♪ >> the market is seeing that the economy is not week. >> equity risk premiums are incredibly narrow. >> i'm not really sure the markets know what to expect. i think that creates some volatility. >> there is quite a lot of momentum still to be had particularly in the first half of this year. >> as goes january so goes the year. announcer: this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. romaine: happy new year to our audiences worldwide. i'm romaine bostick alongside kriti gupta. jonathan, lisa and anne-marie have the day off. an interesting punctuation mark to what has been a phenomenal year for equity markets across the globe.

the s&p here on the u.s. sitting on 24% gains on the year in this particular tuesday, pointing to a slightly higher open. kriti: may be setting us up for some sort of reckoning. romaine: we talk about the tone it to end of the year, the year-to-date gains on the s&p, that we seen on the nasdaq, that we've seen on all of the indices around the world, but that performance did not necessarily hold here into december. those gains and losses here on the month and on the quarter as a lot of people do start to look at what is coming up in 2025. coming up here on this december 31, john stoltzfus, one of the most bullish folks on wall street talking about his street high s&p price target for 2025. going to be joining us to talk about the phenomenal rally that

we saw this year in gold and a somewhat less phenomenal rally for coffee prices. with begin this hour with a quick check and what is happening here with as of the futures as we close out a record year for u.s. equities. 57 record highs for the s&p so far this year. the punctuation mark coming on december 6 when it closed out right around 6090. peeling back just a little bit. looks like it is going to open the day if these futures numbers hold. the euro-dollar unchanged on the way. camped out around 4.5. wti crude prices can't out at about $72 a barrel. let's talk a little bit about the outlook for equities as people wonder whether it can be

-- price targets for the past year, they were light. john stoltzfus was always bullish and he had a good eye on what he thought would get in 2024 and now he is out with this note for 2025 saying that the bull market has more room to run, writing that the pivot to monetary policy we believe supports our view that the market for u.s. equities is still midcycle. he says the technology-led double-digit gains of the large-cap stocks of the first three quarters of 2024 are likely to broaden out to other sectors, styles and market caps in 2025. pleased to say that john joins us right now, kicking us off your on this december 31. happy new year and let's talk about those forecasts going forward. i'm seeing targets coming in now including yours into the sixes, into the 7000 for the s&p 500. is this all earnings-driven or are we going to see multiple expansion as part of that as

well? >> great to be on surveillance with you and happy new year to you in the whole bloomberg team as well. that is what matters most to the market. there's room for multiple expansion to play a role in here. the private investor over the years i've been in this business, 41 years, has changed a lot over the years. what has taken effect in terms of retirement planning over the course of the last four years in which we seen defined benefit pension plans go by the wayside, social security, the amount of income that it can provide or what percentage it provides an individual of income during retirement means people have to invest more. instead of investing in stocks

for the actionable idea of the day, much like institutions, intermediate to long-term goals, we think that supports higher multiples while on the other hand, we think the effects of technology on all 11 sectors has been shown since the financial crisis right up through the pandemic. romaine: we will expand a little bit here on the big part of the trade that we saw in the market, certainly in the first half of the year. a lot of questions since the second half of the year when we start to see the material gains from that. will we see that in 2025? >> we will begin to see it more and more. this year it has primarily been the round of investment that has been made in ai both from within the technology sector itself,

but in the other sectors by managements that want to remain very vibrant and effective in attracting investor attention. in terms of creating greater efficiencies from revenue and earnings growth. and on the other hand we think it is the consumer that is going to be a big part of the upgrade and likely will gain some traction in 2025 and forward. all this stuff takes a bit of time but for investors, who have patience, are diversified, know what they own and why they own it and have right sized expectations about how different asset classes, different sectors, cyclicals vs. defensive operate, this looks like a time of both opportunity and risk and the main thing is to have some tolerance for fluctuation and tolerance for risk that is

realistic and right sized. kriti: how much of the bull case is dependent on capital flows from the rest of the world and the absence of economic resilience in europe or china? do you see international investors bolstering the u.s. market maybe more so than domestic? >> that is an awfully good question. over the years we've seen private investors from abroad increase their exposure to the u.s. a lot of that because of the influence of the technology sector with the innovation that occurs here in the design stage of technology, but in addition to that, the factor is in an uncertain world, the strength of the u.s. dollar also attracts foreign investors to invest in the u.s., while meantime, central banks and sovereign wealth funds may actually

stay-at-home. we think it is the individuals that will continue to invest for diversification in the u.s. kriti: you mentioned that point of the dollar that it attracts international investors. doesn't it disincentivize that bid, so an investor in japan that maybe wanted that realm of safety or kind of innovative technological exposure may be looks at the strength of the dollar in three months and says actually, this isn't worth it? >> we would have to say that the strength of the dollar is relative, and i think with the dollar strength where it is right now for instance, it almost this incentivized u.s. investors from investing abroad because the foreign currencies are weaker vs. the u.s. dollar. on the other hand for foreign investors with their currency as weak vs. the u.s., investment in the u.s. enhances dividends, enhances gains because investing

in a stronger currency helps your performance if you are a foreign investor with a weaker currency when you reconcile your trades. you don't get a lost in translation, but a gain in translation. romaine: i am curious if you can talk a little bit about how some of the policy decisions that we are expecting out of washington could affect the performance of financial markets, and i want to start specifically on the tariffs side because there are some concerns about the bottom line effects on corporations and obviously the inflationary effects on consumers. john: you have to say the greatest concern relating to tariffs is on the traditional sense. everybody can remember tariffs pre-staging the great depression and all. but the effect of tariffs during the first trump administration and during the biden administration when he actually tapped many of the trump tariffs and even increase to them was

not anywhere near as concerned as might have been expected. we think the idea of some of the numbers that are thrown around by the president-elect in terms of what he might impose on tariffs, much of this we would think is part of that art of the deal approach that the president-elect takes when negotiating, but the other side of it is if you consider the u.s. economy vs. producing economies and all the good that are consumers buy, we are buyers of size, so we are a very attractive place to sell your goods too, which might mean there's more wiggle room for a country that wants to sell into our country or exported goods to us to win our import dollars, so to speak. and we think it will be interesting to see how that works out, but we think most of

the talk on the tariffs based on the cabinet and the experience of the cabinet as well as the president's experience after having four years in office prior to this, we think it will be, the bark will be louder and much more, create more fear than the actual bite. and we actually think the negotiations will probably work out better because countries are going to look to want to keep the u.s. as a major source of their exports. romaine: great stuff as always, always insightful all year long and we expect that as well in 2025. have a happy new year. she when that right now the average in the median price target for the s&p to end next year right around 6600, the highest estimate in that survey came from the manley were just talking to.

expectations heading into 2025 going to match up in the same way that we saw with low to high expectations in 2024. let's get the bloomberg brief. yahaira: the u.s. treasury department said it was hacked earlier this month by chinese back cyber attackers. the incident led to unclassified documents. the hackers gained access with contract with the government. the chinese embassy in washington called the claims smear attacks against china without any factual basis. the tel aviv stock exchange is planning to move trading days from monday to friday from its current operating week of sunday through thursday. the change will happen in early 2026 and trading will end at 2:00 p.m. on fridays in order to allow for observance of the sabbath.

the finance minister says it might israel with other global capital markets and strengthen its connection to the world. in lionel messi carried out an initial public offering of real estate properties at $232 million. the company has been listed as a real estate investment trust including seven hotels, commercial real estate and homes but has posted losses in both 2022 and toy 23. romaine: a quick check on the markets, u.s. futures pointing to a slightly higher open in the united states and asia trade. a lot of markets around the world already closed the new year's eve holiday. a recap of some of the big movers across asset classes, that includes gold nearing historic gains to close of the year. >> gold offers more reason for investors to belong right now. when we think about the highest

risks associated with tariff escalation, we think this can take prices even above our forecast. >> 27% advance on gold, a conversation of ahead as to what keith that rally going into next year. you are watching "bloomberg surveillance." ♪

♪ romaine: welcome back to "bloomberg surveillance."

futures pointing to a slightly higher open on out right below that 6000 level, a little bit shy of the all-time high. the euro-dollar relatively unchanged on the day. 10 year yield camped out around that 4.5 level. a lot of speculation about where to go next, up or down. i don't know if next year the story is going to be about the bond market or maybe commodities and what to potentially drive markets worldwide next year. kriti: i'm sure we are going to see a little bit of all that, especially given that currency story over oppenheimer, this idea that if you are looking for a haven and the role, does gold as well? romaine: and we talk about gold, it has had a phenomenal year. 27% daily year-to-date right now of futures pointing to a slightly myles gayman here on a daily basis, that is still going to set it up for the best year

in at least 14 years. one of the best-performing commodities certainly in the metals market and the big question right now about some of those historic gains. that is under surveillance this morning. >> gold offers more reasons for investors to belong right now, and really what i think the dominant driver has been is this structural support from the central bank. this is the primary driver in the safe haven notion, the hedge against inflation we think goes on top of it. we think this can take prices even above our 3000 forecast. romaine:romaine: we continue that conversation and some of that driven by monetary policies , some of that driven by central-bank purchasing.

he writing in his recent note that is forecast for gold for end of year 2025, and actually reflects a view that we still see a rise but at a more modest pace. we talk about how high and how steep that charge was for a good portion of the year. i think in maybe september you guys did kind of reduce your general overweight stance just a little bit here. where do you stand right now? neutral on gold, overweight or underweighted? >> neutral, and we anticipate it will go back the other way again in 2025. we do see friend of your 2025,

for gold adjusting down. a big part of that adjustment is we changed our view regarding where the terminal rate will be for the fed. at the end of september into october, we saw the peak for gold price near $2800 per ounce, and that reflected the view that the fed will cut to a terminal rate near 3.5%. since then we've seen much more conservative, hawkish views on the fed with potential return on inflation, and that is the key for us in terms of with a federal go from here. at this point it seems more likely the fed terminal rate will be around 4%, and that is why we adjusted our forecast. if there's a lot of uncertainty, we think that will create more traffic for investors. romaine: we kind of have to break this up as to why certain people by gold.

