>> tuesday morning and happy new

year's eve. i am matt miller the bloomberg-interactive brokers studio with sonali basak as well as paul sweeney. we are invading his show once again, bloomberg intelligence and bloomberg open interest is combining in a simulcast. we are going out on radio, television and youtube. sonali: you are going to miss us tomorrow. matt: tomorrow we will not be here. thank the gods. paul: january 9. matt: i was wondering. it depends on how much respect we have for president carter. sonali: which is a lot so we will be here and we will be covering. matt: if we really want to honor him we will not come to work on that day because the market is closed. what will we do? sonali: we come to work rainer sought -- rain or shine, hell or high water. matt: there is no day when the new york stock exchange that is closed that we are not here.

maybe you are here. me and paul are definitely not. we have a lot to talk about. tell us what you like to do on new year's eve? sonali: i am cheesy. i cannot i believe i am put on the spot. i write all my thank you notes and i plan for next year. i have already torn apart the building and let everybody know to expect through january 31. what do you do? matt: that is cheesy but that is why you are good at your job. i do not do anything special. i was listening to a new to me band this morning called frog wings. fish is playing the new year's eve show at madison square garden. sonali: my family goes every night? matt: it is a -- the best run they do all year. and i am trying to get howie on the line later on today. paul: who is howie? matt: to give us a preview of the show. he has been to 300 shows.

he has a -- he is an advisor. sonali: i will be listening to frog legs in january. matt: frog wings. sonali: i bet that paul is partying tonight. paul: 730 dinner reservation and then hopefully in bed by 9:30. matt: before the ball drops? paul: please. matt: let us get over to isabel who will party hard tonight. and, she will take a look at the year that was in the year that will be for us in stocks. isabel? isabel: i was looking at nvidia. they are basically helping to manage ai infrastructure. this first broke in april and now it is completed. this is only on nvidia-based systems and it will be woken -- open sourced so until can adapt it to their hardware and they declined to comment on the value

but in israeli news -- newspapers said that it is valued at 700 million. it is another deal for nvidia who has just proven that it is unrivaled, so to speak. sonali: you are looking at microstrategy? isabelle: it is the eighth straight week that the company bought bitcoin, 209 million worth. this is the fewest it has brought. in november 25 it brought 55,000. in total it holds more than 45 billion dollars worth of bitcoin. it is a bitcoin company. last laugh is on everyone, because even if micro -- michael seiler has now been mopped, in video has -- nvidia has gone to the top. the market value is touching 100 billion. if people sell, it could unleash a wave of that, but it has been a spectacular year with microstrategy up 400%.

sonali: bitcoin is back on the rebound at 95,000. if you stop seeing microstrategy buying every week, what does that do to bitcoin? is it a signal that maybe they are holding off? what it spooked the market if they do not have that 11th or 12th? matt: why is gold up the most it has been. sonali: central banks have been buying it. matt: they are the michael sailor's stock in the past. they are defending the old physical safe haven by stocking up in gold but what do they stop by? sonali: my name means gold so i will take it to die. paul: what means gold? sonali: my name in bengali. so gold will live on. matt: there were -- there are interesting parallels because michael saylor continues to buy

at the bait -- at the pace that central banks buy. sonali: that is fascinating. matt: are we looking at verizon? isabelle: it was hit with a proposed class action who said that the company "improperly shifted pension benefit responsibilities to risky insurance." former employees breached its fiduciary jude -- duties and jeopardize their savings. this takes aim as pension derisking transactions. this means a sponsor lessons the risk it faces in connection with another sponsor. this issue has boomed over the past year and it takes aim at state street saying that it is a plan fiduciary but it acted in its own interest rather than those of the retiree. it is interesting to see the outcome and to accuse a company of not taking your fiduciary duties responsibly is kind of -- sonali: this is one of the

hottest trades and it sounds exocrine -- esoteric, these pension risk transfers because they broke up the insurance risk assets. so if they get sued more and more it becomes a riskier business in a lot of ways. matt: you should watch bloomberg open interest weekdays 11 to 9:00 a.m. . at about 950 time -- about 9:50 the wall street beat segment areas. paul: i did not know about it because i am on the radio at that time. sonali: i think matt's mother or maybe it is just him. matt: my mom and dad watched the whole program yesterday. isabelle: verizon is up 5%. this is the only time of the year that the wtd function is the same as the one year. matt: it all returns to the bloomberg terminal. i miss the gptc function.

it used to be able to graft percentages. i was looking at gold which peaked at the end of october, 35% year to date. but with the gp function, you can only see the prius. and with gptc, it would automatically show you the percentage depending on the time that you put in. i have to find out why they have dropped that. paul: i will talk to tom from the fourth floor. isabelle thank you so much for that. we will break down what is moving in the markets. we have the cofounder and senior portfolio manager at miramar capital. thank you for joining us. i cannot imagine what you are telling your clients for 2025. you delivered a couple of years where the equity markets are up over 20%. do you have to talk some people off of the legends say that is

unusual, do not expect that performance? what is your message? max: happy new year. we are telling clients that there is a lot of risk built into the market given the high performance you had in the magnificent seven stocks. we are actually telling our clients to derisk. so taking some investments and profits is a good idea, and position the portfolio a little bit for more volatility into the first half of the year with a change in interest rates happening and fiscal policy with the new presidency. given the valuations we are looking for other areas of the market where we have more value and growth. matt: are interest rates a worry? sonali has been pestering people about the 10 year level and we did see it and we still see it about hundred 50. that must be restrictive to some

businesses and consumers. is it a problem for stocks? max: i do not believe it is. when the s&p was trading at 22 times earnings and treasury under 4% you now trade at 27 times earnings and we are about 4.50. we have had growth that has carried and offset changes. the trend is lower on the short term. that is what the fed has told us. if you see a shift or inflation remaining sticky and growth remaining strong, imagine for a moment the fed decides it will not cut more or maybe one time or if they reversed it because inflation is there. you could see the 10 year back 25% which nobody is anticipating. if that is the case we would be concerned. sonali: when you see the bond

market behave in such a manner when the yields are higher than not only most of the market expected but really pricing in a range of risks not just inflation but the term premium associated with the u.s. fiscal vote, you fast-forward a couple weeks and you have the treasury department with a letter to congress saying you might hit the new debt limit around the time of inauguration. that is a lot of political uncertainty. what does that mean in terms of term premiums and additional payments that investors willing -- will require heading into next year given that uncertainty? max: it means that people are not pricing in the equity markets. the equity markets are pricing in a fed put and imagination if you will of no higher spending. they are not taking into account tariffs. the bond market is putting in a roadblock and saying be cautious, we have a lot of things coming in.

if you think about the treasury during covid they financed a lot of the debt sure term. in hindsight they went a little bit longer. if the fed is based with -- faced with embedded inflation and growth at 3% it is hard to cut. i think the bond market is telling us something and you cannot ignore it. momentum has been concentrated in a handful of stocks. and we all know that if you have been in the market for a while when the market shifts it will get ugly. cannot say when it happens but when it does it is ugly. we remain cautious and we tell our bond investors for shorter-term and we wait a little bit before we go longer term. and to de-risk. matt: to me a lot of times that sounds like health care. his health care a sector that you are looking at? max: to answer your question, when we are looking for a dividend growth as well.

when we have a large cap magnificent seven, we have several of them but health care looks interesting roughly giving a three to 4% dividend yield and growth. it means industrial stocks have been hit hard. some of the financials look good for us and the defendant stocks. there is a whole plethora of companies if you look at an equal weighted part of the market that trade at 15 or 16 running times lower. you take the magnificent seven you are skewing it. it is health care but not health care but other areas like industrials, financials and energy which no one liked a lot. when you look at the pipelines which we have investments in they have been tremendous, a 45 percent pay in dividends. sonali: thank you for joining us today, those risk appetites and the worries seen at the year end and a few trading days of losses and we are snapping back into the green to end strong. it has been a magnificent year

for the magnificent seven and many other stocks as well. up next we will talk about something that i am interested in. there has been a hack at the u.s. treasury department and chinese hackers have gotten access to try -- to files. we learned about it as the public just yesterday. we will talk more about that. matt: a major cybersecurity incident is what the treasury calls it, just days after washington said that chinese length hackers had gotten into the phone right -- phone records as well. hacking the phones as people such as donald trump, jd vance, kamala harris. we will talk about the chinese hacks. this is bloomberg. ♪

paul: as we get set up for the final trading day of the year and as paul gets hydrated in the

interactive brokers studio, we are looking at gains and that is somewhat remarkable because we have had such a bad december. we are down 2% in a month where typically we are up about 1% over the last 25 years. sonali: you are having the worst month for the s&p 500 since april where we saw 4% decline. there have only been three losing months which have tracked the index higher. we are still under the 6000 level. so the people who bought at end of the red. matt: april is a horrible month. paul: for me it is october because of the october crash in 1987. if i can get through october it will be all good. down 22% in a day. matt: that does raise hairs on the back of your neck if you are long equities, especially in a market that has been up 25% year

after year. that would be tough to deal with. let us talk about the major cybersecurity incident at the treasury. sonali: it is interesting because when i spoke to investors this is one of the biggest risks that they are afraid of because the treasury department is the lifeblood of the financial system. and it has so much data on every single note that is out there, we will talk more about this now. they notified lawmakers yesterday that a china state sponsor actor infiltrated workstations in a major incident. we will bring in jamie who covers cybersecurity for bloomberg. how do you see what happened to the treasury department compared to what we have seen in other hacks facilitated by chinese state-sponsored actors? jamie: it is almost like another

day, another hack at this point. we have been dealing with years of widespread, long-running hacking campaigns whether they are cyber espionage or pre-positioning in the possible conflict with taiwan. we have seen literally years and years of attempts and intrusions and compromises of american and international critical infrastructure networks by chinese state-sponsored hacking. this is something that has been happening for years and the more obvious and the more we talk about these things the more the expectation is that we expect minimum cybersecurity standards from not just the private sector but from government agencies, especially one as critical as u.s. treasury. matt: what is the expectation to the defenses of some of these government agencies? is the belief that the u.s.

government has decent cybersecurity defenses or not? jamie: that is a complicated question because a lot of the time a lot of these federal government agencies depend on contracts with third-party providers where they have devices that often called end of life so they are routers or interconnected devices that basically connect networks together and they have not been updated or they are obsolete and they need to be changed. and because euro accuracy in the federal government is so large, it is always a challenge and it always costs money and it is a big undertaking. so, we are seeing more of these end of life products being compromised and we know more about the fact that these are entry points in a lot of different hacking campaigns. it is really, we want to see more cybersecurity orders.

