility of tariffs will increase prices for domestic

consumers. that is potentially a big negative when the fed is trying hard to bring inflation back to 2%. we also have concerns about the labor market. job growth has been pretty good. but if immigration policy changes and president trump removes people from the u.s. who came in illegally but nonetheless are working, it will reduce our labor supply which will drive up labor costs and inflation. there are reasons to be concerned about the prospects for inflation. annmarie: when it comes to inflation and tariffs, do you think this is a one-off hit or could this be more pervasive? chuck: initially, it is largely one-off but tends to spread through the system. when you have a single auto contract negotiated between the uaw and auto companies, it is a one-off and pertains just to that industry. nonetheless, everyone else is watching and many other labor

unions get ideas they can also push for 10% increases for four years in a row. that is a large increase. it does tend to transmit through the system. annmarie: what do you make with fed policy in this kind of fiscal environment? chuck: i think the fed wanted to get rates down while they could. they sort of rushed the 50, 25, and then 25, so they reduced rates by a full 100 basis points. the market is looking at the economy and see the economy is not weak. i year ago, a lot of people were forecasting recession. that did not happen. growth is well above potential. it becomes even further above potential if we have fewer workers because we are getting illegal immigrants to leave the country. i think we have got inflation

risk out there. the economy will probably grow more slowly because if you cannot hire, you cannot expand the economy as quickly. we could have an unusual combination of moderation, growth, and upward pressure on inflation. annmarie: do you think the fed at the moment is restrictive? chuck: yes, very simply. i look at not overnight money. if you look at overnight money relative to inflation, you could make a case the funds rate is roughly on average worth the lungs historically. you have a much tougher case when you look at the 10-year. with inflation in the ballpark of 2.60, i'm being a little generous, you have the 10-year at 200 basis points over inflation. historically, it has been more like 250. in my judgment, interest rates

are not a bar to investment, to spending, and we see strong corporate issuance of debt in the marketplace because corporations see prevailing interest rates as attractive. annmarie: when you put all of this together, you do not think the fed is restrictive. do you think in 2025 the fed may be raising interest rates? chuck: yes. but not in the early part of the year. the early part of the year, the fed will wait to see what happens with policy, with tariffs, with immigration policy. they will look at the growth rate of the economy and they will wait. they can afford to wait. there is no reason for them to rush to lower rates more. they have good reason to regret having lowered rates as much as they have. i expect them to be on pause for a while. and then, it depends very much

on how things play out. annmarie: thank you so much for your time this morning. happy and healthy 2025, chuck lieberman, i know you will be focused on the policies as we are about what potentially 2025 has in store. this is what you need to focus on when it comes to the rest of the trading day, the final friday of the year, and the start of next year. here we are counting down to the bell. monday, pending home sales. tuesday, u.s. bond markets closing at 2:00 eastern. of course, it is new year's eve. wednesday, new year's day so u.s. markets are closed. thursday, first round of u.s. jobless claims of the year. also next week, we get policymakers coming back to washington, d.c. a big fight is going to be on capitol hill on whether speaker mike johnson can remain in fact the speaker.

monday, i will not be here but romaine bostick and dani burger will be guiding you through the markets, another awkward day between the holidays, christmas and new year's. if you know what day it is in your showing up to the office, hats off to you. max kepner will be joining us. cameron dawson and patrick, all of that is coming up next. that does it for me. there was no santa claus rally. thank you for spending your friday morning with me. two regular viewers, thank you for walking me on the program this year. it has been a fantastic 2024. we will see you in 2025. good morning. ♪

matt: good friday morning. from new york city and from london, this is a paul sweeney. we are simulcasting.

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