for some people is that protection against risk. others, you have to deal with the inflation implications of holding something like gold as well and then people allocating to portfolios here. what is going to be the dominant driver of buying and selling gold next year? >> i do think gold as an asset class is a diversifier. performance very strong in 2024. equity markets as well. and we seen a rise in the fixed income market as well. in 2025, we do anticipate market uncertainty, policy uncertainty with a new administration. the talk of tariffs and how that might impact global trade. all those type of risks could potentially change the valuation with equity markets, and also for the fixed income market, if the fed stays hawkish,

potentially we may see yield curve actually stephen further, and we may see higher yield on here as well. those types of factors really make the investment decision very difficult. we believe gold would be the best price to hold the value against the background of any potential market resets in 2025. kriti: so we talked earlier about the bull cases, let's talk about the bare cases. so much of the rally in 2024 was driven by retail demand in china as an alternative to the crises they had in that part of the world. we are trying to see the chinese consumer get back up their feet. does that help or hurt the case for gold? >> i think the strong demand that we saw from chinese individual investors came in the early part of 2024.

and during that time we've seen the property market with the perform very poorly. at the same time the equity market and lack of consumer confidence as well as concern about how to protect the investment really made gold very attractive. one thing we do like about gold, 2023 was an exceptional year. the big difference was gold buying in the second and third quarter. you are looking at data from first and fourth quarter buying gold. if that were to continue and we anticipate that trend to continue, that would be a very

strong floor of support for gold price. kriti: i have to ask you a bit of a leftfield question. so many people say that there are cases for gold come inflation, the uncertainty of 2020 five especially with a new administration. the same reasons that you would buy bitcoin, for example. could the rise of bitcoin and what you've seen this year undermined the case for gold or even provide an alternative to gold? is that a viable argument? >> it is certainly an argument and we've seen some anecdotal data that would suggest maybe some individual investors certainly have shifted their interest from gold to other digital currency and bitcoin, the biggest beneficiary of that. in some cases, i think the use of bitcoin in particular, we see

a lot of people concerned about potentials of -- and so on. i think for a certain part of the market they will always consider gold as the gold standard for value preservation. the individual consumers on the other hand, the investors on the other hand, i think that trend will continue to change and benefit. we do have a positive view of bitcoin as well in the forecast. that is really very much driven by in particular u.s. portfolios. romaine: we've got to leave it there. bitcoin camped out right around that 9400 level. managing partner over at dws

talking about the 27 percent rally that we seen in gold futures, slightly higher here. on the final trading day of the year ended the senate going into 2025. believe it or not, gold was not the best performing commodity this year. that belongs to coffee, that conversation coming up in just a bit. if you want to find the best and brightest minds in the world of finance you can find them right here on "bloomberg surveillance." a whole houston interviews taking place in this studio all year long and we are going to recap some of those when we come back. let's sit down with san francisco fed president mary daly. that interview when we come back. you are watching "bloomberg

romaine: welcome back to bloomberg surveillance. u.s. futures slightly higher on the final trading day of the year. .3% higher. a somewhat middling punctuation mark on what has been a phenomenal year. 20% plus gains. the rustle up 10% on the year and the dow up 12% to 13%. the biggest gainers on a year-to-date basis the mag seven, they are responsible for

almost 70% of the gains in the s&p 500. under surveillance this morning, we want to take a look at the u.s. treasury confirming it was hacked earlier this month by a chinese state-sponsored actor that breached the departments third-party software service. the hacker gained access to various unclassified documents. this is one of the most read stories on the bloomberg terminal. not only questions about this hack and what this means for the relationship between the u.s. and china. kriti: we have already seen that come to a pinnacle where the chinese embassy in washington is saying this is just the latest in a series of accusations from the american government to the chinese government that this is cyber warfare. denying this had any part in it. we should point out that this chinese hacker is not associated

with the chinese government. we are still waiting on details but this is something bringing a scare factor given the contractor they talked about also utilized contracts for $4 million with the likes of the department of defense, the veteran affairs office, and several others. romaine: the u.s. raised this ing those meetings in peru. this is something the u.s. is known about now coming to light and raising a lot of questions about just what information the chinese did obtain. in other news, president joe biden has announced a $5.9 billion aid package to ukraine. that includes more than $1 billion in direct military aid and billions more in support. this comes ahead of an expected policy shift with the incoming and ministration of donald trump said to be inaugurated on january 20. this is interesting development

because we have seen the biden administration try to rush through a few last-minute funding and supportive measures for ukraine before biden leaves with the expectation these things will not be supported by president trump. kriti: $1.9 billion of that total coming from the presidential authority that takes down u.s. stockpiles. this is the scare factor. i am sitting in london and this is what we talk about almost every day, this idea that in january suddenly nato, some of these european nations have to increase some of that defense spending, they cannot rely on american support. not just defense spending for their own countries, defense spending for ukraine as well. you can see biden doing anything he can but on january 20 there is not much more he can do. romaine: it is pretty clear what trump plans to do. what he said on the campaign

trail and the blueprint out of project 2025 does not bode well for that fight and a lot of this in the u.s. is being pushed by the first body, the man who helped get president trump elected. elon musk has turned his attention to europe and specifically germany and just a little bit earlier we heard from german chancellor olaf scholz denouncing not by name but basically making a mention of elon musk in his new year's address. for musk's support of the country's far right party. musk reportedly praise the party , writing an endorsement in a german newspaper. this is a relatively far right wing party and at least three chapters are designated as extremist organizations within germany. a little bit of a tit-for-tat -- i don't know if we call him a lame-duck president in olaf scholz and elon musk who has

outsized influence over the u.s. election. kriti: i think it is fair to call him a lame-duck especially since we have german elections in february 23. and for our global audience the afd party is far right but they are also advocating for things like getting rid of the euro, pulling out of the eu, a very vocal interview with our own oliver crook in europe talking about the fact that the eu is to blame for germany's economic woes. we will see if that has legs in 2025. kriti: a story -- romaine: we go back to some of the stories from earlier this year. projections ranging from more rate cuts to potential hikes. we had a sit down with the san francisco fed president mary daly earlier this month. here is what she had to say. mary: it is always about the data for me. we do not know what the incoming and ministration will do. new administrations always put a slate of programs together and

as a policymaker i want to see the net-net effects. once i see clarity about what those policies will be. i was focused on the incoming information and what it means for the outlook. today i feel like we have policy a good place, the economy is in a good place, and we are prepared for whatever comes before us. lisa: what happened in the past three months that because the fed and yourself to be much more concerned about the stickiness in inflation? mary: the data happened. you look at the data and there are two things that have occurred. the economy remains in a good place in the risks to the outlook are equally balanced between the risk to inflation or the risk to employment. we adjusted policy when we had confidence inflation was heading down and we adjusted policy to ensure we have a balanced labor market. that is where we are. the date on inflation has been coming in slower. i would not say sticky.

i would say the progress has slowed relative to what we wanted but that is a typical pattern. it is bumpy. from 2.5 to 2.8 it is a bumpy path. lisa: some people are wondering if there was this stickiness. i would say cleveland cpi has tipped up for december from november, there was this question why did the fed cut at all? mary: i get it. i will reassert it is bumpy. earlier in the year we had two months of data and people said it is really accelerating and then it came down. inflation data cannot focus on one month or two months. the most important thing is we needed to recalibrate policy. was 75 enough to be the recalibration we were looking for to meet the economy we expect or do we need more? ultimately i determined the 100 basis points was the right level.

now i feel we have the recalibration behind us and we are in the next phase in the next phase is looking at the incoming information. we can return to a more typical pattern of gradualism for the fed. we practice that with a lot of uncertainty. you adjust the policy rate and then you wait watchfully and you see what transpires and you make further adjustments. michael: from september the expectation in the markets was going into every meeting you would be cutting. has that changed? should the expectation be you will not be doing anything at any meeting and from that question flows a second question, what are the criteria that you need to see to decide to go back to cutting rates? mary: as you saw from the sep, the median projection is two rate cuts next year. that is not every meeting or every other meeting. i was very comfortable with that

and that makes sense to me. we have to remain agile. the thing that has got us here is being resolute to achieve our dual mandate goals. price stability was our focus when inflation was high. employment has coming to the frame. we also have to be agile. the world is uncertain so we pencil in two and as that projection gets further from when we made it the accuracy of it falls. we will continue to take in more information, consider it come in every meeting is live from the standpoint that you're debating the right level of policy. my projection is it will take many fewer rate cuts next year than we thought but i will watch the economy and see if that works out. michael: when we went into the cutting cycle you are out front saying you were concerned about the labor market and we needed to make sure we did not lose the gains we had.

now coming out of jerome powell's press conference it sounds like the focus has shifted to inflation again. are you comfortable with that as this new phase he is talking about? mary: i think of it as a new phase as well and i would characterize it slightly differently. freight long time -- for a long time we were focused almost entirely on inflation because the market was robust and inflation was 7, 6, five. then the raber market -- then the labor market came into the frame. after a long period of focusing only on inflation now we are focused on both. i see policy is already in that position where it is supporting both. if policy is restrictive it will bring inflation down and it will do so in a way that does not strangle the labor market or break it and give people lower price or lower inflation but take their jobs.

we are working towards that soft landing. michael: you have you -- jonathan: you have used the word we quite a lot talking about the federal reserve and chairman powell's performance specifically. one excuse that was given is maybe he was struggling to reflect a lack of a consensus on the committee. how much of a diversity of thought is there on the committee? was there some disagreement on the committee at this meeting. mary: i will not speak about the entire committee. when i say we i focus on the things we all agree on which is price stability and full employment. what i would offer is we have a healthy level of discussion and disagreement. you do not want and fomc that thinks exactly alike. i believe that what people are looking like is the fact that now the world is more uncertain and people are debating and bringing in their views and that is appropriate. when it was a pandemic and there

was only one direction to move interest rates it was obvious everyone agreed. when inflation was high there was no disagreement. now you should expect more disagreement, more differences of opinion but they are always framed to the same thing. i would get inflation to 2% and keep full employment? jonathan: when i hear the world is more uncertain, i say that is not about the data, that is about the new administration. mary: i would disagree. we have risks we always deal with. housing inflation. right now there is a substantial housing imbalance in the united states. the models all say housing will come down but we are uncertain about that. it has not come down as quickly as the models would have predicted so that is an issue. the labor market and consumer spending and growth are much stronger than people would've predicted at this point given the tightening we have done. there is a lot of uncertainty

about the natural rate of interest. where is stopping point? then there geopolitical risks, the risks to global growth. that will be the backdrop. then you have a change in administration. i would say this level of uncertainty is normal in the sense we have had all of those things going on and is not as excessive uncertainty about the pandemic, the financial crisis, because there was were big periods of uncertainty. if you are a central banker you get used to uncertainty. romaine: san francisco fed president mary daly speaking on bloomberg surveillance earlier this month. a lot more coming up this morning. a closer look at the price of chocolate. price of coffee sitting at record highs. what does it mean for you and traders? you are watching "bloomberg surveillance." ♪

i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. romaine: welcome back to "bloomberg surveillance." trading is then around the

world. a lot of markets in asia are closed as are several markets in europe, including in london -- in paris and germany. we talk about here in the u.s., the slight bid we are seeing into u.s. futures come s&p futures up .3%, potential punctuation mark on a 20 plus percent rally on a year-to-date basis. euro-dollar unchanged belying the strength we saw on the dollar. a 7% rally. the yield camped out around 4.5%. 7/10 of a percent on the day. we should point out the rally was sought natural gas futures yesterday, a 13% to 14% rally, down about 4%. that is where we start right now at this hour. a closer look at commodities under surveillance.