we would love more transparency from federal government agencies on what they are doing in terms of shoring up systems and using the providers and incident response and using cybersecurity firms as well as deploying agencies like cicsa and the fbi and those concerned with cybersecurity as we know and it has been said repeatedly by government officials that there are chinese attempts and actions to get into our systems to basically have access to intellectual property and you know as well as intelligence gathering purposes. matt: the chinese embassy in washington says it opposes " smear attacks against china without any factual basis." the u.s. needs to stop using cybersecurity to smear and slander china and provide disinformation about the chinese

hacking threat. how sure are we about this stuff? because i think it is a huge allegation. it could be construed as an act of war, hacking the department of justice, the department of defense and the treasury. so, is it firmly evidenced that chinese state hackers are behind this stuff? jamie: the phrasing of the letter that the treasury set to sherrod brown and tim scott said that they had denoted it as a major cybersecurity incident which is what they do when they attribute it to a state-sponsored actor and the fact they said that after the investigations by government agencies the attribution is crystal clear makes it extremely definitive. they would not put that in a letter to congress if they were unsure. and it would make -- meet the

hallmarks and tradecraft of previous attempts, so there are indicators of compromise, tactics and procedures that these hackers would be using that are identifiable to the people who track them. there are also companies like microsoft that have visibility over the internet and watch certain threat actors as they move and they recognize patterns of behavior. sonali: the treasury department was notified on december 8 by a third party provider. they no congress on december 30. matt: ironically called beyond trust. you could say that again. sonali: there is an irony to that. the three-week lag is what i want to ask about. why did they wait so long to notify lawmakers for such an important government body? jamie: that is a great question and we would love to know. we are not getting that information from the treasury.

a lot of the times, particularly this past year you of learned about -- you have learned about extensive hacking campaigns and a lot of telecommunications have not disclosed those hacks because they have been getting waivers that they would have agreed on with the intelligence community and the government. if they have not been able to declare or disclose those hacks it is for a myriad of reasons including national security but they also want to be sure that they know what they have and they probably want to be able to say they have eradicated the problem and mitigated compromised and they are able to say we found it and we detected it and we are dealing with it, it is over. matt: thank you for joining us, reporting on that incident. it is the one that we know about. there are others that we perhaps do not. beyond trust set a number -- a limited number of customers,

plural, were involved with his hack and they also have contracts with the department of defense, justice, and veterans affairs. it could be that those other agencies have not gotten back to us or alerted congress that they were affected as well. and paul, as you point out, this makes you rethink the tiktok issue. paul: that is what i thought about. does this put the tiktok issue which this preparing court will look like soon, does that put it in a different light and i suspect that it will because who is to say what is china state versus china private. i do not have a clear understanding. matt: isn't that the same thing? paul: n/a a lot of issues. sonali: the other thing the treasury department there was a lot of issuance and a lot of wrangling around the debt ceiling and the u.s. fiscal situation. what kind of interference was there and can they show that there was not a significant enough interference to markets?

was there any? it is hard to understand the ramifications. matt: there is a lot to unpack. issuance has grown threefold in the last decade in terms of treasuries and that is not the primary market story. sonali: it is crazy because so much is at the short end of the curve. this is one of the biggest critiques as scott takes over. can he turn out the debt to security is at a time when the term premium is soaring. it is an amazing dynamic. matt: up 75 basis points. term premium out, 75 basis points. we will be back with more. happy new year's. this is bloomberg. ♪

>> it's a countdown to the market open.

matt: all right, welcome back to "open interest" and "intelligence," combining forces with paul sweeney. head of the opening bell, 10 seconds to go until the final trading day of the year. futures are higher. it looks like we could at least have a positive start to the cash trade this morning after a rough couple of sessions with the magnificent seven falling hard and dragging down the s&p index 2% over the last two days.

as sonali basak pointed out, the worst since april. there you see the opening bell ceremony on the new york stock exchange and on the nasdaq marketplace. it brings a tear to my eye. not really. sonali: as a capitalist. matt: it's been a great year, why would i cry, right? up 24%. reinvested dividends, 26% to date, for two years in a row. if you take a look at the cash traits that play out right now, up .3%. sonali, for you and me, it has been one for the record books, right? we launched our show this year. sonali: we did, i get to spend every morning with matt miller. paul: short straw. [laughter] sonali: it's been a ride. as long as he doesn't make me start writing harley davidson's. paul: you can write a vespa on the jersey shore with me. -- ride a vespa on the jersey shore with me. sonali: maybe i well.

matt: vespa is a great gateway drug. automatic transition, easy to deal with, just as much fun as a big bike. how great is it for your mental health? paul: it's fantastic. down at the shore in the summertime, cruising up and down, it's excellent. when people raise their hand and say what do you ride, i write a vespa. i know it's going on. sonali: higher resolutions and ending on a higher note. matt: starting to end on a high note. i remind you, things can change throughout the day. we have had some volatile sessions throughout the past couple of months. isabel lee is here with us to break down what's going on. what are you looking at? >> verizon is up but flat, up by .1%. it was hit by a class action from retirees who said that they

improperly shifted pension to risky insurance companies. former employees alleged that they breached their fiduciary duties and jeopardize retirement savings. taking aim at pension de-risking transactions, a sponsor of the defined benefit pension plan facing the connection with a sponsoring plan. the complaint takes aim at state street, the filing saying it's a pen fiduciary active interest. booming over the past year, they talk a lot about it, and it's an interesting allegation, proving it's probably a big thing. sonali: probably will mean more lawsuits at different companies. paul: knowing this company as well as i do, being a customer forever, i don't know what the growth drivers are. land lines in decline. wireless competition everywhere. broadband everywhere you look. i guess that's a tough business.

sonali: it reflects a lot of what we have been seeing in america, corporate america, the benefits you get after you retire. company after company, matt is always asking why pensions exists, but certain people still need one. matt: i need a pension. it's not about need, i would love one. sonali: is it a model that works, that's the question. matt: these are the regional bell operating companies where you got a pension that was part of the gig. sonali: now these financial companies cannot manage on their own. what else are you looking at? isabel: microstrategy is flat but recently bought $209 million in bitcoin, eighth straight week of buying. who knows if it will continue next year. this week, the buying is the fewest. november of 25, as much as 55,000, bringing the total to 35,000 dollars in bitcoin,

essentially a bitcoin company with a proxy hedge fund and it has been working for microstrategy. just last week it was added to the nasdaq 100, which drew up some criticism but is a big milestone in the next will maybe be a p 500 that is a different discussion altogether and has been spectacular for microstrategy. paul: bitcoin, up 4.5% today. $96,000. sonali: we had that back at the end of the year but hitting 6000 on the s&p again? matt: not likely in the next few hours. although with bitcoin, you never know. we have seen that kind of volatility in the past. it's insane -- sonali: big market buyer. matt: tom keene has been making fun of me for at least a decade because of my interest in bitcoin, but when we started it was trading for less than $1000 for pop. paul: calls it bit dog, we try

to correct him, but he's one of the skeptics, but not the only, jamie dimon among them. matt: paul: warren buffett, also. here's the way to think about it, it's just a commodity, right? thinking about it as a commodity, nothing more. not an asset or a currency, it's a commodity. if you have an opinion on supply and demand, you have an opinion on bitcoin. sonali: you are looking at a day were one of the best-performing stocks in the market, as there were some that rose more into the green today, not quite making it. we have news today that an israeli startup founded in 2018 that helps to manage ai hardware infrastructure that first broke news on this in april, they completed the acquisition. the software currently works only with open source systems meaning that rivals can adapt it

to their hardware. nvidia declined to comment on the value of the deal and we had an israeli newspaper putting the value at 700 million dollars. their second-most important market. the last major deal was 7 billion. still, their dominance is unrivaled and it's exciting. up 400% this year. matt: year to date, just extraordinary. market cap up. as joe weisenthal so sagely pointed out in his tweet, year-to-date numbers are the same as the one your return. how about that? sonali: it's really interesting. isabel, thank you so much. more on nvidia here, what's interesting is that in addition to the increase you have seen in nvidia, broadcom is right behind

it. it is now up 110% this year, coherent had an interesting run as well. the broadening of the ai trade might be the broadening that a lot of investors hang onto. matt: samantha sent out a story that i think the top 500 richest people in the world are worth $10 trillion. i pulled up at rich go on the terminal and i see jen-hsun huang at number 12, right? he's now worth $120 billion. is worth has climbed $76 billion this year. which, i mean, isn't shocking, but it's just remarkable. sonali: $10 trillion? matt: in total. elon musk is worth almost half a trillion by himself. sonali: three times the gdp of france. matt: they are worth a lot of money. we are talking about 500 people. i also saw the top, the waltons

have increased their wealth amazingly. jim walton, worth $112 billion. rob walton, 100 $10 billion. alice walton, 40 billion more than last year. these are their individual networks. not as a family. paul: with an unbelievable yacht, by the way. pretty darn cool. steve saw snake joins us here. he's not on the list, sorry, steve. working hard over at interactive brokers group, chief strategist year. what are you telling your clients these days about 2025? expectations i would guess are 20% plus gains each in the last two years, expectations might be getting out of whack. how do you temper them? 4 good morning -- steve: good

morning. it's getting a little easier, but it's tough. we are seeing some asset allocation trades that have hit the thinner markets. the mantra has been don't necessarily fight the tape, but insure against it. everybody is on one side of the boat right now. even people who are not necessarily raging bulls will say that we are looking for 10% next year. historically, that's a big hill to climb. you have a lot of volatility coming down the pike. the vix tells a very different picture where we did nothing for the first six months and it has been moving around. volatility is creeping back in. one of the things, if you are buying dips, vic's and volatility is one of those things that you buy the dip sin. sonali: -- dips in. sonali: bond market volatility has been more aggressive in a lot of ways.

is that signaling more pain to come when you think about the broader volatile markets next year? steve: it depends why we have seen the rise in rates. if it's because everyone is deciding the economy will be riproaring, that's good. but i'm not so sure that's the case, they have risen alongside nominal rates, so it's more demand for return on that money. one of the things i like to remind people one of our biggest exports is debt. it's bigger than the amount of foreign buyers than anything we sell in the u.s.. it's about capacity and there are also concerns where i do a podcast, steve, him and nouriel roubini, that was quite a room, they wrote a paper saying that the way the treasury's bond

issuance was going by prioritizing the short end was artificially depressing rates. if he's going to be part of the council of economic advisers in treasury, it might push out some more supply in the long end. that's possibly why we are seeing them doing what they are doing and why we are seeing pension funds selling appreciated stocks and selling it depreciated bonds for their portfolios. matt: and a part of the reason we spend $100 billion a month servicing debt. sonali: makes my nose please -- lead. matt: maybe they ask -- makes my nose bleed. matt: maybe they should have sold more on the long end. treasury levels that we are looking at right now, is that going to be a problem for 2025? the fact that we have gone in so far, so fast, the trump administration with a pipit in

the fed, using path, looking at 450 on the 10 year. steve: this was supposed to be the line in the sand and we blew right past it without much concern. if we were all truly rational value investors, the higher long-term interest rates mean the present value of the cash flow from companies is less and that depreciates the value of the market. in reality, we are all momentum traders, whether you like it or not. up another x percent next year, it's a lot of momentum and a difficult tape to fight. one of the lessons i take away his 1987, the bond market basically collapsed in 87 as stocks rallied. if people are moving into stocks from bonds, it can persist. if it's pure evaluation, it should weigh on stocks at some point. it always does, it's just a

question of when. steve -- sonali: steve sosnick, happy new year, thanks for joining us. matt: and thank you for your support this year. as we launch this show, i love to get messages from you in the middle of the program. sonali: we do, please communicate with us. the nasdaq 100 turned red as we sit here. the s&p 500 is trying to hold onto its gains. they are pretty meager right now, fluctuating, let's see if it holds below that level. hedge, ken griffin said the multi-strategy is over but that there are still some big gains there. we will take a look at it. this is bloomberg.