we talked about gold a little bit earlier. how about coco futures? up more than 70% year to date going back -- best performance going back to 1960's. searching on supply fears and that is driving the largest cocoa contract in new york -- coffee futures also higher. yet another record high for those commodities. "the outlook for commodities will remain sluggish next year due to a potentially strong u.s. dollar unless chinese stimulus changes that demand." kona joins us now to talk about that outlook. we have to start with what drove these phenomenal gains in prices this year. was that just about the supply and demand dynamics, was it about geopolitics?

what? kona: for the top-performing commodities coffee and cocoa it was definitely supply and demand dynamic. with coffee we had extreme drought, extreme drought conditions in the two major producing countries which is brazil and vietnam and in coco we had not directly weather related issues but certainly is the supply side where we had four yields in the ivory coast and ghana. old trees and dry weather. recently the winds in the west african region have come early so that is causing problems for crops. a combination of massive supply problems have hit both cocoa and coffee which means we have had tight deficits for numerous seasons in a row now. romaine: i am curious about this

idea about how the market adjusts to this. you look at the trajectory of prices, how fast they went up. we know the collateral requirements has caused a lot of issues for the brokers and the dealers. is that volatility? irrespective of where prices go, is that volatility going to be repeated in 2025? kona: the short answer is yes. the reason is because stocks are very tight. both at origin and also at the destination where most of the consumption is happening stocks are ridiculously low on a historic level. when you do not have that buffer , what happens is price have to give so you get extreme volatility because you do not have the necessary cushion and what is worse is these trees, both cocoa and coffee, their

plant is not annual crops like soybeans or wheat where when you have a good price farmers respond and plant more and you get a good response. with cocoa and coffee the supply response is very lagged. you will see a lag but may be in a couple years time. he will not get the supply comfort coming earlier and that is on the supply side. on the demand side we will not see immediate contraction in demand to address the supply demand imbalance and that is because there is rarely lesser demand for coffee and cocoa. people are not willing to give up their coffee and chocolate. it is a small luxury they are willing to pay. you have no movement on supply and demand in a hurry which then leads to volatility. kriti: i can certainly relate to

not giving up on the cocoa and coffee. talk to us from a trading perspective. the last time we saw moves in agricultural products it was a little bit of a hedge against inflation. but that still play that role? kona: yes. that is something that seems to be growing from a small point. what we can see is the hint of inflation be very sticky and not having to spin or if anything researching. if that starts to take off in a big way you can start seeing the world and traders becoming more aware. if we have inflation again, what do we do? in that context commodities become an interesting asset class again. as you know commodities are very good asset classes as a hedge against inflation. we saw that in 2020, 2022 just

after the ukraine war when everything went up, whether energy or food. we saw commodities as a complex pickup. could we see a repeat of that? potentially but nowhere near anything that extreme. we will see more of a stepien inflation which is definitely lower than two years ago but higher than what the central banks were trying. if that is the case you want to put money into commodities? i think people will pick and choose. things like gold mud be a good option because that is the safe haven demand and there's been no shortage of uncertainty and a macroenvironment. others will pick and choose based on the supply and demand balances. some of the soft commodities will do well because of the weather issue. you could start to see china stimulus starting to pick up. some of the metals could do well. arguably 2025, some of the

metals overran their fundamentals. copper took a hit when they realized china's economy is not as strong. if the stimulus does become better-than-expected and longer-lasting than may be metals could do better. i'm a little bit concerned about grains. grains look very well supplied and i think in the environment of tariffs and trade wars with china in particular you can see the cbot futures fall, grains and soybeans remain under pressure. kriti: so when we talk about this, i follow your fundamental narratives on if there is inflation uptick these are the assets that could benefit. is there a risk of folks that are not used to these kinds of commodity trading where the volatility you mentioned to romain as well almost hurting the way some of these prices work and are traded? i reference the moves we saw in

2021 or 2022. so many people who did not traditionally trade commodities ran to the asset as that hedge. do you see a risk of that in 2025? romaine: i think -- kona: i think we will not see a rush to commodities like we saw in 2021 and a big reason why is the dollar is strong. commodities have a natural inverse correlation. the fact we are going a very strong two-year high in the u.s. dollar index is the dollar will remain strong in 2025 because of donald trump's policies, which are all inflationary which will be supportive of a stronger dollar. if we do have an environment i think it will be harder for commodities. that will be the biggest headwind for commodities and therefore you will not see a broad-based increase in the commodities asset class as a whole. as i mentioned before i think people will selectively choose

which markets to go into. even oil has been pretty stable for 2024 as a whole. if iran were to see increased sanctions or russia then suddenly oil could be interesting due to geopolitics. this year oil did really well despite numerous tensions around the world. oil took it all in stride but iran could be another issue of supply would be impacted there. romaine: going to have to leave it there. kona hague, a closer look at the commodity space. losses in the energy space but some of the metals in the energy space and the soft commodities having a year. conversation coming up with brooke may. we will talk to jason baumgarten. i don't know if you've been taking look at all the ceo departures but jason will have perspective on whether we see a repeat in 2025.

a conversational global energies and if you bought luxury real estate in florida you probably bought it from one of our next guest. all of that and more coming up on bloomberg surveillance. ♪

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>> the market is seeing the economy is not week. >> equity risk premiums are narrow. >> i'm not sure the markets know what to expect. >> there is a lot of momentum still to be had, particularly in the first half of this year. >> as goes january, so goes the year.

>> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. romaine: 7:00 in new york, 1:00 in paris, midnight in the fiji islands. happy new year to our audiences worldwide. romaine bostick in our world headquarters in new york, kriti gupta in london. as we take a look at financial markets closing out what has been a phenomenal year, the s&p headed for its fifth straight quarterly gain and that will cap a 24% rally on the year. put that together with the rally we had last year come the best back years for u.s. markets back to 1997-1998. kriti: a pretty decent stat. in the last couple of hours it feels like the sentiments around the market have changed. when i came in for the morning shows in london the markets were down hard. you've seen the sentiment completely evolve in the future story. deep in the red and now into the green. romaine: it is interesting we

talk about what led the rally. starting the year was about big tech companies. some of that was a play on technology but a lot was a play on fundamentals, on cash. then we saw the rally brought in out in the u.s. and now it is narrowing once again towards the end of the year. kriti: real shock to me was how the market sold off around the fed story. the fact that some of cuts were priced in when i attributed it to the trump trade or the broadening or even the economic resilience you saw in the data. there were still so much monetary policy they could do a market that did not eat it. romaine: monetary policy was a big part of the story this year. even if the fed does not do anything that could be a big story in and of itself. a conversation up ahead with brooke may at evans may wealth on why she says the market may be overdue for a correction.

and we will talk with jason baumgarten at spencer stuart on the record number of u.s. chief executives who left the corner office. and pavel at raymond james will be talking about his outlook for oil and renewable energy. let's begin this hour with a closer look at stocks which are on track for their second straight year of 20% plus gains. 10 stocks accounting for more than 59% of that advance, going back to the s&p bottom back on october 2022. new york university finance professor spoke to bloomberg a little bit earlier about the narrow breath we have seen in this market. >> i have never seen a group of companies carry a market for as long a period as the mag seven. the mag seven companies alone, if they were a market would be the second-largest largest equity market in the world after

the u.s. equity market. these companies are cash machines. i've never seen cash machines as lucrative as these companies. i do not see the cash machine slowing down. romaine: we go from one of the brightest minds in finance to one of the other bright minds in finance and that is brooke may at evans may wealth. we start off with what the professor was talking about. two sides of the coin. you do not want to see the tide concentration in the market. on the other hand a tight concentration of companies pumping out cash at levels we have never seen -- i cannot think of any parallel other than going back to the robber baron era at the turn of the last century brooke: brooke:. absolutely. when you look at stretch valuations, which there has been a lot of criticism in the s&p 500, a lot of those higher pes are attributed to those top 10 stocks.

when we look at earnings growth rates they are strong. you want companies grown their earnings that can justify higher p/e ratios. when we looked at big tech going into 2024, earnings were expected to be up 28% where is the other 493 names were only expected to have earnings growth around 7%. going into 2025 the narrative has changed. big tech earnings are expected to be up 21% but the other 493 names are expected to be up 13%. we are seeing a broadening in participation. if you peel out those top 10 names the p/e ratio you have on the market is much more reasonable and in line with the five and 10 year averages. kriti: that suggests -- romaine: that suggests we could see a meaningful extension of the rally and that suggests we may not see pullbacks in between. i am curious what you think the biggest risk for the market will be next year? brooke: it is an environment

that is good to be an investor. we have low unemployment, we have deregulation on the horizon , we have an economy that is growing. our base case is the market will do well. there are quite a few factors we are looking at and summer policy related. that is another reason why the fed will be cautious. we want to wait and see, president trump has been vocal about what policy initiatives he wants to take and their concerns around what tariffs might mean for the economy where what deportations could mean for the economy. we are ready to pipit if it looks like there factors at play that might be somewhat of a speed bump for the market. kriti: if i can ask you a more sector specific question especially around the policy story, i feel like a key part of the biden trade was the chips act in this massive move you saw in the chip sector not just driven by the ai story or the tech story but actively was

because the federal government was granting funding to so many of these companies. you saw that in the trump trade as well, almost a biden unwind from that sector. is that the right approach when it comes to how you stop pick, what sectors the federal government funds at the end of the day? brooke: not necessarily because that can change. we are looking for companies that have long-term sustainable earnings growth. the ones we like right now, nvidia, broadcom, taiwan semiconductor in hardware we think can do well regardless of subsidies. that said, we are shifting focus more towards companies who have also embraced ai but are doing it from a software standpoint and have been able to show their customers and their clients they can be accretive to their earnings and help grow their businesses with additional services and products so we are looking at companies like

service now and salesforce using more of the software side in addition to the hardware. kriti: some of the companies you just named are all sitting in a lot of cash on their balance sheet. as a long-term investor how are you thinking about cash on balance sheets? is that something to be deployed or uses a cushion for policy uncertainty? brooke: when we look at ceos and what they are telling us, the sentiment is ok. it is not overly optimistic but it is ok. when they tell us where they will spend it is in capex, r&d, we expect capex and r&d spending to be up 8% to 9% over the next year but we also see m&a activity and share buybacks and increases in dividends to be more of a commitment when it comes to their spending. we think m&a spending could be up 20%. dividend increases could be up 7%.

there is a lot they can do with that cash we think will be beneficial to investors and they are planning on deploying yet. romaine: to wrap this up, i am curious, because we talk about the challenges for 2025 and it goes beyond fundamentals. geopolitical issues that frankly still have not been resolved. do you think there is enough hedging in the market right now? this is been a big topic not just amongst traders but even long-term investors. our people protecting their portfolios against those potential it was option is shop? -- potential exogenous shocks? brooke: i don't think they are. i have seen the tech bubble burst and i've seen the great recession. this is an environment where investors have made money for several years. we do not see an overextension of margin and leverage, which typically to see a bubble burst

or a big correction you are in an environment where you do not have cash and you have a lot of margin. we are not necessarily overextended but i don't know that investors are taking a cautious approach right now. romaine: we will leave it there. brooke may at evans may wealth. we thank her for her time. it is interesting to talk about this rally in the s&p 500. 1.5 trillion dollars in market value added to the s&p 500, yet there were just about eight people who accounted for 43% of that. is elon musk and mark zuckerberg and jensen long, the wealth of those eight folks going up $600 billion this year alone. kriti: what is surprising is their wealth affects everyone's wealth via the stock market. if you're talking about the bromance between elon musk and donald trump. this brings me back to when elon musk bought twitter and it actively affected the s&p 500. if that bromance dissipates does

the stock market drop? romaine: that is a big part of the question. we talk about these singular individuals and house in much of their fortunes will be tied to some of those policies coming out of the white house. let's get you an update on some of the other stories going on this morning. yahaira: cities around the world are preparing to ring in the new year with celebrations highlighting local cultures and traditions. in new zealand they have already welcomed for a 25 with the light display recognizing the city's indigenous tribes. at 8:00 eastern sydney, australia will ring a new year. authorities are investigating airport security at the site of the crash as questions grow about how a concrete wall at the end of the runway may have contributed to the disaster. international safety experts questioned if the crash was made

worse due to the position of the structure and being made partly of concrete. online ticketing platforming platform vivid seats might be considering a takeover -- shares jumped on the news but are still down one than 26% this year. sources say the company's deliberations are ongoing and there is no certainty it will lead to a transaction. vivid seats said to stop comment on rumors. that is your bloomberg brief. romaine: ask for that bloomberg brief. i'm not sure if you planned to go out on this new year's eve over there in london but there was interesting poll in the u.s. shown the majority of people just stay home. kriti: i think that is what i am going to do, me and my dog watching the fireworks on tv, that sounds like a dream. romaine: i am one of those people. we are going out but we are not going out tonight, we are going

up in the afternoon and will be home well before the fireworks and all of the festivities start. but it gets to this idea of how much of this holiday is a revenue generator. i know there are a lot of folks in new york who want to go out and brave the elements to see the ball drop or duet between nightclub and restaurant if you will. there are some of the people who decide it is not worth it. romaine: absolutely -- kriti: absolutely. here i am learning about we are traditions europe has. i learned today that in germany they take little lead or wax figures and throw them in water and see what form they take and that is a fortune teller of what their new year will be like. i have about 20 more similar examples. romaine: back in the u.s. we have our own traditions as well. as we ring in the year around the globe, closing in and a little bit will start to see russia move on to the midnight

hour. vladimir putin already out with a statement in his new year's address marking his 25 years in power, what he is calling his proud achievements. vladimir putin will be a key figure in the news heading into 2025 given the war in ukraine and his relationship with the incoming president of the united states of america donald trump. when we come back on bloomberg surveillance we will take a closer look at the c-suite and dive into the reported uptick in ceo departures. record levels this year. jason baumgarten of the leadership advisory firm spencer stuart will be joining us to talk about what is behind the trend and whether it continues. you are watching "bloomberg surveillance." ♪

romaine: u.s. futures pointing to a slightly higher open.

s&p 500 up on 4%, a punctuation mark on what has been a 20% plus rally on a year-to-date basis. similar percentage gains for the nasdaq on a year-to-date races for the dow and the russell. gains on the year around 10%. most markets have started to shut down. quite a few in asia are already closed for new year's eve holiday, some in europe as well as we approach the midnight hour across the world. euro-dollar unchanged. the 10 year yield in the u.s. camped out around 5.5%, unchanged on the day as well. in uptick for wti crude in new york. .9%. despite the fact that on a year-to-date basis it will end the year unchanged. oil, energy, and commodities were some of the big stories of the year. another big story this year is the number of ceo departures.

here is the latest on that. record numbers of cheap executives at public u.s. companies are reportedly leaving their posts amid increasing scrutiny. jason baumgarten of leadership advisory firm spencer stuart saying it is hard to draw meaningful conclusions about why ceos are leaving their jobs from brought statistics alone but at spencer stuart they believe you need to understand the three c's, the ceos themselves, the company they were leading, and the context in which they were operating. jason baumgarten joins us now. i want to start with the third c, the context. has the job carton too hard? -- has the job gotten too hard? jason: from a co you can be expecting global tariffs or a boon from ai so depending on what situation a company finds itself in, what is going on in the industry or how is the puppy responding is certainly something that matters.

context is about the industry but also about how that company has historically responded. does the ceo have a plan and how was the plan seeing results they and the board of directors want to see? romaine: i am curious about these statistics. i don't know if we have a breakdown about how many of these departures were willful and how many were folks forced out. when you look at the trends yourself, what you get a sense of? is this the board saying we need a leadership change or is this the individual ceo saying i would rather do something else with my time in my life? jason: is a great question. the reality is it is all of those things and more. in some cases ceos are saying this say tough job. there is a lot more media scrutiny. there is a lot more attention. there a lot of stakeholders to make happy and it is harder and harder to eke out performance. so much is driven by so few companies.

it is harder for ceo to see the value creation under this and have increasing pressure on them as individuals. some are just saying i have done well, it is time to let the next person lead. the context is changing, let's have a changing of the guards. in other cases the boards are saying we want a different rate of performance or we want a different change in direction, whether they are doing that under the scrutiny of other stakeholders. we see boards taking action faster. our own studies on the topic, the faster boards take action more likely the company is to perform well after a decrease in performance so it is sensitive for a board to take action. other ceos are saying it is time , i delivered a lot of value and it is time for next generation. i had a ceo recently tell me they retired at 60, they were thrilled, they were taking their first real vacation in 45 years

and they said they were getting their knee replaced going for a hike and hanging out with the family for the first time in their professional career because they've have been fully on 24/7 for 40 plus years. kriti: that is quite the run for that person. i am curious about the approach ceos use. i am curious if the limelight is something that helps or hurts their case. i am thinking about jamie dimon, tim cook, mark zuckerberg, who may be could benefit from the spotlight but bring about more scrutiny as well. how do you think about that? jason: we often focus on a few individuals but the reality is there are 1500 ceos in the s&p 1500 and 500 and the s&p 500. a lot of leaders trying to do this to drive value and employee satisfaction, to drive satisfaction in their communities.

they'll have to think about how to yield the public persona carefully to make as many people happy while still delivering on the fundamental values they are trying to deliver on for stakeholders and shareholders. kriti: we are on a financial network so i have to ask you a question about buybacks. this has been such a point of contention for 70 people when it comes to do ceos just want to see their stock rise when it comes to compensation and buyback and shareholders? how do you think about that? jason: increasingly boards have to think about are they seeing the value creation they want from the ceo and is it following the plan the ceo put forward and the management team is executing on. if they are seeing results, sometimes those are interim things whether it is revenue increase or margin increase. those do not always translate right away or in obvious ways. the board has to be the go-between to say they are seeing the results they need

from the ceo and the management team on behalf of shareholders that will ultimately read to shareholder increases. part of that plan is to buy back shares and that is something they will evaluate. if they see that as part of the plan they are not as happy about than they will ultimately value that as part of the ceo and management teams evaluation at the end of the year. romaine: we talk about some of the ceo departures in the context of those folks who are done with the job. there is the opposite effect. you have transition issues with certain ceos that are long and the tooth and have been in the job for quite some time. not to say they are not doing well but there a lot of questions as to what is the transition, whether you're talking about jp morgan or disney. i am curious as to how proactive these boards are in making sure that for some of the ceos that have been in place for a long time that are getting to an age where you have to start thinking about who will come in next, how

much influence they have to make sure there is an orderly and smooth transition? jason: we do a survey every quarter call the metric of leadership. we ask 2000 ceos and board members what is going on in their companies and the general context. two things that stood out to us. boards were unanimous that the amount of uncertainty in the economy -- both groups said it is more uncertain. the second thing is that in light of that only 50% of boards reported they had robust succession plans in place and many of them when pressed on the topic said they would not have multiple options which is what we look for his does a board have multiple options. the final thing we are seeing is a trend away from it has to be an internal candidate as a badge of success. the reality is boards should look internally and externally at their candidate pools and make sure they are doing all of that diligence before the time comes.

finally it takes real work and it is uncomfortable work for boards to ask these questions of ceos, many of whom have been in the seat, the average is 80 plus years. if you've been on the board for eight plus years you have to say does the strategy change. on text change for the ceo that the prior ceo do not have to wrestle with. romaine: are those skills still transferable? in the past we talked about the idea that being a ceo is all about management. if you managed a food company you can manage an industrial company, it is just management. is that still the case? jason: we are always seeing industry shifts. the reality is that is a slightly scarier thing for a board to do but it can work in ceos who are great people leaders, who are great at thinking about how to create value and graded asking the

right questions, great at recruiting talent can usually drive value as long as they're willing to put the extra cycles into learn what they don't know and bring that beginner's mind to learn about the industry if they are shifting industries. romaine: jason baumgarten at spencer stuart, the leadership advisory firm. a closer look at the record number of ceo departures this year at least based on the tally we have seen coming out of challenger gray. one of the hottest sectors to start the year was energy. to end the year it is one of the worst performance. that conversation coming up with pavel molchanov at raymond james. where is the renewable energy trait? the sun coming up over new york. this is bloomberg surveillance. ♪