sonali: welcome back to bloomberg television and radio

audiences. i'm sonali basak alongside paul sweeney and matt miller, having some fun on the last day of the year. we are trying to see these markets wiping back into the green, up .2%. higher on the day for the s&p 500. the nasdaq 100, not so much. looking still in the red. we will keep an eye on the markets for you. we haven't really talked about it, but just wanted to point out what the 10-year has done over the last couple of days, you are looking at a 10 basis point move lower since friday. we are still above that 450 danger zone, 4.5% looks like we will end the year roughly, but we were at 4.6%. matt: time to refinance the mortgage? not yet. paul: no, dude. this is the point. forget about 460, right? everyone we spoke with said that if we get above 450, we are in trouble, and we are above 450,

so it doesn't matter that would come back down, right? sonali: but what i'm watching 4, 4 .7, we had someone talking about 5.2%. in that scenario you have to look at refinancing and whether or not this is the only type of rate we will get in the next couple of years, saying higher. matt: we spoke with some mortgage folks who said 6% was kind of the new 3%. people are getting used to it. even the low sixes on a 30 year fixed, they think they will see some activity. sonali: could've been worse, could have the 70's. paul: rates for like 40%, 15%. sonali: feel bad for the millennial, the gen z. hedge funds, it's been a fascinating year. we are bringing in a correspondent on a huge story

from earlier this year. ken griffin spoke to our colleague. the multi-strategy hedge fund boom has come and gone. but we are watching some defy the odds, still? >> it's a lot of hot demand for these multi-strategy funds. a talent war persisting in this space. decent returns. so even though yes, the amount of money that those funds have dipped down, in a large part that's because the hedge funds have returned money because of capacity constraints and you are seeing hot demand from investors. matt: you had traders putting out books where you could raise 500 million or a billion in strategy, whatever it was, then have a nice life. doesn't seem like that happens anymore.

seems like a lot of the money coming into hedge funds is going into the big shops, like .72. is that how this market is these days? >> a lot of that money is going to the established funds but in the last year we have seen some launchers, like bobby j raising 5.3 billion dollars. he wanted much more and was aiming initially for 10. still, five is a lot. the second biggest launch we have seen maybe ever. diego bankia raised $5 million. $3.5 billion. there was a low for a few years where we didn't see a lot of big launches. maybe the last year, 2019, significant launches. we are seeing this size of capital coming into the funds. speaking of capital going into existing funds, they opened their doors recently and were seeking $10 billion and had

demand for $20 billion. that shows the capital they had to turn away. sonali: interestingly enough, diego maggio raised money from his prior firm. i don't believe we saw that with freestone growth. he and his co-founder were citadel executives. kent's cubs, spinning off of citadel, creating new firms. same with millennium. when you think about how large the rivals are, can they compete at the end of the day? the new firms versus the millenniums and citadels of the world? that was a warning shot across the valve that you are the king of the castle, you can't get bigger and will steal the show no matter what. >> the question is, if you are launching a fund are you looking to take on the millenniums and the citadels? some of these are trying to be

the anti-pot shop and they are more specific in the way they are targeting the space. jane global seems to be trying to compete a bit more with millennium and sit it out because of that strategy. what is interesting as you see a trend. when you look at these funds not taking on additional money because it could impact returns, we are seeing in funding really unique things to embrace capital into what they can with it. millennium is investing in hedge funds more often, investing in outside firms. you are seeing some of these funds consider private investments, not something that done before. you have seen them bulk up talent behind firms. we typically thought about it as an equity shop and they have pushed into macro over the last few years. matt: why are these all dudes? is it still just a big boys club? i haven't heard you mention a

female name and you talked about 20 people. >> is still largely a male club, male-dominated. matt: who are the women to pay attention to in this space? >> malik on car, she was very senior at lone pine. she launched a fund over the last year, one of the biggest female launches we have ever seen. exit viking global, raising a fund over a billion dollars. we are seeing more and more rising female stars in the space and we would love to see more. matt: look, i don't want to get back lash. i know that esg is dead and over, god rest it's soul, but some people might want a different perspective. you might want a female perspective. that could be a reason that you go with a smaller fund, a newer fund over izzy englander or ken griffey.

sonali: there was a time when calpers and other funds were giving effort to female ledge -- female lead hedge funds. even from the allocator perspective, you have seen a lot of shrinking of that. plus the opposite is happening, you covered what was it, trying to raise $5 billion and raised much more. millennial money? it's more money than you can imagine going to the bigger managers. >> that's exactly the trend. matt: i have a negative violence against hedge funds. that's my personal opinion, i've held it since 2005. when i did raise a fund, it was $500 million, but it was not sticky money, unfortunately. i just think a lot of the money

is going to the really big firms. therefore, it feels more institutional, less entrepreneurial, less opportunity for alpha. i'm not paying for beta. i'm paying for alpha. sonali: are you paying for diversification? matt: but you aren't getting it, the funds are so big now. sonali: this has been one of the trickiest environments in the last few years. especially if you don't have the experience, the tenure. the big money does come from these big institutional investors, but we have been seeing rhe institutionalization of the hedge funds space and you are seeing more and more of these bank platforms really try to get their ultra high net worth individuals into some of these vehicles. there are pros and cons to these efforts and it's an interesting shift over the last year or so.

matt: you have to wonder if they are transporting that alpha. paul: but your reporting continues to attract capital through cycles. paul: what do you got going on tonight? >> new year's eve plans, going to a party tonight. paul: i'm going to a party. i'm going to a party tonight. i'm actually going to venture out into the far-off land of brookland. -- brooklyn. i'm going to dumbo, under the bridge? sonali: down under the manhattan brooklyn overpass? matt: there you go. i like it. it's been awesome spending 2024 with you. i look forward to more reporting from you in 2020 five. matt miller and paul sweeney in the interactive broker's studio,

we got back with veronica clark, director of research at u.s. economics. this is bloomberg. ♪ (♪♪) (♪♪) what took you so long?

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>> 11 years ago i bought a bitcoin for $800 and i would get a harley today if i still had it. >> you probably wouldn't still be a tv anchor or on here. >> true, i would have my feet in the sand with a beer in my hand. >> don't miss the next "open interest." matt: happy new year's eve.

matt miller is here the interactive brokers studio with sonali basak and paul sweeney, we have crashes show. youtube.com, is the common section open? -- comment section open? tom is on vacation, sipping a martini somewhere and we are looking at some gains to finish the year right now in the cash trade. s&p 500, up .3%. doesn't look like we will hit 6000 again before the end of the year. sonali: it's crazy, that was the moment everyone was so excited about but analysts had upped revisions through the end of the year. remember? matt: yeah, we heard a lot of higher forecasts. you know, we are still hovering around 6000, a 20 5% gain plus

year to date after a 25% gain last year. paul: when you think about the forecast from wall street, its high single digit returns with earnings estimates that are double-digit, so the implication is lower multiples on the marketplace. matt: of the estimates, lou wang at bloomberg news, i always buy over her ticker and look over the latest. none of the 19 chief strategist of the banks she has surveyed expect the market to drop next year. there are zero bears out there. sonali: it's not just about that, some of its work and you find than last year? matt: why would he do better? maybe you can outperform the treasuries? matt: to that point, -- sonali:

to that point, it's without the risk. even with the treasury market. matt: we love the in go function on the terminal and you can look at the global aggregate doing better. treasuries are up .6%. oil is down year to date again. brent crude, the global benchmark is off 3% and change. 10% the year before that. it's not good for everybody. gold, the dollar, most of the assets that we follow have been on an absolute tear. as a result, people have gotten far wealthier to an amazing extent. as we talked about earlier the 500 richest people of the world reached a combined net worth of $10 trillion in 2024. paul: solid. it's all in the stock market.

elon musk is far and above the wealthiest person on the planet and now he is an camped down at mar-a-lago. we will see how he spends his 2025. taking a look at the absolute change in net worth over the last year, a 200 $13 billion increase in net worth. sonali: doubled and not only that there is a gap between him and jeff bezos on december 17. that was the largest ever gap ever recorded between the first and second rank names on the bloomberg billionaires index since its inception. that is not only how wealthy elon musk has gotten, but how wealthy he has gotten relative to the other billionaires out there. matt: basically the number one richest person in the world is worth the number two plus the number three. isabel lee has the details for us. type it into the terminal and you get a wealth of information.

>> the story is either feel-good or not. you can do with it what you will , but it is a spectacular year for the richest in the world and elon musk dominated it, to everyone's point. it's his close relationship with donald trump and he has encamped himself in mar-a-lago, $2000 a night in that hotel. it depends on whether trump makes him pay more or what, but 2000 per month is nothing to his fortune. matt: he's paid $250 million. >> yes, but he still there. matt: if you donate that much to my campaign, you can stay at my house for free. [laughter] >> it's really his companies, tesla, spacex, he donated 250 million and a people call it the best investment ever, the roi is limitless.

it's interesting. we of course have the stock market hiding the wave over all the riches. and we have the donald trump victory sparking a historic valley. ever since he won, we saw the bloomberg billionaires index with a gain of 500 billion and the five weeks following the election. the bump is big and real. paul: one of the few of the people that saw a decline this year was bernard alamo, clocking in at $175 billion, down this year, luxury running into problems. we will speak about it later this half-hour. deb akins covers luxury business. sonali: french billionaires took their biggest hit ever this year. some, the first woman to have a fortune of $100 billion, she has

no loss of the crown is the world's richest woman, troubles and luxury that we will talk more about later. >> chinese shoppers have slowed their spending and they are one of the biggest buyers of luxury brands. i saw an instagram post saying that luxury is out. who among your friends is purchasing luxury items? i'm sure some, but it's a quiet luxury these days. matt: all of the analysts who cover luxury say that the chinese consumer is the marginal consumer for luxury. sonali: your point earlier, is this a good story or a bad story? recovery continuing on, it's the brunt around inflation while the rich get month -- much richer. matt: there's nothing inherently bad with the rich getting richard, but the disparity has

grown and continues to grow. we recognize this is a huge problem over a decade ago and it continues to get worse and worse . poor people have to realize, kiss the ring, go to mar-a-lago, donate a million dollars, retracted and editorial, make sure the donald knows you're on his side. >> not everyone has $2000 per night to spend. matt: sarcasm. sonali: 85% of the country still earns $100,000 or less in that segment of the economy is struggling. matt: yeah, if you don't own real assets, the inflation but was very difficult to deal with and that is what we are seeing. isabel, thank you so much, we appreciate that. giving us the latest on what we are seeing in the marketplace. kind of a mix right here in the s&p. veronica clark joins us, director of research and a u.s. economist there in a bank on the

corner. what is your 2025 message to your clients about this u.s. economy? >> i like the previous discussion on our bifurcated economy where the lower income are struggling and higher income consumers are supporting aggregate consumption. i think it's a precarious economy and that's the message for 2025 and in our view it comes down to what we are seeing in the labor market. i worry that the fed has gotten complacent in the labor market weakening, more so than what the market is currently priced at. matt: cutting rates more than is currently priced. you are not worried about policy driven re-inflation next year? >> not particularly. a lot of the fundamental drivers that we have seen of inflation look a lot better. even compared to a year ago.

just this morning we had case-shiller home state or with home prices running normal pre-pandemic way, that's where you would see signs of reemerging inflation if rates were too low. the labor market, weakening, doesn't seem like a face of inflationary pressure anymore. there's a lot of ways we could see something that looks more like 2% inflation in 2025. sonali: one thing that i wonder about, you saw bifurcation in the economy and were already hinting at the potential further pain ahead. there was a great point made earlier today that you might see some of those middle to upper income consumers feeling pain. some of it could be seen in the coming days looking at student loan repayment. costs of rent, housing, still high. how do you think about the drift

higher in terms of the pain consumers will be feeling into 2025? >> that is what we have gradually seen happening over the last year or so. aggregate measures of consumer health don't look comforting. the savings rate is below pre-pandemic levels and falling. consumer delinquencies on auto loans are above 2019 levels. student loans haven't defaulted yet, but they will start soon as they need to be repaid. the fundamental driver over whether people will continue spending is whether you have a job or not. the unemployment rate has been trending higher and is weak when we get to the stage where people start to lose their jobs and could get people to cut back on spending. matt: what do you think drives that? what pushes companies to -- i guess if there is no gdp growth, they won't need to keep hiring.

if there is lower revenue for big corporations, they won't need more people? >> yeah, 2% to 3% gdp growth has risen by a percentage point from the lows and hiring is weak, mid 2008 kind of rates. they are already trying to cut labor costs and it's a result of high borrowing costs, rates being restrictive. if we try to cut back on spending with less business revenue and you have been looking everywhere you can to not reduce hours, it might get you to the lighthouse. people are not quitting as much over worry of finding a new job. it might mean that lack of voluntary separation could turn into involuntary perceptions offstage. matt: given that, how much do you think the fed could cut in 2025? >> we think 125 basis point cuts

, much more than what the market is pricing out. sonali: how much are you worried about spillover? we have had investors tell us that a lot of the assumptions around stock market protections for next year are really predicated on sufficient growth. between what you are saying about potential weaknesses, consumers, and what you might expect from the trump government in terms of efficiency seeking and bond vigilantes just coming after the bond market, potentially a fiscal situation that won't improve. all put together does it signal that growth is potentially compromised? >> i think it does. we are expecting a 1% average growth for the next year and fundamentally looking back, rates are restrictive. we have had such substantial fiscal support through the comic and in those post-pandemic policies with infrastructure,

that is going to be fading in 2025 and we will see if we get further cuts. the impulse is flat to negative over the next year and rates are restrictive. this could be the time it catches up with us matt: 3% even on the lower bound, that should be, i would say, pretty stimulative. veronica, thank you so much for joining us. veronica clark is the director of u.s. research at the economist at citigroup. happy new year to all of you. we will talk about how much happier it can get with luxury goods. this is bloomberg. ♪

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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. matt: all right, matt miller sonali basak, paul sweeney, live

in studio simulcasting on television. how about that? we are also doing the youtube thing, head over to bloomberg.com and search for you to podcasts, that's where you can find us. markets, a little bit mixed. the s&p is up seven, the nasdaq is off about 13 points. mixed trading volume, light today, as you would expect. the 10 year to, wti crude oil is steady. $71 and $.50 per barrel. bitcoin is moving higher, 95,200. remember, we were just at 107,000 a couple of weeks ago and i don't know, maybe that was trump trade at the time? we will keep an eye on that. sonali: it's it's interesting, looking quickly into the mag seven today, you are seeing that barely breaking into the red. red right now, barely breaking

into the green. fluctuating with risk appetite that's off the table. matt: absolutely, we will keep an eye on that. there is a ticker on the terminal for that. sonali: pnp seven index. that's how i look at it. five of the stocks are higher on the day, two are lower. that is nvidia, down by .9%. tesla is still in the green. paul: there is a mag seven etf as well, i always forget the ticker. and there is a leveraged one. >> why not? >> want more risk? loaded up. let's talk a little luxury right here. one of our best voices that we have is right here in house, deborah aiken joins us, a luxury analyst for bloomberg intelligence and is based in london. debbie, thanks for joining us. we were looking at rich go.

some of the wealthiest on the planet happened to be french folks who own these luxury brands. it's been a tough year for those stocks. step back, what happened to luxury in 2024? deb: i think if we step back to the beginning of the year, january february, we had some of the biggest company ceos focusing on a normalized year of growth. that followed three real years of recovery. 21, 22, 23. normalize's growth was set for 24%. it started out ok in the first half and in the second half we were looking to pick up on the back of that. that is where the disappointment has been. second half of 24 is a real disappointment going in on the economics in the politics. there was a big dragon china.

also just the fact that we got to peak price, 25% price increases across the sector to pass on those inflationary costs . it all just became too much at the entry-level especially. paul: so, what has been the problem? is it just that the chinese economy and consumer are so important to the segment? rich people, the top 500 in the world continue to get richer and richer and richer. i can't imagine there is an upper limit on burke and bags. deb: yes, if we look at the companies that have outperformed , mez and the products that they offered to the market, that waiting list is still in place. though they are high and names, these companies are focused on 8% to 10% growth here in, you're out, and are achieving that, but

it has been twofold. thinking about the chinese market, to put into context chinese consumers when they traveled and spent time on the mainland, they were around one third of the luxury market. we think that 23% or so at the moment means we've lost 10% of the market from their. what has happened, though, is the u.s. has been particularly robust and has picked up a little late, as well as the rest of world and asia. looking at that absolute revenue 2019 versus 2024, even taking out acquisition from 21, sales are still over the world in 2019 in absolute euro terms. there's been a big shift of that we think will continue into 25. sonali: another question i have

is how much is this the macro? china is a massive story and we will perhaps talk about it more, but i'm fascinated by the rebranding of some of these large jug -- large luxury items and brands. jaguar is one that i covered earlier this year. that's a pretty extreme example, but there are others. how much of this is customer taste changing and these companies needing to react to changing preferences? deb: there are more and more reports coming out because we need to think about the recycle industry, too. one of the big categories stepping back would be watches. those are higher index in china. most of them have fortunes.

if we think about the other sites at the low end with the aspirational side, failures in different creative directors moving around, some question on where the identity of some of these grants are. therefore it tends to be the heritage brands that don't necessarily depend on a single creative director and are more focused on a team and a high level of workmanship that continue to do better. i think we will see more of that playing out in 2025, if that kind of answers your question there. matt: daba, of all the luxury companies that you cover, what are the ones that seem well positioned to you, these days, going into 2025? deb: looking across, mo tl has moved around a lot in the last 18 months. generally, a little bit of a delay. companies are really being more

forthright in explaining what's happening, where the investment is to back the future growth. so, on the top and you have the likes of her mez. if you look at the numbers out there for topline earnings growth, 2025 was fully prepared coming in ahead of sales. you are looking at double-digit sales there with a range of 9% to 12%, her mez leading in the lead. product is doing very well. cartier, van cleave, others, with high fine jewelry and that high worth individual to continue to buy, based on those names out there, lvmh we think will do better in the second half of the year and they have big exposure into travel retail.

a lot of these companies admit single-digit growth. from high single to double digit growth in those niche individual brands with, we think, waiting lists out there still for the higher of importance. matt: on the investor side -- consumer side, not the investor side, how prices come down and is there a luxury watch price index we can look at? deb: there is. the news site works with sub dial. they have their own index. we look at swiss watch industry data to look at the average price. looking for it to begin, it's absolute numbers that are down in value terms across the

industry for swiss watches, 3% to 4%. behind that, when you look at the ones above 3000, 10,000 and above would be at a manufacturing price, you could add a lot more onto that the retail value. to answer your question, that is what we saw on average across the industry for 2024. sonali: we will have to leave it there, we are running out of time. that was deborah talking about a very complicated luxury market. up next, talking about nonalcoholic spirits. some of us keeping it clean this year. this is bloomberg. ♪

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matt: it is new year's eve, and that means a lot of people are going to get hammered tonight. many will not, because thinking alcohol has become less popular. slowing demand and the prospect of tariffs under president trump when he comes into office january 20 spooking exporters of booze around the world. the story that caught our eye is centered on mexico, because apparently there is more than a half billion liters of tequila sitting in mexico.

price cuts not helping those shipments move faster to the u.s. ahead of the trump administration. they want to get them in there -- exactly. paul: a tariff on tequila? that's brutal. matt: who knows? we are purely speculative on what terrorists will come into play. but he can't if you want to come and is like about 25 sonali:according to the "financl times" and iwsr, the amount of the spirits sold in the united states the first seven months of the year shrank 3% -- matt: tequila is for boomers, right? paul: yeah, i -- it seems like every celebrity had their tequila. matt: clooney kicked it off with

cindy crawford's husband. sonali: matthew mcconaughey is taking it home. matt: matthew mcconaughey will sell you anything you can. [laughter] a lot of people are heading more towards snoop dogg. ever since weed became legal in so many states, i've lost count at 26, i think, people are opting in some cases to take an edible rather than drink jack daniel's or whatever. paul: substitution effect, like we learned in economics class. matt: i think that is the case i think people are concerned about health, want to lose weight. glp1 drugs are making it easier -- paul: they say that reduces your appetite for alcohol. sonali: or the pandemic may be never want to drink again. matt: you drink so much -- sonali: i gave up drinking for

almost two years ever that and i can begin through a glass of wine a few times a week. matt: really? i happen to know from first-hand expense that is not the case with sonali. sonali: once in a while i go a little heavier. matt: at the desk at 7:00 a.m. -- miller, you're taking the show. [laughter] sonali: i admit that happened once in a while. paul: if you rely on matt miller to carry the show, you had a big night. matt: haven't had a drink for 2.5 years. august 2022. sonali: patron, owned by bacardi, cass amigos, they've been cutting prices for years. i'm all about the craft brewers for beer and craft distillers for other alcohol. it will be tough to compete with tariffs, consumer tastes, and the big guys. paul: that's a lot of tequila to have an inventory for them

sonali: multiple swimming pools. matt: they continue to distill more than they sell. i believe last year they had a sixth of their tequila left after they sold what they could. it continues to add to the stockpiles. sonali: we are going to talk about nonalcoholic drink because clearly that is what people are going. we have seen slower demand for tequila and a boom in nonalcohol experience. nonalcoholic spirits, they are the fastest-growing segment in the beverage industry. younger consumers, gen z, the kids these days, they're passing on the hard stuff. we're going to discuss it with melanie masarin, the founder of ghia, which makes non alcoholic after -- aperitifs, and is in select whole foods around the country. i'm a sucker for that i'll and whole foods. totally a sucker, love to try

everything on it. but there are a lot of things on that shelf. what has it given you to be available in whole foods? how has it increased your business? melanie: well, we are very new to the shelves of whole foods, so we don't have a ton of data yet. in general when we survey our customers, the one thing they want to see from us as being more available for beverages. people want to be able to grab us impulsively whenever they shop and be able to be at whole foods in january and february, 300 whole foods across the country, that is big for us because it is helping make this category a lot more ubiquitous. paul: melanie, talk to us about the nonalcoholic spirits market in general. how big is it? these are growing? i try to stay far away from that stuff as possible, but educate us. melanie: in comparison to alcohol, it is very small, but it is the fastest-growing segment in the beverage category.