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romaine: s&p futures pointing to a higher open, looking to snap a three-day losing streak on this final trading day of the year. s&p futures higher .4% on this day, well off the record highs set on december 6 but still punctuating a year that is now a gain of roughly 24%. nasdaq and russell futures moving higher this morning, equity futures across the board are in the green right now stop yields across the board are lower. volumes are light on this new

year's eve but we did find a couple of stocks worth watching on this day with just about two hours away from the cash open of equities. let's get to our morning movers. yahaira: we start with sand camo therapeutics down more than 50% in the three markets -- in the premarket after pfizer decided to end its partnership with the company for a to end hemophilia. there is none of interest for another gene therapy option for the disorder. as to why the shares are plummeting, that is because analysts are warning this could worsen sangamo's liquidity issues. microstrategy shares are rising 4.7% in the premarket and that is after the company which has been stockpiling bitcoin says it is buying more, $209 million worth and that is less than the amount it bought over a week ago. as to why the shares are rising,

it was part of the text a lot yesterday but it looks to be making up some of that. you are seeing bitcoin prices rising today and we know where bitcoin goes microstrategy follows. last up we have tesla. those shares are up 1%. they also sold off yesterday but look to be on the mend today, even though we have a report that tesla is recalling more than 77,000 vehicles in china due to software issues and even potentially faulty airbags. something to watch out for is the company is said to report fourth-quarter and full-year deliveries and that is said to come on thursday. romaine: phenomenal year for tesla. 68% gain in that stock on the year. microstrategy, a phenomenal year come up almost 400%. one of the best stocks among the dow and biggest performing companies in the u.s..

we want to turn our attention to commodity spaces, specifically energy. oil markets higher in the last trading session of the year after we got a report that factory activity in china did expand for the third straight month. poppel mulch and of at raymond jame -- pavel molchanov is looking at oil prices to be largely range bound but the main energy story of 2025, which is also the main story of 2024 is set to be electricity rather than oil. pavel joins us to talk more about that. let's talk about it here. if you had told me coming into this year that the biggest gains in the equity market would be power companies i would've said you are crazy but here we are at the end of 2024 talking about utilities and power companies. that continues to be the story next year? pavel: this is the derivative trade on ai. the euphoria around ai touches

what we might call the picks and shovels of the electric power industry. the utility stocks, the equipment provider, so everything from gas turbines, wind turbines, solar panels, battery systems, and also the construction companies that are physically building all of this energy infrastructure to accommodate the boom in electric power consumption. romaine: we talk about the building of this infrastructure and you have new infrastructure in the u.s., you have old infrastructure coming back online. is there enough out there for these companies to draw on or are we going to be facing significant shortages in power given some of the demand needs we know of, at least when it comes to computing and ai? pavel: our listeners do not need

to worry about physically running out of electricity at any point in the foreseeable future. that is not going to happen. what is true is power prices are already trending up. they have been up since pre-covid by about 25% and we should expect power prices to continue moving higher, in part because of the additional demand from the data center buildout. let's also keep in mind the geographic differences. the bulk of the data center or the largest portion of the data center buildout is happening around washington, d.c., northern virginia, maryland, a little bit into ohio. there is not as much happening in the u.s.. there is also data center buildout in europe come in parts of china.

this is a global story. northern virginia has the largest portion. naturally that is where the infrastructure needs to move forward at the fastest pace. kriti: when i first learned about how utility grids worked i was surprised to learn you can use oil and natural gas and sometimes natural gas can be cheaper and utility grids as well. there is a big conversation in the u.s. about exporting extra natural gas and lng to europe. if you see this buildout in the u.s., to those flows get redirected? pavel: natural gas going to europe will be limited, not so much by the ability of american gas producers to pump as much as they want, but rather by europe's need to import lng. here is why i say that.

since russia invaded ukraine, europe's consumption of natural gas is down by 15%. i'm not talking about down 15% from russia. that is practically at zero. overall europe is using 50% less natural gas. that means less need for natural gas from any source. u.s., qatar, norway, azerbaijan, and so forth. that is where the use -- that is where the restraint will come from. kriti: there is no necessarily relationship between the natural gas needs of europe and other folks in the united states versus say the ai buildout? pavel: we have plenty of natural gas in north america to do both. natural gas will certainly play a role, particularly in the eastern half of the u.s. to support the data center boom.

in the western half of the country, ai is less of a factor. keep in mind we also need to replace coal plants being retired and this is why we will be following and all of the above strategy the electricity mix. natural gas, wind, solar, and in certain cases and with long lead times, nuclear as well. romaine: i am curious that do you think in the u.s. government policy coming out of this new administration will be supportive of some of those renewable energy initiatives like wind, solar, nuclear? pavel: the number one thing we need to understand about government policy as it relates to electric power is it is predominantly at the state level rather than the federal level. electric utilities are regulated by state level utility commissions.

there is a little bit of a role played by the department in washington but number one is the state level regulations. here is an interesting fact for some of your listeners. 29 states have a renewable portfolio mandate for electric utilities, including some red states like texas, missouri, and montana. romaine: it'll be interesting to see whether that holds and how that interplay between the states and the federal government goes forward. i want to ask you a much more straightforward question about the oil market and the mobility of oil. obviously there are a lot of concerns about geopolitical issues at the disruption of flows of oil. you have the wars going on in the middle east and elsewhere that have also disrupted the flow of oil. do you see any rightsizing in that next year or are they

issues that will remain lingering for a good portion of the year? pavel: for the past 12 months we have had two major wars, russia and ukraine and of course what is happening in the middle east. despite that oil prices have barely moved since january 2024. why? because we also have to take into account what is going on with demand and demand has been weaker than expected because in large part because of china. the number one question for next year is not so much geopolitics, it is good old-fashioned supply and manned. what is going on -- supply and demand. what is going on with the economy and electric vehicle sales? have of china's auto sales are now electric. we are also watching the dollar.

there's commodity prices across the board, and the third thing we are watching is opec. opec has been very disciplined since covid with supply. at some point in 2025 opec will begin to unwind its production cuts, which means more barrels on the market, and that may put some pressure on the price of oil as well. romaine: great stuff. pavel molchanov at raymond james. a closer look at the energy market. we continue our coverage on "bloomberg surveillance." a look at some of the big stories of the day. let's get your bloomberg brief. yahaira: mortgage finance giants fannie mae and freddie mac saw their shares jumped over 30% by yesterday's close, sparked by a post from bill ackman that spirit optimism the companies will be released from conservatorship under donald trump. the u.s. government fund created

to compensate victims of bernie made off announced its 10th and final distribution this week. the government paid out $4.3 billion to 41,000 people, schools, charities and pension plans were swindled by the steam. 50 him's recouped an average of 93.7% of their losses. -- victims recouped an average of 93.7% of their losses. hollywood seeing a late year surge at the box office. sales were $8.66 billion. the three-day weekend total of 165 million dollars was led by disney's mufasa, paramount sonic the hedgehog three, and nosfera tu from focus features. sales are still below 2018, the year adventures admitted he wore -- the year avengers infinity war and black panther came out.

seems like a lifetime ago. romaine: i've not seen any of those movies. i need to get out more. coming up on the high cost of owning a home. >> in 2025 we are expecting mortgage rates will be volatile, but they are probably also going to remain high. romaine: there are a lot of people out there who are concerned about the cost of buying a home in their folks who do not have any concerns at all. a conversation on the luxury real estate market. if you bought luxury markets -- if you bought luxury properties in florida anytime soon you probably did from one of our next guest. that is coming up here on bloomberg surveillance. ♪

romaine: welcome back to "bloomberg surveillance."

futures pointing to a slightly higher open. volume will be light as it typically is on the final trading days of the year. s&p futures up 3%. the potential cap to a 20% run on a year-to-date basis. not much action in the fx space. euro-dollar unchanged at the moment. yields 4.5% is where we are looking to close out the year. not where most people expected. we came into the air with expectations to be a lot lower than 4.5% and by midyear rates for us -- expectations were to be a lot higher than 4.5%. we split the difference in a narrow trading range and that is what you get for the energy market. oil futures in new york, wti crude 71 and change. appoint 3% on the day. -- up .3% on the day. energy has been a big story. so has been real estate and the

potential rebound we have seen a lot of those markets, particular in the high end market and that is under surveillance this morning, the high cost of owning a home. >> mortgage rates for the last couple of years has bounced around a lot but they have generally stayed pretty high and we are ending the year with pretty high mortgage rates. as we are looking into 2025, what we are expecting is mortgage rates will be volatile, similar to what we have seen but they will also remain high. we do not see a lot of room for rates to fall. romaine: despite those high mortgage rates, luxury real estate is booming. according to global luxury real estate brokerage the agency, those whom sales rose just over 5% in the first half of 2024 while overall home sales dropped 13%. data: tire is real estate --

dina's real estate agent and one of the biggest brokers in the south florida area responsible for billions of dollars worth of sales. i would assume your clients are not too concerned about mortgage rates. they will buy whatever they want to buy. i am curious about their sentiment. are they feeling better about venturing into these purchases, better than what they would've been a year or two ago? dina: two years ago they would've felt exceptionally good. 2022 has proven to be the peak of the post covid market and my neck of the woods. they still feel good about making a purchase that helps them establish roots in this exceptional city. romaine: we talk about this exceptional city. we would be remiss in not pointing out the huge migration of folks from places like new york and other parts of the country to miami.

we kind of colic wall street south now. a lot of demand for housing. is the supply there? dina: the supply is definitely there. during covid if you flew in i would have three homes to show you and you would be making a full price offer on one of them. now i have 10 homes to show you. buyers feel better because they can have more selection and they do not have to give in to every whim of the seller. there used to be this commonplace term i would have to add into my contracts that would allow a seller to stay back and have your money, use it to buy something else and rarely pay you rent. as we approach 2025 fires do not have to offer those terms to sellers, things can be more normal. kriti: talk to us about that dynamic romaine was talking about. mortgage rates there is elasticity.

our using changes and leverage people are able to take out or used to finance some of those? dina: in the $440 million in sales i did this year, zero had financing. kriti: that says something. talk to us about the kind of clientele. romaine was talking about new york to miami. what about international buyers? are they driving up those prices? dina: the biggest international buyer are the canadians and we tend to loop them in as one of us but they are the biggest international buyer for my business. romaine: i love the canadians, but they are not one of us. they are very nice. i am curious going back to miami. i have been to miami many times, i've been to all of the neighborhoods except one but i've never set foot in indian creek. one of the most exclusive real estate enclaves in the country or not the world.

what is going on there? jeff bezos is building another mansion. is it their property someone is snatching up for a couple hundred million dollars? what is going on? dina: indian creek is the sexiest destination in the country. i've had the pleasure of selling several homes there. jeff has put it on the map. tom brady was there before. he is always posting on instagram from his beautiful backyard. it is really spectacular. it is like nothing else. it is billionaires bunker but it has also gotten younger. the buyer for indian creek is no longer someone in their 70's or 80's. you have plenty of owners in their 40's on the island and it is an incredible place and i would love to take you there if you're ever in town. romaine: i may take you up on that at some point. it is interesting you talk about the younger buyers. i am curious as to whether the younger buyers -- we are talking

wealthier buyers -- whether they gravitate to the same neighborhoods the older money did? you saw a big transition to new york for the upper eastside was the bees knees for everybody and then you had this new cohort of tech entrepreneurs and other people who said i would rather be downtown in tribeca. you see the same trend in miami or are they gravitating towards those old money enclaves as well? dina: that is an excellent question. i've never heard of that juxtaposition but we definitely have that. you have the people they would choose the upper eastside in new york, they tend to gravitate toward surfside. you have people who would choose tribeca or soho and they gravitate more towards the south beach area. the tech money love the venetian islands. to answer your question new money loves the same thing is old money. they love indian creek, they love being there in their 40's when it used only be for people in their 70's or 80's.

luckily we have enough of a buyer pool to support incredible neighborhoods. romaine: great stuff and you have some great insights into what is going on down there. $3 billion in sales since 2021. $450 million just this year. congratulations on your success. dena: taher -- dina goldentayer. one of the biggest sales down there was the beckham's. a property they purchased on northbay road. what i love about them? are they british? are they one of you now? kriti: mi british now? can you tell by the accent? i don't know the british would want me. it is important to keep in mind it is not just the beckham's comet is lionel messi as well. he has driven property prices up. i hear he is making some of his

assets into a rate as well. something is going on with miami. then i hear some of the people are leaving for austin, texas or seattle. what is the new miami? romaine: i wish i knew. i wish i got in on the new miami when it was the old miami or the new austin when it was the old austin. it will pop up somewhere. speaking of the wealthy and celebrities, you know brad pitt and angelina jolie got divorced? it was surprising to me because i thought they got divorced 10 years ago but apparently this is been an eight year long divorce process and has now just been finalized and is basically going down as one of the longest and most contentious divorces, at least according to the associated press. kriti: we are finally talking about the stuff i want to talk about, the real news you can use. i think i know way too much about this custody battle in this divorce that i should because i believe a winery was a big part of the conversation, a winery they had joint ownership

of. i admit they have not landed -- i have not read into the latest of who got the winery but it was a very contentious piece of property. kriti: anytime sue have these types of celebrities and the type of assets it is a bit complicated to sort it all out. eight years? we have a lot more to talk about on the big program. i want to say, kriti will be leaving, i want to say happy new year to you and thanks for being here on bloomberg surveillance. the final hour will be taken over by sonali basak but we will talk plenty next year. we say goodbye to kriti gupta. stick with us on bloomberg surveillance. a lot of big guests ahead including danielle dimartino booth talking about the future of the fed. a ball drop in new york city and a focus on security. a conversation with former nypd commissioner ray kelly.

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>> market is seeing that the economy is not week. >> we are getting to a point

where risk premiums are not -- are narrow. >> i do not know what to expect or the markets know what to expect. >> there is still quite a lot of momentum to be had in the first half of the year. >> as goes january, so goes the year. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern were in. >> midnight in sydney i australia and happy new year to our audiences worldwide and good morning. this is bloomberg surveillance. romaine bostick in new york and joining me for this hour is sonali basak. happy new year. people already celebrating around the globe and you have big plans? sonali: i do not have big plans so my parents are in india and they will be celebrating soon. i do feel sentimental. romaine: i stay up to midnight and i am on the news in the early. we are going out the afternoon

and my whole family will have a little bit of fun. and hopefully i can get to bed. sonali: i will be in bed the minute after the clock turns in the new year. romaine: a lot of people are in bed and the volume is light in u.s. markets here with just an hour and a half until we get the cash session. let us check in on futures. stock futures up .2% and a similar boost on all the other futures as well. the dow, nasdaq and russell 2000 and interesting punctuation mark on a market sitting on sizable games. -- gains. 24% rally on the year. that matches the gains that we saw last year about 24% and that is the best two year gain going back. sonali: a historic run and we remember what happened going into the new year you have some jitters. the s&p 500 breaking those three days of losses with a significant selloff. if you told me we would be

sitting here on the last day of the year and the 10-year yield was more than 10 basis points lower than friday, a tremendous bond market volatility in addition to stocks. romaine: think about it at the beginning of the year or a year ago. what is the most surprising story, the record boost in stocks? nonrecord moves in commodities? was it what we saw in the treasury space and the vix and the fact that it did nothing? sonali: bitcoin 100, would you have put that on your bingo card? romaine: i was ready to start talking about bitcoin and all of a sudden they are back. now sitting on a 100 percent gain on the year-to-date basis, 100% gain the previous year and a lot of folks think that they can match that in 2025. sonali: everyone is setting up for a new administration. you saw bitcoin tearing off the heels at the fcc will be lighter and we will see. everyone is preparing with --

preparing for inauguration. romaine: a lot to talk about in this final hour. matt and john hancock will be stopping by with where he sees limited upside. tom fitzgerald will provide his 2025 outlook for the airline industry. the airline and travel stocks have had a phenomenal year. and we will talk to ray kelly about keeping everyone safe as the city of new york year is up for the big new year's eve celebrations. have you ever done the ball drop? sonali: i have not. i have watched it safely from downtown or uptown, wherever i have lived. i am out of the city this year. romaine: i sought before the security ramped up after nine -- 911 in oklahoma city. sonali: what year? romaine: i am older than i look so i will keep that close to the chest. i will not be going out but for all of those braving it we wish you the best.

we begin with equity futures sitting on modest gains with stocks hoping to snap a three-day losing streak on the final trading day of 2024. the s&p having a wonderful year, a blistering year. the index up 24%. matt of john hancock seeing a limit to further gains writing " it will be hard for equities to stomach much more upside. while we still prefer u.s. equities based on fundamentals, we recognize that the magnitude of outperformance in 2024 is not likely to be replicated." matt joins us to talk about that output. maybe we do not see the same gains in 2023 and 2024, but should we expect some meaningful gains in 2025? matt: it is possible. but what we are seeing is heavy is the crown for u.s. equity leadership and u.s. economic leadership, frankly. after certain stints like this

where the u.s. economy has blown past most low -- most global economies u.s. dollar strengthens a lot. up 6%, 2024 and a stronger dollar makes us less competitive and it helps us bring down inflation because we are buying stuff from abroad. it is difficult to's dumbest -- to stomach for economic purposes. then we have rates higher on the economic year and that is a bit of a slowdown with massive expectations out of the u.s. economy and markets into 2025. the earnings estimates for the s&p 500 are still about 15%. there is a lot of optimism. one of the biggest -- assets that they have had has been conservative and more kind of bearish sentiment. the sentiment dial has been turned up significantly to end 2024. we think that is a bit of a liability into next year. romaine: that is what i'm

confused about. how crowded some of the trades are and the lack of hedging into equity space and the idea that you have valuations for some of these companies by historical standards and there are some people who want to reinterpret history. what do you do in that situation? do you reallocate or stand by your position that those stocks can go higher? matt: momentum is not a fundamental factor and momentum was the number one way to help warm and the only way to outperform in 2024. what is momentum? you look at the best-performing stocks and allocate most of those. basically chasing performance was rewarded. to your point, there are other things that drive stock markets whether it is valuations, or earnings. and those parts of the market have been left behind this year. there is a bit of the dogs of the dow type formula where the

worst performers can sometimes become the best performers and subsequent years. ending this year the dogs of the dow mantra looks more realistic as a potential turnaround or catalyst into 2025 because we are so stretched on valuations. we are at 20 of two times on the s&p 500 and the highest in history. the last 30 years has been 24. 9% upside on valuations and earnings estimates are great and dividend yields are the lowest in history. it is hard to eke out gains and the more better value stuff. sonali: why do you believe that in the essence of when you see selloffs happening you are seeing a lot of babies thrown out with the bathwater. and if you believe that some of these underperformers can come back next year, how much of a risk is there that just risk appetite alone goes along with a? matt: that is the tide that lifts all boats, the risk

appetite. into next year there it -- it is hard to get valuation upside. it is not calling that they are bad companies and will never see this performance. it is just saying that the multiples could expand in mid and small-cap versus large-cap. international has been at the top performance. european equities up to percent. they are very cheap still. we could see a rotation or i would say downside protection because valuations are so much more attractive. we are just trying to manage risk the best we can and frankly the high flyers do not look good to us because the valuation and part of the value space is not as good. we are trying to find quality at a reasonable price as our mantra. sonali: is the best way to hedge the equity market the equity market? if you look at the volatility in

the bond market is not a place to hide? matt: we think it will be, inflation is likely to come down and inflation is the numbness -- nemesis of that bond market correlation that has not been around. inflation has come back a bit to end the year and that is more sentiment driven. it comes back down into 2025 and it goes back to housing. we will get data today and we are dialed into mortgage apps and housing price data. it made up 60 to 70% of the inflation narrative. if that slows down into 2025 inflations come down and bonds act like bonds again. and the ballast portfolio can look better into next year. romaine: i want to go back to something you said. one of the great things having a bloomberg terminal as you can check things on the fly. the dogs of the dow were dogs all year long. i was looking into this year.

underperformance by about 25% relative to the s&p 500 and i am looking at some of the ones that will be the dogs into next year. like a verizon, show test chevron and johnson to johnson. some of them were coming into next year -- into this year and i'm curious about whether this is attention. if all of the attention is on tack and ai, why should i expect anyone to braise a health care -- embrace a health care, consumer stable or telecom stock? matt: you had to chase performance. if this is not a year of a rotation, it has to be the 1990's again. there has only been three overt -- three other times where there has been 25% back to back gains like we are looking at potentially.