we have seen people shift their habits in terms of not drinking, 30 to 40% of the u.s. adult population doesn't drink at all. people are also moderating. that is what we are seeing with ghia. 90% of our customer identifies as someone who drinks alcohol but is seeking moderation. it could be senator thursday, -- sunday to thursday, or not after a certain hour, 1000 alcohol per evening. at one glass of alcohol per -- one glass of alcohol per evening. way beyond the trend, there is diversity a product within the category, there is very crossgenerational consumer for the category. we are starting to see retailers embrace it. matt: i have moved back to new york in 2022, had a couple kids, wanted to lose some weight. there were dispensaries on every block, so i figured i don't need to drink anymore, and i haven't had a drink since then. what i do is i just crush

flavored seltzer waters all day long. why would i want to add fake alcohol to that? melanie: well, actually ghia is not fake alcohol. we are trying to create a new flavor profile. we have won over 10 culinary awards since we launched. you may want something to prepare your pallet for dinner, something that makes you feel like you are having alcohol, not the physical effects, although a lot of brands lean on that. the placebo effect of having a very delicious drink that feels like a grown-up drink that is very complex, that has sophisticated taste profile, so that you don't feel and vandalized by being served water or -- infantilized by being served water or sugary mocktail.

it is very celebratory. you have signals that give you that feeling. you may want to have more. matt: i love campari. i used to not that stuff back. sonali: i do, too. bring us behind the recipe. how do you make ghia? melanie: well, we make ghia in the u.s. we have ingredients from all over depending on their source of origin. we have a sweet lemon, it comes from japan. w and somee -- we have some rosemary extract from the south of france. the recipe is that i am french -- i am french-italian, i grew up in france, and it was that campari flavor profile, using a plant that grows in the alps and it gives it the bitter taste. it is satisfyingly bitter but not too much. quite complex.

it is made with pure juices and extracts. we always say we are trying to raise the bar. play on word, but it is not just alcohol, is also just making better drinks. if you look at alcohol bottles today, they don't even have ingredient labels on them. it's the only thing you eat without freshening once inside. we wanted a product that is much more transparent but delicious. it is a new way for beverages. -- wave o o beverages. paul: who is a typical customer of nonalcoholic spirits? is it age-driven, gender-driven? who is the typical partaker? melanie: within the nonalcoholic spirit space there are subcategories, and obviously beer really paves the way. it is the gateway to nonalcoholic for a lot of people. we're seeing generation standpoint, it is really anchored with

millennials, but we have a lot of older customers as well. matt: you want to try it, paul? would you not try it? i know you like a glass of tito's on the rocks. paul: and that is from austin, texas, so i don't think that will be a problem with the tariffs. matt: there must be a situation -- let's say you went out and you have to drive home. paul: i would try a mocktail. are they cheaper than a cocktail? matt: i don't know. melanie, are they cheaper? sonali: i was going ask --go ahead, please. melanie: the rule of thumb is that investments you have a nonalcoholic version of a cocktail for two dollars less -- in restaurants you have a nonalcoholic version of a cartel for two dollars less. the ingredient is more expensive. matt: what are you charging? melanie: 4.99 at whole foods. sonali: the bottle is not cheap, that is what i was looking at . it is a must $40 for the bottle

-- almost $40 for the bottle of aperitif. how studies that price? -- how steady is that price? do you find it is too expensive for some, or that it is hitting a higher-income younger buyer? who is this reaching? melanie: i think it is a big hurdle for the category. spirits in general are more expensive because we don't have the resources of the big guys. it is a goal of ours to make this bottle more approachable. two years ago we concentrated the bottle a lot more and it has 17 servings inside the bottle to pass on some of that value to customers. we recently launched a bottle that was $20, sparkling bottle that you don't need to mix. that is a lot more approachable because we wanted to be in line with a bottle of wine. that is doing well over the holidays. the prices will come down. we probably going to see more acquisitions in the space and

they will have their prices go down as well. matt: what about events? can you go after events? i've noticed over the past few years liquid death, which is essentially just water in a large can. it's like $15 if you go to msg. but i will and other people will pay it because, like you say, you don't want to be looking infantilized is the word you use. i want if you lik, grown-up, but i don't drink. -- i want to feel like a grown-up, but i don't drink. are you tapping that market? melanie: we are hoping to, for sure. then you start -- venues are starting to make the move. it is a place where you get charged whatever. you go to the bar and pay whatever is available. we are going to more independent venues, but the big ones like msg usually come with a heavier price tag. matt: i will smuggle salmon. sonali -- i will smuggle some

in. sonali: i don't know if the sophisticated buyer drinking ghia is also drinking liquid death at a phish concert. matt: no, at the u.s. open -- sonali: we have less than a minute left. melanie, you mention consolidation. are you looking for one of the larger beverage kind to be buying you -- larger beverage dines to be buying you? melanie: it is early, but we wanted to be global, we want it to be in every venue, on every retail shelf, on every restaurant menu. it would be very helpful to get one of the giants do that for it is just the beginning for us. matt: everyone wants to follow the clooney playbook. you make it in your back yard and they buy it for a billion. fascinating story. i will definitely check out the beverages at whole foods and maybe i will bring some with me when i go --

sonali: brooklyn tonight. matt: to the u.s. open next year, or some event like that that make sense to me. melanie masarin, the founder of ghia, talking about adult nonalcoholic spirits that can be used in an aperitif or just keep them around the house. we will talk about markets, specifically bitcoin's postelection rally, losing a little bit of steam to close out what has been a banner year for the cryptocurrency. sonali, by the way, anchors or crypto show on tuesdays. sonali: not today, but back next week. matt: usually on tuesdays. we will talk about the oj crypto. o.g. crypto. this is bloomberg. ♪

matt: i thought you were going to bring us in. sonali: oh, sorry.

will, come on now. [laughter] that's our producer. paul: i can do it. looking at this market here, it is mixed out there, as you would expect for some -- as you would expect. nasdaq is absolutely unched on the day -- i use that term because lisa abramowicz hates it. wti crude oil, i always quote wti crude oil because i'm watching "landman." all -- matt: i like the global benchmark -- paul: i like the west texas -- matt: cl1 commodity. paul: bitcoin up 3.8%, 95,500 for the cryptocurrency. sonali: you know what is interesting to me, fun little fact as we head into next year. you are looking at the 2-10

curve with treasuries. -10y -- 10-year yield is down, but the 210 curve is that the steepest level since may 2022. matt: it's been inverted for a while. sonali: totally, and the you are watching a 30-basis-point differential. that is something investors have been betting on all year long. painful trade throughout the year, but if you stuck with it, you are richard ford. matt: wbe function on the bloomberg seems pedestrian, but when you type into it, you click into the united states, and you can see the curves, you can click into the twos, 10s, graph that. it's a really good function. much more useful than it initially appears. how many years you been at bloomberg? actually next week will be my 25th anniversary. sonali: really? matt: i will get my 25-year pylo n and the fifth floor can sign

it for me. i'm excited for that paul: paul: very good. awesome. matt: you mentioned we can say unch because lisa abramowicz is in here. i've been quoting the dow jones industrial katie greifeld is in here. because tom isn't here, we can focus on bitcoin. sonali: all the parents are gone, all the kids are out to play. checking on bitcoin since the election, it has dropped below the $100,000 level. it has been in the mid 90 thousands. it topped 106,000 earlier this month. some of the more bullish calls for bitcoin into next year are in the $200,000 range. that is due to trump's embrace of the industry. we will discuss it with michael regan. let's go back to something you and i have been talking about a lot, matt has been thinking about a lot. if microstrategy is the biggest corporate buyer of bitcoin and you have at least yearnings from

some corners of the u.s. government talking about this idea of the strategic bitcoin reserve, how much real appetite is there to do something like that, and how much does it actually matter to the bitcoin market? michael: you know, sonali, i get matters a lot. the execution and what it exactly turns into is the big question. if you go back to trump's speech to the bitcoin conference in july, he basically said his plan is to create bitcoin reserve similar to the strategic petroleum reserve. the way he wanted to do that was to keep hold of the bitcoin that the government already owns. he owns a surprising amount of bitcoin through seizures -- it owns a surprising amount of bitcoin through seizures, 200,000 bitcoin. that would obviously prevent new supply coming into the market from the government.