the only time it went three years in a row was in 1999. we will have to bring out the popcorn and watch "jurassic park" or "friends" and get the 90's culture back. 1999, be careful what you wish for. when you get this third year -- sorry. romaine: go ahead. matt: if we have another momentum here it will be tough because you have to be careful what you wish for, we have the lost decade after that so we will peel back the trade and rotate it to a higher quality and value parts of the market. romaine: the comparison with the 90's and a lot of people make the comparison with the idea in the 90's you were dealing with companies that did not have the fundamentals to support those valuations. we talk about a market, 70% of the point gains in the s&p 500 are attributed to about nine stocks, basically the mag seven

and a few on top of that. these are all cash monsters, alphabet, j.p. morgan and netflix, those are winners. matt: i have -- i agree. we have been overweight tack but it is hard to see the same kind of return stream that we have gotten into next year. you can only do outsized return. there is reversion over time with markets and we are in the most concentrated market in history by a huge factor. 40% of the market is just in the top 10 stocks and i am talking about the s&p 500. it has not happened before and it has never been as close to this high. at some point the trillion dollar mega cap companies have built-in valuations. i am not saying we have it in a portfolio and we have a debit overweight relative to the other parts of the market but into next year chasing that does not make a lot of sense. finding other opportunities makes more sense.

romaine: happy new year to you and we will catch up to you in 2025. it is interesting to see how the market rally has changed. 10 of the 11 sectors are higher. on a month-to-month recorder date basis only three are in the green including communications, discretionary and technology. sonali: some of the dogs of the s&p are expected to be winners tomorrow. energy, a lot of people are on that train into the trump administration. romaine: one of the surprising performances was in the travel sector. we will talk to tom fitzgerald about his outlook for the airline industry in the new year. and we are in the new year in certain parts of the world. happy new year. this is bloomberg. ♪

romaine: welcome back to bloomberg surveillance with futures pointing to a higher year on this final trading day.

.3% gain for s&p futures and a similar boost across the rest of the equity space. we are just a little more than an hour to go before we get to that session. it is interesting to see how we close out the year. the s&p and nasdaq sitting on record highs. a phenomenal year with 20 plus percent gains. sonali: the s&p 500 edging back into that 6000 territory will are -- where it really wants to end the year. it is interesting to see volatility come back a little bit and people like matt watching the economic data until they are very -- until they are buried. romaine: we talk about the equity market and it was all about tech, ai and chips. the philadelphia semiconductor index up 20%. the mag seven having a decent year. discretionary stocks, 30%. one of the best performers, airline stocks. the s&p 500 airline index up 57%

this year. we talk about this annual performance here on the year and the s&p super composite airlines index and now a lot of questions about whether that can continue into the new year. tom fitzgerald is joining us to talk a little bit more about his outlook here and i was just looking at some of the data that bloomberg has been tracking. they have new survey data from the main lobbying groups and expectations that we will cnet income continuing to rise for the airline industry and profit margins continuing to widen. pricing power to widen in 2025 for the airline industry. what is your outlook? tom: i would agree. we think the industry has a lot of momentum. demand is healthy and the traveling public skews higher income. supply looks set to remain constrained through next year, 2026. and fuel prices are manageable,

very favorable for margins. lower earnings volatility and substantial cash flow for de-risking of balance sheets. romaine: what is the balance of demand. we went through this period out of the pandemic where it was weighted towards leisure travel and business travel came back a little bit. what does the demand balance look like in 2025? tom: leisure is strong and we see corporate travel and we are not expecting a massive step change but continued recovery especially if there is an uptick in capital markets activity and advisory deals and so forth. that should be supportive of corporate travel which has been the slowest segment. small and medium-sized business travel is well above pre-covid levels. sonali: when you think about the pressures and changes you think about the troubles faced by spirit or failed mergers trying to inch their way back. what does the industry look like

next year in terms of the winners and losers. are you going to see traditional airlines gain more steam given the shakeout? say, united and american? tom: we think it is likely that the profit laggards, the low-cost and ultra-low-cost carriers will see flat or shrinking growth while the industry leaders will be growing in line or united, growing above gdp creates a great opportunity for them to take shares in the domestic market where we have seen a lot of pricing momentum where there was in excess of supply. sonali: i would love for you to respond to the pressures we are seeing, the idea that you could see rising wage costs from pilots and moderating capacity growth and then the industry shakeout we have been talking about. one this all lead to higher prices for consumers and if so, how much? tom: it should.

the cost pressures are real and that is why we favor united, alaska and delta who have the reverse -- the robust streams. and typically when there is discount wars profitability was at strength so you have a room to cheat a bit on pricing and that is not the case today. we are not expecting eye-popping gains like summer of 2022 but we should have strong wet -- strong revenue growth. romaine: what about the seating arrangements? we saw more airlines experimenting with premium seating taking economy seats and making them wider with more legroom so they could charge more. what has been the uptake? have consumers been receptive? tom: i think it is early days. we have seen frontier in spirit go up market with more akin to domestic first class. but it is early days on their results. over the coming year we will see

alaska and jetblue reconfigure. alaska will retrofit and jetblue to introduce a domestic offering. southwest will not have extra legroom until 2026. it will take some time for the strategy to play out. the premium demand is there and it is a fairly -- a very appealing time for united and delta to capture the demand. romaine: one interesting element to the rally that we saw this year in some of the stocks particularly in the last couple of months have been this idea of a somewhat lighter regulatory touch out of washington in 2025, particularly against the backdrop of a couple of mergers that did not happen for a variety of reasons. i am curious if you anticipate the potential for consolidation in the u.s. airline space next year and beyond. tom: it is possible given the

change in the administration as you mentioned. i think the people in the industry would not be shocked if there was consolidation among the low cost are ultra low-cost carriers. you can point to the benefits over the last 15 years so there is a case to be made that consolidation can help some of the smaller players gain sale -- gain scale versus a couple of carriers chasing price-sensitive traffic. sonali: one national carrier is a dream that the industry has been heading towards and not always the greatest for consumers when so many are really going up on the fares and luxury seats. what is the ultimate consumer impact and is there consumer protection behind it? tom: that is tricky to say. overall, they value travel with a lot of options. you do not have to pay for the

front of the cabin and you redeem points if you have the credit card or mileage programs. at the end of the day as long as the economy is healthy demand for travel has to be inelastic so they would love to have deals but i do not think they will not have the experience and not see their families and not take the business trip. sonali: when we think about the actual investor perspective we

started on how this was such a great trade this year in your coverage universe, -- romaine: it is funny, he points out united that has more than doubled. in fact this is the fourth best performer in the s&p 500. travel stocks did incredibly well. sonali: when you look at travel stocks you would think that they are in the larger consumer sector. given the airlines they are categorized as industrials. we talk about this a lot in open interest. if you could buy as a block trade wouldn't you be able to benefit? think of the dogs of the dow, and maybe you look further outside to hotels as well. romaine: they have done well and cruise lines have done well. united, 138% gains. alaska, 66%. some of these are coming off very low lows. but if you came into this year and set i will double my money on an airline you would be

crazy. sonali: especially if you are worried. we are all a little crazy else they would go in -- we would go insane, so they say. into this year you are worried about consumer. people are still worried because delinquencies are rising again. romaine: they keep spending. i know at some point we will have a reckoning but for now, you have seen the holiday shopping numbers and the travel number, people just continue to spend. sonali: people might have disinflation or lower inflation but prices will be higher. romaine: this might be an issue for the fed. coming back a conversation with danielle over at qi research with a rateath from the fed, is it a path at all? ♪

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romaine: welcome back to bloomberg surveillance. the futures are pointing to a slightly higher open for the s&p, dow, nasdaq and russell 2000 capping a phenomenal year across the board and one that will tile out of expectations, not the 20% gain or 30% gain for the nasdaq but the russell 2000 getting a 30% gain. a lot of people thought of a broadening up of the rally but nothing to sneeze at. sonali: however, snapping days of losses for the markets is a sigh of relief into the new

year. people can sleep easy and recalibrate how they will think about risk. romaine: yields in the treasury market are lower although we should point out how -- higher on a year-to-date basis. at one point it was below 4% but it will end the year right about 4.5. sonali: that is better than 4.6% but more economic data ahead including payrolls in a number of days. romaine: what goes on in the treasury market will drive what goes on the stock market and so to the fx market. euro-dollar is unchanged but on the year we are talking about the dollar outperformance and dominance. the dollar is king and that is a big factor not only in financial markets what is going on in washington. sonali: the dollar has drifted higher with the yield movement. you are seeing a decoupling, i suppose. there are a lot of factors in that including not only happens

with issuance but also in congress. romaine: under surveillance this morning a look at the treasury department which confirmed that it was hacked by a chinese state-sponsored actor in a major cybersecurity incident. that hacker allegedly accessed several workstations and an unknown number of unclassified documents in the latest of a series of cyber espionage incidents involving china targeting the u.s.. sonali: i think back to a conversation that i had with marty chavez, the ceo of goldman and he is also a very large technologist. his biggest fear was an attack on the treasury department because it is a most critical lifeblood to financial markets. we did not see those immediate effects. this breach was reported by a third-party software provider on december 8. we are hearing about it on december 30. we do not know the extent of

what has become of it. of course, it is not the first time we have seen such a hack. to the treasury department it tends to hit a specific nerve given that it is a blow to the financial system. romaine: we are also keeping an eye on house speaker mike johnson. president-elect trump giving his full endorsement for johnson to remain speaker and he has also gotten an endorsement from none other than elon musk who helped finance much of donald trump's campaign. maybe this staves off a potential readership fight. the constitution requires that this vote take place on january 3. he only needs a majority. given how slim the -- the republican majority is in the fact that several republicans as many as 40 have issues with him, there are no full chance that he will get reelected. sonali: a vote of confidence gets things done, but there are

more dates coming up. you think about the treasury department saying that the debt limit will be reached around inauguration so a lot to watch for january alone and a lot that requires congressional weighing in and perhaps the president-elect want something more on his side. romaine: we will have full coverage has that takes place scheduled by a constitutional law by january 3. we are keeping an eye on the commercial aviation industry which is now about to log its deadliest year since 2018. most of this is related to two fatal accidents that occurred over the last week alone. we have the crash in sherpa john --we have one crash and another in north korea. this is coming from the safest urinary travel. sonali: a lot of eyes on the airline industry and bowing although it is not clear what caused the crash. we know that our own analysts do

not believe that it is boeing. it is unclear what role the birds played, but certainly a lot of eyes on what happened and a sad situation. romaine: it comes at a weird time with south korea dealing with its own leadership issues. and a west -- an arrest warrant coming down for the president after what was characterized as a coup attempt. andrea puts geopolitics back in the focus for everyone out there and even for the fed. jay powell does not want to talk about it but he has to think about it because the markets are. they are expecting fewer rate cuts because of a lot of questions about the impact of president-elect donald trump's policy -- policies. danielle dimartino writing that "the good news for the fed after a spate of base affects that have the potential to put upward pressure on inflation, the direction towards the 2% target is assured."