the question is -- matt: i thought the silk road stash was bought by tim draper at auction. michael: some of it was. there is still some of that, and various other seizures. it all adds up to about 200,000 bitcoin. matt: wow. michael: that is the basis of what trump wants as a reserve. his ally in the senate, cynthia lummis of wyoming, wants to buy a million bitcoin to add to that , and use the proceeds to buy bitcoin. that is not necessarily seem to be a lot of people jumping on that bandwagon. there is no cosponsors of her bill to do that currently. there is any number of reasons to believe that there would be some resistance to that. but i think that is the big tension heading into 25, what exactly what we do with this bitcoin reserve. will the government buy more to add to it or hold onto the

tokens it already owns? it boils down to the fundamentals of supply and demand we know what the supply is, almost 200 million bitcoin in circulation. there's only about one million left to be mined the next century or so. the supply really comes from are there any big whales selling or not. the demand -- we clearly saw a surprising amount to many people of demand unlocked from the etf's from the beginning of the year. that is what took bitcoin above that record back in march. in the optimism about trump is what took it further. i think what is interesting lately is you have sort of that macro influence reinserting itself. both the stock market and bitcoin peaked right before the fed's last meeting and jerome powell came out a little less dovish than people were hoping for. we've releasing this mini

correction in bitcoin since then. lack of another narrative, we are releasing the macro, the interest rate, the tech stock trading environment taking over again. paul: mike, what do we expect from a regulatory standpoint? presumably we will get a new sec chair, presumably more constructive towards crypto. how is the world thinking about that? michael: yeah, absolutely. we are expecting a sort of 180 turnaround from what we saw in the biden administration, where there was any number of legal cases from the sec, criminal cases. i think the expectation is that many of those will be dismissed or settled early in the administration, and that there won't be that regulatory headwind for crypto the next few years, for better or worse. there is good reasons why the u.s. had such a strong reaction

to all the chaos of 2022 after ftx filed for bankruptcy. memories are short, and now this new administration is really ready to take off the restraints on the industry that we saw during the biden administration. sonali: also outside of bitcoin, there are serious implications for regulation when it comes to other tokens out there -- if the area -- ethereum, for example, especially since the sec had a specific way it looked at ethereum. rev other potential tokens in the pipeline to get into etf. what do you think happens and what kind of gates are lifted? michael: a lot of people are expecting solana, xrp etf. the potential is there for perhaps approval of more crypto etf's.

the question i would have is whether the demand is there from the investors side. if you look at -- call it the difference between the bitcoin etf's and the ethereum etf's, which were also approved in 2024, we something like this we saw something like $35 billion of inflows into the bitcoin etf's, only $2.5 billion into the it. -- into the ethereum etf's. bitcoin was the first mover everyone was waiting for. it is too many people the crypto market, and they are not so much interested in these alt coins. we could see approvals for more crypto etf's. the big question is how much demand will there be, given the disparity between the demand for bitcoin etf's and ethereum etf's that we have already seen. matt: i want to 3x leverage dogecoin etf's. any applications for doggy coin?

michael: now that i am aware of. i will go back and double-check that for you. certainly someone has ready to file they haven't already. matt: michael regan, what an amazing year to cover this asset. i think a lot of people wrote it off for dead after the crash of ftx, because it drop down to a paltry $15,000, which is a line going amount for line of code. sonali: blackrock saved the date, coming up with the bitcoin etf that was the record-breaking etf ever for any asset, really, not just any crypto asset. paul: that took you up to $60,000, and then trump took it to where we are here. matt: michael regan, thanks for joining us. mike covers crypto for us for bloomberg. we will talk about the biggest gainers in 2024 and the biggest losers of the year. this is bloomberg.

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matt: is my microphone not

working? i was too early? sonali: you were too early. matt: good new year's eve morning to everyone out there, the dozens of people watching bloomberg television and listening to bloomberg radio this morning. you can see us also on youtube. matt miller here was sonali basak and paul sweeney. we have merged shows. we are simulcasting with bloomberg intelligence. we are excited. we are having a little bit of fun. we are celebrating the end of the year. celebrating hong kong as well. look at those beautiful fireworks. bring them up. sonali: it is exciting, guys. matt: very cool. it is nighttime there, it is daytime here. it is magical. sonali: it is new year's somewhere. matt: for those of you believe in the roundness of the earth. we have markets that are not as exciting as fireworks, but we are climbing a bit. very little bit. the s&p 500 up .04%.

the dow jones industrial average doing a little bit better, up 48 points. we are not seeing the fireworks in markets are we? sonali: you are seeing the nasdaq down on the day. though you are seeing the s&p 500 holding onto its gains, but barely. we have been keeping a close eye on that throughout the morning trade because last day of the year you would want to see in the green, but it is looking like it is wavering. you're still below that 6000 level. the one that was met with excitement earlier this year. i mean, we cannot really complain, guys. it has been an extraordinary year in the s&p 500. two-straight years of gains of more than 20%. the best returns since the 1990's. that 10 years still above 4.5% danger sound as some investors, at hsbc we give him credit for

tagging that one. above that 4.5% level but below where we were last week at 4.6 percent. i know you are watching crude, paul. that is .8% higher. but oil generally, weaker on the year. matt: bitcoin up 3.5%. how about that? it is a solid move there. 2024, as sonali was saying, a big year for equity investors. particularly if you are sitting in the tech stocks. the winners and losers for 2024. we can do that with isabel. hang with us. that is a pretty solid gig. matt: looking at the winners and losers of 2024. >> the biggest winner is vistro. it pulled off a feat no other utility stock had pulled off since 2001. i was expecting to see tech names, but it is up 260%.

they posted their best year in history. it is a comeback for the defensive play utilities. that has been long considered one of the sleepier corners of the market. but utilities this year advance on the back of the growth of ai and other data centers that fueled demand for power. that is really interesting. matt: i did not see that coming, and i should have. you know, i work with alix steel and she is all about the energy plan utilities. she will say, see? i told you. the power, all of this stuff. isabel: the one stuck with a claim on vista's position is palantir. it only join the s&p 500 in september. maybe that is why it is not on the list. matt: paul: dan ives was late to the party because he initiated coverage of palantir light. but he came out with one of the strongest byes i have heard. matt: does he not have any other kind of pie?

paul: you are right. i don't think he has any holds or sells out there. when he came up and initiated coverage that got my attention. sonali: pc palantir four straight days in a row, and when the risk appetite goes, of course these high flyers can go a little bit along with it. i would also say palantir speaks to another trend that people are looking into. this is defense tech, isn't it? isabel: definitely. nvidia is number two. maybe we can skip over that. number three is ge verona. it is the maker of the biggest offshore wind turbines in the western hemisphere and or than doubled this year. matt: that is amazing. isabel: it spun off from general electric in april and became an independent supplier. i also did not see this coming. it may not be in the leaderboard in 2025 because it sees grim prospects as the industry faces a slowdown and we pricing. have ceos saying they have not

had a new sale in roughly three years. matt: i was going to say, i feel like wind turbine revenue is not on the up and up. they are already all there. sonali: what is fascinating about that, you have this index of spinoffs up more than 16% this year. and you have constellation energy being the second biggest gainer on that index come up more than 90%. companies that have been spun off doing extraordinarily well. just by focusing on getting away from that conglomerate mentality, that is a trend expected to continue next year. isabel: they will become more noble too and make their decisions without the bureaucracy. flexibility is key. let's go to the losers. which is not a big surprise. it has been a tough year for cvs and they continue to face mounting headwinds. there is this pharmacy benefit manager legislation. there is also a new doj

complaint alleging cvs health violated some things related to opioids. we also have three consecutive profit warnings and a decline of over 40% of its share price this year. it really has been tougher to cvs -- tough for cvs. matt: those people who go to a cvs know what a horrible place it is to shop. usually it is very dirty, everything is locked up so you cannot get anything, and there are long lines at the pharmacy. but i wanted to say something nice about a pharmacy -- a cvs location i went to on central park in yonkers recently. it has been redone and they did a lovely job. sonali: i love cvs myself, but a lot of pain there. member, the ftc had also started probing cvs as part of other benefit managers for insulin pricing. something i am watching closely. i wonder if this travels into

the trump administration. if they are going to target insulin prices the idea was they would start to look at more and more drugs and look at the cost of them. we will see if it happens. isabel, we do have to leave it there. thank you for joining us. we want to talk about homebuying because paul really wants to refinance his mortgage, and it is looking tough out there. paul: full three of us have bought a home in the last couple of years. sonali: the one thing i am happy i got ahead of is buyers heading into the market when things get rougher. mortgage rates did not really change. in fact, they have been on the upper end. many homebuyers are giving up on the prospect of pre-pandemic level rates. pending sales of u.s. homes increased for a fourth month in november to the highest level since early 2023. that is exactly what i was trying to get ahead of. we are going to discuss the market with daryl fairweather.

i'm not good at timing the market. who is? it looks like people are starting to accept these higher mortgage rates. i have to ask, not only should they get used to these higher mortgage rates, should they be concerned that you could see them float a little higher from here? daryl: it is differently possible. our forecast is for mortgage rates to stay where they are at, but that could be a bumpy ride. they could float up, they could float down in the near term, but nobody should be expecting rapid improvements in mortgage rates. i think that would be an unusual situation. you have to take the market as it is right now. paul: is there a clearing rate? do you think the market would free up in terms of activity? i used to think it was 5%. now it is maybe even 6% or something like that, where sellers will say, i'm willing to make a move here at 6%. do you think there is a clearing rate? daryl: most mortgage holders

have rates above 6% -- rates below 6%. it would take a really rapid reduction in mortgage rates for people to become on lock from those record-low mortgage rates got during the pandemic. if that were to happen there would be a lot of chaos in the economy. i don't think that is something people should hope for. he could come with side effects. matt: i'm glad some ali was able to get into the market, but for a lot of gen z and millennial buyers it is a tough nut to crack. his homeownership going to be more and more difficult for these younger generations or do you think there will be some kind of regulatory changes or building stimulus that drives a new wave soon? daryl: next year is going to be a renter's market, which is good for people who have been shut out of the homebuying market. it is stabilizing because of the

new construction that has happened. but as people set out the housing market and stay in the rental market prices are going to keep going up and it is not going to get any more affordable for them in the years to come. if people decide the market is better for them this year that may end up where they are stuck for years and years to come. sonali: why would rance stay flat? if you have more people being crowded out of their housing markets here to buy a home, then why would rand stay flat? especially after the increases we have seen so recently? it feels like the path forward has been higher constantly, especially if you live in somewhere like new york city. daryl: in some places rents are going up, but in places where there has been building like the south there are zero and one bedroom apartments. even where zoning has been liberalized we are seeing ed use up for rent. though small units that might be attractive to a young

professional, there is more of them now and that is why those runs are flat. people want that three-bedroom home. they are going to have to enter the for-sale market and it is probably going to be expensive. matt: people talk about having a housing crisis in this country. maybe a couple million units shy. i don't know the numbers. are we in a housing crisis in terms of availability? and how do we get there? daryl: we were in this housing crisis even before the pandemic. the 2010s we built fewer homes in any decade going back to the 1960's. though there was a bit of construction when rates dropped it was a not -- it was not enough to make a meaningful difference. we are stuck in this place where housing is unaffordable and if it were not for these higher rates prices would be a lot higher. it doesn't have anything to do with the rates. it has to do with the fundamental lack of supply. especially for homes that people desire and places people want to live. that is where housing has gotten

expensive and it does not look like it is going to get more affordable anytime soon. matt: there was a story in the new york times about people buying barndominiums. that has got to be the dumbest place. sonali: i am so game to live in a bar. matt: in the high desert of arizona? temperatures are not going to get any cooler. our people moving north? is everybody getting ready for the heat? daryl: the florida market is one of the weaker markets this year and it does have to do with rising insurance costs and the storms that keep getting more severe. in places like arizona water is a big issue. they are having to truck water out to some places because they have been cut off from the water supply in the main cities. in terms of, is the midwest doing better? rents are going up faster in