happy new year, let us talk about the 2% target. i know we are closer than a couple of years ago at 9% on headline cpi. to take a look at the pc data we are at the 3% range. what gets us down to 2%? danielle: it is fascinating, in the last trip -- in the less press conference he had an in articulates and -- inarticulate sentence. he said market rents as new leases. he kept mentioning market space pce and this is something that you can track on the terminal and what it does is it follow market prices to a much greater degree than to a lot of the implications reveal in the consumer price index or pce. he went into a long discussion about market space pce coming in at 2% year-over-year on the dime in november and even at the core level was a few tenths of a percentage point above that.

that is including the fact that this one measure uses owners equivalent rent which we know is a computation. if you use the cleveland fed's metric it comes spot on. i am intrigued that powell is willing to look at different measures to give assurance that they are headed towards the 2% target. romaine: i think that is interesting. i will second -- i will not second-guess the guy because he is a lot smarter than me. we have seen a lot more dissension among the fomc members not just behind closed doors in the minutes, but publicly in their speeches. which i guess is understandable given that we are in an inflection point with rates and no one knows where we are going. of course we have disagreement. but how much does it become a limiting factor. does it hold the fed back from making changes? danielle: it is an extremely

interesting dynamic. we had soup involvement to dissent, the first since 2005. coming into the january 29 vote we have collins and wills be considered to be doves and then st. louis coming on and kansas city. those two gentlemen are considered hawkish. we are going to have the chances and chair powell knows this that this could be -- that there could be dissent on either side of the spectrum into 2025. there is a lot to balance especially since continuing claims are stubbornly at a three year high and as we saw on the terminal yesterday, large bankruptcies coming in at 18, the worst december since 2009. we have not seen a dissipation in that bankruptcy cycle throughout 2024 and it looks to be ramping up into 2025.

there is a lot for them to balance on the committee and incoming economic data. sonali: i am glad you brought up the bankruptcy cycle and i have been watching it closely. bc why --bcy brings up the bankruptcy on your terminal. at least one said. you do not have anything close to it in the consumer discretionary sector. a place where we have seen massive bifurcation. what does this mean. is this kind of acknowledgment that you are seeing a bit of a k shape when it comes to the consumer and is there anything that the fed and policymakers can do about it? danielle: we really are getting to the crux of the inequality divide and one of the greater challenges is that the top of the k is going to get smaller. many americans about 20 million have not made a payment on their student loans since march of

2020, so it is almost been five years here. these are some of the higher income earners as well. and they are just now tomorrow for the first time going to be reported if they are in default. you could see one of the upper parts of the k weaken into 2025, and i think that is again going to be a greater challenge for the federal reserve because we will not be as bifurcated as we will be bottom weighted with people they have run through the credit they can run through which is by now pay later which is 1/10 of credit card outstanding and is on course to cross $100 billion early in 2025. the idea of a spent u.s. consumer while higher income individuals who did not -- they did not qualify for financial or student loan forgiveness, they are going to get dinged and these are debts that cannot be

expunged in bankruptcy courts and that is why we are seeing acceleration on the household bankruptcy side as well. sonali: i have a feeling we will talk about this a lot into 2025. before we get there i want to play into hindsight capital for a moment because at the end of last year on december 31 when most of the markets are expecting more than six rate cuts i listen to a podcast that you had done with us. you were expecting three. if you take your crystal ball and ring it into next year, how many do you expect and a hike could be on the table depending on how the presidential policies play out? danielle: given the magnitude of revisions, the economic alice's -- analysis took down its income is $65 billion and took it down by $91 billion. given the magnitude of revisions we are seeing, i think market

pricing is in the wrong place but in a different direction. i think we will see more along the lines of four if not five rate cuts into 2025. we are starting the year with median duration unemployment at 10.5 weeks and it is not until october 2009 during the great depression that we had seen people out of work for such an extended period of time. the fed will be leaning harder on the labor mandate going into 2025 and then the markets will see more rate cuts they on what is priced in. kind of a flipside of last year. romaine: we only have one minute left and i will get your thoughts looking ahead to may 2026, jay powell, does trump keep them around for another term? danielle: i cannot for see that happening. jay powell and michael barr, several have been very forceful and pushing forward with the central clearing of treasuries with basil 3 and game.

that is his legacy trying to regulate the shadow banks and bring them into the conventional framework. i do not see him having the desire to stay around after may 2026, even if he was to be renominated. romaine: we have to leave it there and have a wonderful new year. we will catch up with you. danielle demartino at qi. we round out the show. folks are starting to gather times square in new york city for that wonderful ball drop. that put security back in focus. a conversation with a former ny pd commissioner. ♪

romaine: the s&p is poised now to close out with its fifth straight quarterly gain tapping up 24% rally on a year-to-date

basis in 2024. futures pointing to a slightly higher opening up wayne 3% when the market opens up. the euro-dollar is unchanged on the day, relatively. there is a 10 year yield up four .5%. higher than when we started but below the peak of 4748 and a lot of questions about the directionality going forward. unchanged on crude oil despite an earlier bid. up about 1% and it looks like it will close up the year slightly lower fractionally on a year-to-date basis. that is the lay of the land right now in financial markets with trading expected to be light as a lot of people are still on vacation from the christmas and hanukkah holiday and the new year's holiday. new year's eve taking place around the world and set to take place in 15 hours or so in new york city. people expected to flock to times square in midtown

manhattan to ring in 2025. you can bet that there will be a lot of security. ample security resources being deployed throughout the city despite what we know, no credible threats. the mayor and security teams are saying that everything is safe though out there and have fun and the nypd will be on alert. what is get some insights out of someone who know how they operate. ray kelly joining us. he was commissioner during the administration of michael r. bloomberg who was the majority owner of the company that owns a network you are watching right now. great to have you here. let us talk about the basic security measures that we typically see for big events like the times square ball drop where you have to corral hundreds of thousands if not millions of people into one tight area and make sure that all of those people get in

safely and get home safely as well. ray: it is a real challenge but i think the nypd has done well for many years. there is a core area that in order to get there you have to enter either on sixth or 8th avenue and that is where anyone going into that area is subject to a search and their bags will be searched and that sort of thing. and the same thing that has been done in situations, for instance the manholes are sealed and mailboxes are taken away, those sorts of things which are pretty standard. they say now that they have counterterrorism, and the department started doing that since the horrendous events of 9/11. that means more police for specialized units and more sniper teams and that sort of thing.

and as the commissioner said, there are no credible threats that we are aware of. she also mentioned that drones will be increased in the departments have been using drones for the past few years. a lots of cops, no questions about it. it is manpower intense. and another thing to be aware of is that in the other four boroughs they are major new year's eve events that require significant police presence as well. so we have done this before. romaine: that is a good point. the five boroughs and a main thing in manhattan and a lot of festivities going on around the city. i know that keeps the cops busy on a day like. in the past do you get all of the cops on the clock for a

night like this or a majority of them? or are you able to do with your normal allocations what you would do on a normal day? ray: that is a challenge, we have to police the rest of the city. 8.4 million people or whatever you want to use. most of the police you see tonight are on overtime, it is not dire regular scheduled duty. it is expensive but that is what the department has to do. there are manpower concerns over people leaving the department. in order to police an event like tonight, you are going to have to pay a lot of overtime. the rest of the city will be adequately policed. romaine: i am curious about the recent events. there are a lot of security measures that are static. you can apply them this year and 10 years from now. we have had a couple of incidents in new york with the

killing of the united health care executive and a lot of political differentiation if you will for lack of a better word. concerns about the security measures to protect those folks. how does the nypd adapt to these newer and more unique challenges that might put people in danger? ray: there are no guarantees but it seems like you monitor social media closely. usually if there is some political distressed, it is on the internet. we watch certain people. people who have a record of disruption and have been hinting about coming through the event. and we might surveilled them. not necessarily in person, but whether or not they got airline tickets and that sort of thing. no guarantees but the department is doing everything that they reasonably can be done to

protect the city tonight. ray: i -- romaine: i am curious to get your thoughts on the health of the department. since mayor adams took over we have gone through three official commissioners and one acting. like four people holding the job. the current person who holds it, you have some familiarity with her given her experience in counterterrorism back in the early and late00's here. give us a sense of what you know about her and her potential stewardship of the nypd over the next year and beyond depending on how long she stands. ray: i know quite a bit about her because i hired her. she was there for 12 years. she has three degrees from harvard, a law, business and undergraduate degree. she did an excellent job. she has run two major you -- new york city agencies.

her reports have all been great and very positive. she is a decision-maker and is very smart. and i think she will and is doing an excellent job. i think that police department is in good hands. romaine: it does not matter at all the idea that she herself was not a cop herself. does that matter to the rank-and-file? ray: i do not think so. you get over that very quickly. we have been commissioners who have never been police officers. the majority of police officers -- police commissioner's have not been officers. it was always the idea that they manage and help the department and that was reduced to one commissioner when teddy roosevelt was on the police

commission. she has the right want to get the -- she is the right one to get the job done. romaine: all eyes are focused on times square and all of those nypd officials hoping to keep everyone safe for yet another new year's eve. commissioner and former nypd commissioner, who served briefly under david dinkins in the 90's and did a long stint under mayor michael bloomberg back in the 2000's. as folks get ready to celebrate this holiday, some folks are celebrating around the world. a lot of global markets are actually closed for new year's day. several markets in asia including korea and japan are shut down and you have several in europe are closed. a few have closed early like paris and london. markets will be trading as normal in the united states. the cash session set to open in about 35 minutes time. we want to thank everyone who

has joined us here on bloomberg surveillance and all of our properties all across 2025. the explanations, the hosts, and the guests. everything we do to bring you unfiltered and unbiased news about what really moves markets and what really moves our economy and what really changes the world. we appreciate you putting your trust and faith in the coverage that we bring every day. there is a whole team of people behind us not just the folks on television but those operating the cameras, teleprompters, looking the guests and planning out the shows, they are truly responsible for the great stuff that you see on bloomberg television every single day of the year. we appreciate that you tuned into us every single day of this year and 2024 and we hope that you come back and spend it with us in 2025. from all of us here, have a happy and healthy new year. ♪

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