milwaukee, cincinnati, pittsburgh, those eastern cities. those rents are going up quicker, so that might have some what to do with the climate. matt: paul: daryl fairweather, think you so much. she is the chief economist at redfin, talking about u.s. residential real estate. the 30 year fixed mortgage, 6.75%. my 6% mortgage is not that bad on the jersey shore here. we are going to talk chips. why not? chips are in just about everything. it is not just nvidia. lots of other ways to play this game. you are going to have some smart voices coming up on the chip business. speaking of, the nasdaq off about .25%. this is bloomberg. ♪

paul: good tuesday morning. good new year's eve morning from our bloomberg-interactive

brokers studio. we are doing this simulcast thing. that is where you do radio and tv live. matt: it is so much fun, isn't it? sonali: can youtube today too. paul: for the kids out there, youtube.com. you can find us out there, as always. looking at the markets here. kind of mixed. the nasdaq is off about .25%, but one of the stories obviously the last several years, a big player in 2024 was the chip business. it helped propel police wealth in 2024. we already talked about that story, where the tech titans are making money on their portfolios. let's take a look at some of the winners and losers of the semiconductor industry and whether this rally can hold up in the new year. based in our beautiful san francisco office out there on the p are in san francisco. it is nice and they have good

food set up out there as well. i love going out to the san francisco office. winners and losers here, let's start with a loser. can you talk to me about intel? where does intel live in this new world? it feels like they have missed the ai play, yet they are getting a big contract from the u.s. government. i'm not your how to square that circle. how do you think about intel? >> you have to look at it as two companies. one is your legacy chip company. an other is a manufacturing company similar to a tsmc or global foundry. on the product side, this is where they have missed out on that ai crate -- ai trade. it was then not coming to the market with the ai products in time, and they are still sort of juggling. we don't have a good pipeline for their ai revenue ramp, and

on the server side they are having challenges with amd taking share almost every quarter over the last year or so. the contract manufacturing comes from the manufacturing side. since pat took over the home the northstar for the country for its turnaround was become the sort of leading edge manufacturer of the best, if i may compare, become the tsmc of the west. that is where they really have been investing a lot, focusing on getting advantage in manufacturing leadership here in the u.s.. that is where all of their grants, tax credits, etc., are designed around the business. speaking of tax credits, is intel just down? do they bring in somebody to break it up and sell off the pieces? because they are still looking at $20 billion from uncle sam,

right? >> yeah. they have not said anything specifically, but from our analysis of the company, including valuation we think there is going to be some kind of divestiture, some kind of investors brought in. we think the more likely portions of the business are going to be the psg or altera business they had required -- acquired. there is a lot of equity stake they have not mobilized. these two would be, i would say, the highest probability exits. the discussions around breaking up the foundry business, that is something they ought to do, especially how important to tediously intel's manufacturing plans are for the u.s. sonali: speaking of how important the plants are for the u.s., there is a new presidential administration. how do we expect president trump to approach the industry? and would they get any support

above and beyond what we have seen under the biden administration and chips act? kunjan: that is a great question, and there is multiple angles to look at it. just looking at it from a manufacturing and subsidy perspective we do not expect anything to change here. the government has been very supportive of bringing back manufacturing, especially leading edge node and advanced manufacturing when it comes to semiconductor spirit so, we don't think this will -- this tailwind will continue to be a tailwind in the new administration. there are different angles now. one is the m&a landscape, with the new administration being easier on m&a, it has not happened in semiconductors. again, this area, when you look at the data versus the sentiment the data does not show that the trump administration would be significantly a booster for m&a. if you look at the deals that were blocked or went into

regular tory -- regulatory concerns, the data shows it was similar to what we saw in the biden administration. from that angle we do not expect, at least from the data, significant things to change. there are different angles here, specifically pertaining to china. that could result in multiple different aspects. one is sanctions on chinese-based companies. most of the u.s. semiconductor giants have significantly high exposure to china. anywhere from 40% to 60% of the revenue. becker, de-risk. the second could be retaliatory measures from china. one example recently was china initiating a probe on nvidia. we expect something in terms of the tariffs or the sanctions to play a larger role on the u.s. semi conductor market. matt: paul: i'm looking at the winners in the ship -- chip space.

broadcom up 109% year-to-date. those are the clear winners. what do tech investors feel 2025 holds for some of those names that have been propelled by ai? is this an earnings growth story that can support more performance out of these names? kunjan: fundamentally we expect 2025 to be another really strong year for ai chip names, with the one key caveat that we expect not just one name to take all of the glory and winnings. we expect a much more broad-based growth going into basic names, ai networking names, broadcom. there is even others we expect to continue to ship -- continue to take a small share of the growing ai wallet, because spending is set to grow this year. we think there will be more names than just a handful this year. sonali: what is the risk to that

growth story for hyperscalers? at the end of the day we have seen ambition for companies to be working with nvidia and others, but do you think that could face a wall if investors also get fatigued? kunjan: you are seeing concerns come in. when you look from a growth rate per the growth is normalizing, right? when you look at last year was somewhere between the mid 40's and now sort of half. we so far have not seen any data showing that at least in 2025 you could see a shock to this number. so far since the advent of gen ai these estimates have proven to be conservative. at the end of the year typically for most companies we have seen the numbers of the capex numbers go higher than what we had expected at the beginning of the year. paul: thanks so much for joining us. based in the middle of silicon valley. for everyone on the new jersey

transit, long island railroad, coming into the city for new year's eve, here is the weather forecast. up to three quarters of an inch of rain is expected. matt: three quarters of an inch? that much? paul: that is equivalent to four or five inches of snow. matt: it says temperatures will be too warm for snow. three quarters of an inch is very little. sonali: matt doesn't have to walk around in heels. paul: that is a lot of rain if it comes in a short period of time. if you are standing in a diaper in times square because they will not let you leave. matt: i don't know how to read the doppler. sonali: it is warm. paul: there is going to be a million people in times square, but they are not going to care. matt: to me that is a very small amount. it is not even four quarters of an inch. paul: you are exactly right on your math there. sonali: it could be snowing. paul: they will get a little wet, but they will be fine.

matt: back to the chip thing, you did the ai extravaganza. i learned so much about artificial intelligence at that bloomberg conference. my biggest take away was the difference between training and inference when you are looking at use of a large language model. it was fantastically useful. paul: you are going to be fun at the cocktail party tonight talking about ai. sonali: i just saw the progression of not get nerdier throughout the year. it makes me so happy. it makes me very happy. paul: matt: speaking of nerds, we are going to have a fish preview. you're going to preview the show at madison square garden. stay with us for that. this is bloomberg. ♪

sonali: looking at these markets, we are also keeping an eye on and new congressional session beginning on friday. let's hope it accomplishes more than the current session, which has been the least productive in decades, passing the fewest loss since the 1980's. we are going to bring in joe mathieu, host of "balance of power" to talk about what is going on after friday. we know there is a speaker vote. we know that president-elect trump has come out in support of mike johnson. does that clear up a lot of questions? joe: i don't know if it does.

it makes life potentially easier for mike johnson, but this is far from over. you still have a couple of republicans openly suggesting that they will not vote for mike johnson to be speaker. i will just back up a second to remind everybody that on friday the new congress begins. this is the 119th. it is a clean slate. the first thing that needs to be done is the election of a speaker. if you don't have a speaker you cannot swear in the congress, and then you cannot do any governing from there. the question is, will this get done on friday? normally this is a formality. the beginning of the new term with the new mandate. but mike johnson could have his hands full here remembering that he only has four votes to pillai -- to play with. the majority is so razor thin. paul: having trump that endorsement, which seemed fairly high profile, does that not seal

the deal for speaker johnson? joe: i don't know that we can say it seals the deal. it does help him a lot. this is the most important endorsement of them all. when you talk to tom massey, when you talk to victoria spartz, some of the others in the freedom caucus, these are republicans. they want to have a conversation with mike johnson about the way forward. in the case of tom massey he is already unknow because they are upset about the way the budgeting process was handled at the end of this year. now, donald trump could make mike johnson a made man, but when you only have four toluse democrats have made clear not a single democrat will vote for mike johnson. this all has to be handled inside the family. matt: before they start the hard work they are going to have trouble doing the first thing. normally i would say that is good, right? gridlock is good for markets. you don't want those people in

washington legislating, you know? but they need to pass or bring back the tg -- tcga. it sunsets next year. is it possible they will not be able to do that? joe: that would be a shocker. that would be a story of the year. we just brought donald trump back but he could not extend donald trump tax cuts. his name is on the thing. it's going to be a question of what the combination is. there will be a need for some democrats to vote for this and you know you are of salt is one of them. but we also talked about taxes on tips, overtime, social security, mortgage insurance. matt: auto loan interest. joe: exactly. there are so many we forgot half of them. a lot of the tax writers, even republicans who support trump are worried about getting all of that into a single bill.

he was already a big lift to make permanent the trump tax cuts. now you add this other stuff and it becomes a complicated conversation. especially if no one is going to touch social security or medicare. that is why we have been talking about the potential for deficit spending in this new administration. when you add the idea of tax cuts with tariffs you wonder what the impact on the economy will be and what we are going to be talking about a year from now. matt: every administration does deficit spending. i just want to point out for posterity's sake donald trump promised he was going to bring back the state and local tax deduction. he did not say, i'm going to raise the cap buy a few thousand dollars. he said he is going to bring back the state and local tax the duction to where god said it to begin with -- unlimited. i want to point that out. so no one forgets, donald trump promised he was going to bring it back. sonali: from matthew miller this is particularly important in new

york. matt: not just me. it is important to so many middle-class new yorkers. working families. sonali: notwithstanding taxes on tips and other things you had mentioned, a lot of things to consider. the point that torsten's lock at apollo has made i believe this morning, that the term premium for 10 year treasuries has increased by 75 basis points over the past three months, this means investors are demanding more yields here to take on that additional risk that is associated with what many believe is a more precarious u.s. vista -- u.s. fiscal situation. if that is the case heading into the end of the year before discussions are underway wooden somebody, say scott sent at the treasury department, into the face of higher interest rates, because investors are demanding more, wouldn't they look at congress, the president, and

say, we have to rein it in? joe: that is why we were asking him that before he was selected. scott bessent would tell you, hold on, we are taking each of these in a vacuum and you have to put them all together in the mosaic that only donald trump could create or understand. we are kind of being told to wait a minute here because you are not going to believe what you see. they will point to the trump tax cuts when they were initially put into law, increasing revenue and then kneecap by covid. what will happen without covid? will tariffs be across the board or more directed? these are the conversations they are going to be having. they have a lot of lawmakers to convince. look at jon thune or some of the others. these are reagan-style republicans where tariff is not the most beautiful word. we have some things to figure out in the onset. the one thing republicans seem to agree on is border security. that will probably be the first thing you hear about. sonali: the other big difference

between now and the last trump term is you have spending on interest payments alone crowding out other forms of spending and surpassing even what you spend on defense. paul: joe, what have you got coming up on your show today? joe: they asked me who i wanted to talk to in the last show. can you believe we are doing the last show of the year? i said frank luntz. he has just held a series of focus groups at west point. we are going to talk about what it means to be a patriot and maybe get outside the bubble for a minute to remember how lucky we are. matt: very cool. i'm excited to tune into my last "balance of power" of the year. really appreciate the work you and kailey do. i love the program on sirius xm. joe: 10 121. matt: it is a fantastic -- channel 121. matt: it is a fantastic way to cook dinner. you can catch it every day from

noon to 2:00 and again from 5:00 to 6:00. not a replay, mind you. they do not re-serve you the show from the afternoon. they do another program. i want to turn to the big take story on the bloomberg terminal this morning as the u.s. that balloons in the direction of $50 trillion. treasury bond dealers are warning of the risk of growing market pressures. joining us now is alec harris, who has more on this story. alix, some of the numbers here were shocking even to me, and i covered this market every day. but treasury issuance, as one natwest executive told you, has tripled over the past decade. meanwhile the balance sheets of these banks are not catching up. being a primary dealer ain't easy these days. >> you look at citadel in this case and they have been vying to

become a primary dealer for years and finally in september said, thanks but no thanks. this is a losing proposition and i think that is how people are feeling about it now and why you are not seeing the primary dealer community even grow to keep up with the amount of supply and that the government is issuing. that is a problem, because you need those primary dealers. you need them to facilitate in these markets from the auctions to secondary markets. remember, their balance sheets for these dealers is not just treasuries. it is a lot of other things. it is mortgage-backed securities. you are playing with all of these things, and as you can see, if you look back to march 2020 that is a really good example of what happened when the treasury markets ceased to function and dealer balance sheets cannot handle what it needed to do across all asset classes. that is the scary thing. that it is a regular occurrence. sonali: let's take a large step back for a moment.

there are a lot of confusing dynamics happening in the treasury market. one is the size of the u.s. debt load. then there are questions, why overnight funding seems to have pockets of stress every so often . the dealer balance sheets being constrained, as they are my as you say. and then hedge funds trading with a lot of leverage in this system. what is actually the problem here and the risk in the way the plumbing is working? alex: right now what is happening and where the primary dealers are having problems is you are asked to facilitate an intermediate in this market but do not have the balance sheet to do it you have to charge higher funding costs. if you are looking to buy treasuries in the repo market and you are an asset manager and you need to borrow to finance securities you're going to have to pay more. and there might you point where they are not equipped to pay as much as the dealers are asking them. that is when you get backstops

and stopping out of positions, and all of that has to make its way back onto the dealer balance sheets. right now there is 400 billion in aggregate treasuries alone sitting on dealer balance sheets. every time you get a treasuries settlement cycle, so the middle of the month and end of the month, you are getting a backup of repo rates. we are seeing it quite often this year. july dealer balance sheets were stuck. end of september was a very volatile quarter-end that nobody expected. year-end, today it is very mild. repo is under control. it is because the minute the calendar turned to october everybody said, we have to be better prepared for this. use all repo rates back up to 5.5% in the middle of november. sonali: another question about this too. we are talking about the treasury market here.

it is not only the most liquid market in the world, it is one of the largest and underpins the cost of avery other type of borrowing. if you are talking about the need to backup rates, as you are talking about, at what point does this become a larger issue? even a taxpayer issue? alex: you can see in some cases it already is. you guys were just talking about the cost of interest in the last segment. that is what it is going to look like to the taxpayer, that the auctions are going to get more expensive because it is just going to get harder and harder for these dealers to continue taking down this supply. member, the dealer balance sheets are not created equal. dealers have the autonomy to decide where their priorities are. during the treasury refunding one year i think it was last may they were doing something called blue sky and just kicking around ideas, you know, what they could

do to help improve treasury market funding. one of the things they proposed was a table to see who the biggest dealers were in the auctions to light a fire under the rest of the dealer community to say, if you are not pulling your weight you have to, because there is too much supply to leave it to a handful of dealers to be taken down. there is only 24 of them. we are down from the peak in terms of the number of dealers we saw in 1988. this is so critical that everybody is playing their part. if they are not there are serious consequences in the terms of costs to the economy, taxpayer, and those trying to finance their transactions in the financial system. matt: it is a great story. treasuries, $50 trillion day lose will test dealer pipes. i think that was one of the coolest quotes in the story. you are trying to put more treasuries through the same pipes, but those are not getting any bigger. it is a pretty great way to paint the picture.

calix harris there with the story on primary dealers. it is our big cake. being a primary dealer was a really good business. when i came on the street on the trading desk the government bond desk was the bomb. they had so much capital. they could swing it around. matt: we could do a whole show on things that have changed on wall street. [laughter] sonali: citadel securities really wanted to be in it. they shelved the plan. matt: we are going to talk about inflation in the restaurant business with danny grant, partner at maple hospitality group. and how can you tell if it is mazor david bowie? we will previously phish concert at madison square garden. happy new year's. ♪

♪♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

sonali: welcome back to bloomberg television and radio. i'm sonali basak alongside matt miller and paul sweeney.

happy new year to everyone out there. we are going to talk about the food business here because the restaurant business, never easy. placing, labor costs, and more budget-conscious consumers are taking a bite out of the industry's profits. joining us now to talk about what is ahead for 2025, danny grant. he is a two michelin star chef and partner at maple hospitality group, the company between -- behind people -- restaurants. let's start with inflation. the cost of certain goods -- coffee, cocoa -- have been skyrocketing. eggs. how do you get around that at a restaurant? danny: thank you for having me on. 2024 has been an incredible year for us, and really had a lot of wins for us in growth and being able to navigate through inflation. just like probably a lot of

parts of the country we are excited for what is to come in 2025. we are having a lot of expansion and opening new restaurants in miami and other parts of the country. this is the part of our restaurants that we excel the best that, is celebrating. it is one of our favorite days of the year to welcome everybody into the restaurants to celebrate. and to talk about how we navigate some of the inflation, it is really, you know, we take a lot of the hit, as far as we look at being able to cover costs and whether it is coffee, steaks, king crab, and ways we e to mitigate some of those things by different cooking techniques, different style of service. but one thing we never sacrifice is the quality of the ingredients. as you know, the restaurant business is an ever-changing, difficult business, but we relish in those moments and have

been seeing a lot of success. paul: talk to us about your consumer. who is your typical consumer? who are you targeting? danny: we like to target a broad span. we are in neighborhoods and locations that is anything that is coming in to have fish and a night out, to the much more extravagant celebratory moments of, they just closed a big deal and we are the most obvious place to go to to blow off all that goes into closing a deal. those are some of our target people. we target foodies. we love people who want to eat and drink the same way we do. that makes me happy and makes me kind of -- it makes what we do worth it. paul: matt: how has the restaurant staff held up in this post-pandemic world? we continue to see inflation, a problem for customers, for diners, and owners and

operators. but what about servers, bartenders, busboys? have wages kept up with inflation? how is that part of your family doing? danny: that is a great question and topic, because without our team we are not a restaurant. we cannot open the doors. that is one of our most important assets of running restaurants. some of the things we have done to keep that in place is, first of all, we have very high-grossing restaurants. that gives us a little bit of extra flexibility to look at ways to be creative and take care of our team. so, you know, we are always looking at upping our wages, health care, and then are the things that we have. food packages we bring to our team. we have family meals, other things that really help keep the morale of the team and everybody

feeling like the tightknit family we are. matt: great to have you on the program. thanks so much for joining us, and we wish you a happy new year and a successful new year as well. danny grant there. he is a two michelin star chef at maple hospitality group. paul: i watch this tv show "bear" so i feel like i am in expert -- i'm an expert on the business. that is how i learned things. matt: you learn things through television. sonali: i am more of a cowboy than paul is. matt: she has 12 power -- 12 pairs of cowboy boots. sonali: that is the truth. [laughter] matt: let's continue to talk about inflation. nowhere is it more apparent than in live entertainment. concert prices have gone through the roof, and even places like cash or trade, which is an app that allows you to buy tickets at face value are affected. i have not been able to get

phish tickets this year, and it is a really important part of my year. it is an important part of new york city and wall street culture. the jam band is playing its new year's eve run at madison square garden. they have become a staple of that venue, and i wanted to get in touch with a phish fan. he runs ceg presents. they produce and promote hundreds of shows every year. and tonight is his 190th phish show. just to give a preview of what to expect tonight, it is such a big deal. they always do a gag on new year's eve, and they have become a staple of madison square garden. tell us about what to expect at the show tonight. >> first of all, if you do want to go tonight i can probably get you tickets. [laughter]

but secondly, new year's is always a three-set show. they start around eight, they play until at least 1:00 in the morning. and there is at midnight always a gag. no one really knows what that is. there are little hints. you will see it in the merch, and may be the tickets. i saw something may be pointing to a hockey thing tonight. that is just a guess. sonali: what is a gag? matt: last year they had, i think, whales and squids floating through the air. how way, would have been the best gags you have seen at a new year's eve show? howie: that was pretty epic. they had a giant whale and dolphins and they turned madison square garden into an aquarium. but years ago at midnight they had snowblowers in the ceiling

and they made it snow inside the garden, and that was pretty incredible. last year was really my favorite new year's because it was something that all phish fans have been seeking for 30 years. they re-created -- well, it is a story called game hinge. they re-created it with dancers and everything. he was pretty amazing. matt: i have a buddy who has been to 418 phish shows. he made the david bowie coins which you flip to decide which song it is going to be, because apparently they sound a lot alike. they come en masse to new york every year and the smell of the city changes. you see them all over the place, and it changes the tone, but there is an entire economy built around it, as there once was

with shakedown street and the grateful dead. what kind of promotions, what kind of events are you building around these runs? howie: just from being a fan, and phish fans want to keep the party going well after midnight. so, back in the 1990's i concert company, we started to promote shows before phish and after phish. we do it at nearby venues. this year we have 11 shows. during the baker's dozen, when phish played 13 nights at the garden, we had 35 shows, and cruises during the daytime, concert cruises during the daytime and after parties. this year we have two left today. and hill country, which is on 26th street near the garden. there is a grateful dead cover band playing at 4:00. after 1:00 a.m. we have a dance

party with djs from phish festival radio, with a very special guest, dj blender. i'm not going to reveal who that is, but do a quick google search. you might see who that is. matt: i think i have a suspicion. i do want to talk about cash or trade. it is a fascinating app and business around getting face value tickets. i hope you have a great show tonight. maybe i will go. maybe i will get a ticket. paul: yeah, your wife. we will see how that goes over at home. matt: the markets. sonali: we are down on the day now. the nasdaq is down .3% and the s&p 500 down .25%. anyway, happy new year.

one bad day doesn't hurt anybody. paul: happy new year to both of you and hope to see you back here in 2025. ♪

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