>> a very good afternoon on this

last trading day of 2024. we are live across our platforms. i am carol massar along with vonnie quinn. it is december 31. vonnie: i cannot believe we made it. you better stay until 5:00 p.m. with me. let's get to it. a stellar year for stocks. it has been one for the bulls. modest declines today. it feels like maybe people are already done with 2024, thinking about 2025. what we are going to do over the next three hours, that is our focus. think about some of the major thematics of 2024 and really look into what maybe is coming in a new year's. we have an incredible amount of journalists and analysts around the globe so we are going to talk about their beats and what is top of mind. vonnie: there were just a few themes that stood out and took the tape the whole year

throughput every time we thought they were perhaps old hat, they resurfaced and they were continually the themes. carol: speaking of artificial intelligence, those glp-1 drugs. we are going to talk about that, ai, and the ceo of reflexivity. he is sailing into our studio as we speak. also our own bloomberg grew on this space. covering all the twists and turns when it comes to these weight loss drugs. vonnie: not just the weight loss drugs but the entire sector. we are going to have a whole new selection of people potentially regulating this space and the insurers, what are they going to do post united health care's death? carol: everyone is wondering what is going to come out of the new administration in terms of their specific sector errors. on our mind for the new year,

bank stocks have been on a tear with earnings around the corner. they have definitely bounced off of the u.s. election so we are going to talk about that as well. then we are going to talk about china. vonnie: yes. is china turning a corner? is there a corner to turn? is it going to take a few more years? could xi jinping turn it around in a heartbeat if he feels like it? carol: we are also going to talk about gold versus bitcoin. the comparisons continue. we touched upon it yesterday. should those comparisons continue? you take a look at a chart specifically of what we have seen in bitcoin. it has been on such a tear. we are going to talk risks and rewards and talk about their trade. vonnie: and we have to leave a little time for resolutions as well. carol: i don't know. i do the same list every year. let's talk about the market trade. we are hovering near lows of the session. let's get into it with just meant in -- jess menton.

jess: it's like the last few sessions where if you are looking at the biggest point decliner's if you're thinking about the weightings, nvidia is the worst point decliner but it has rebounded a little from being in a correction earlier this month. you still have apple, broadcom, meta and google, all of the top eight to nine stocks are housed roughly in the mag-7 other than broadcom of which some people refer to as batman now. i don't know if that has caught on. those are the ones if you are seeing just going into the final trading day of the year, a lot of people locked in some gains after the fed decision. vonnie: we are seeing a bit of a selloff today. is there potential for some buying before the close? jess: we have seen some of that action into the close and that is something a lot of traders, especially technicians like to see if that tells if you are

buying on strength rather than selling on weakness. if you look at the mag-7 index year to date, it is up 68%. nvidia the second best performer so far this year behind vistaril. the big thing going into next year will be the earnings picture. they were looking at how it is supposed to if you are looking at the bottoms up consensus analyst estimates right now it is around 13%. where the s&p 500 is currently trading it is roughly north of 20% for eps growth. she is arguing there is a divergence. either the bottoms of estimates would need to double or you are going to have to have -- continue to have the earnings justify those valuations. carol: jp morgan reporting on january 15. i am thinking about that. we are going to talk about that a little bit later on what is top of mind. they have really been performing

since the u.s. election and i am kind of blown away this is one of the groups that is outperforming the s&p 500 and the nasdaq 100, up 32% as a whole. jess: when we talk about financials in general it is not just the bank stocks. you have insurers and credit card issuers got moved into that industry group almost two years ago. a lot of times it was the other segments that were outperforming. we also covered so much what was happening with regional banks. especially when you are seeing this, that is continued strength for the economy. carol: i think they also think the administration is going to be like, let's roll back a little bit. vonnie: they have been whiplash by the fed as well. jess: especially when you're thinking of the stress tests and different capital requirements and maybe those types of potential easing type of policies that could come out of a new administration. vonnie: and of course we saw that huge selloff after the silicon valley bank. so there was room for them to

outperform in terms of earnings and so on. will there be a lot of consolidation next year? jess: it is almost like you are having a lot of people arguing that. it is interesting when you go towards the end of the year and the calendar flips and you look back a year later, especially the last couple years there was so much doom and gloom in 2023, 2024, even sell side analysts notorious for getting those calls wrong, they have still been playing catch-up you they are still arguing for the -- that is only roughly haters -- five of the last seven years the s&p 500 has been up double digits. carol: i don't want to get hate mail, but we don't get it right when we make these calls. but we will put that on the side. let's finish with a final thought. two of the big trays this year that were top of mind for investors were those glp-1 drugs. ai, artificial intelligence, that was a big momentum driver. jess: it is and that is something people underestimated the last couple years. even when you think about tech

during the height of covid, the last couple of years, that has driven the two-year bull run in stocks since october 2022. but this is the first time you have seen a bull market run like this where you have not seen the small caps and the value sectors of the market. if you are looking at the performance for health care real estate materials it is the worst bull market run for them just yet. also their earnings projections next year are improving. does that mean we continue to see it broaden out? we see and hear people talk about that a lot but that remain to be seen. vonnie: thank you so much. jess will be with us in about an hour. that is jess menton, our guru for everything stocks here. with ai being such a dominant market theme this year, let's turn to someone deeply entrenched in the space. joining us in studio is jan szilagyi, cofounder and ceo of reflexivity, formally known as toggle.ai. thank you so much for coming

into the studios. curious as to why the market decided that 2024 was the year ai started to fulfill its promise. it has been around for decades. jan: thank you for having me. what has happened is the kind of ai, this large language models seem a lot more accessible to a lot of people. you are able to try something. when people talk about various forecasting methods, that seemed very esoteric. now where you can go online and try chatgpt it feels like magic, but magic that you can touch and feel. i think that is why it has become top of mind. carol: it is top of mind. here we are in our second year of all things ai. remind our world what you guys do because you really work with financial firms in terms of your platform hoping to, monetize, utilize, in terms of taking advantage of ai. jan: our clients are primarily top hedge funds who are really looking to our platform to help them consolidate these vast sources of data that they have.

carol: it is what they have always done, right? jan: yes. they have been relying on bloomberg in order to get access to that data. what they look to us to do is help them connect the dots. the amount of data there is to process is enormous. to give you a practical it is -- practical example, what you can do with reflexivity is dig deeper into in idea. if you want to be long ai nvidia and microsoft might come to mind immediately but when you dig deeper you think data center companies, you also want to be long utilities. it is able to map out a much larger universe. carol: we are obviously all about data and the larger the data set, the smarter the data set, you can get an idea of trend. what kind of data do you have insight into? you work with microsoft, the nasdaq, interactive brokers. what are you seeing? we have talked a lot about the ai trade that maybe it is

thinking a lot more about the energy uses. what can you give us in terms of insight and data flows? jan: that is a great question. yes, one of the things you can do is tap into not only the timeseries data that has always been the bread-and-butter of forecasters and analysts but also into unstructured data. text documents, what are people talking about on earnings calls. what are people filing when they file company reports. you are able to really get a much better finger on the pulse of the economy as well as interesting trends. vonnie: if ai is going to take the job of the junior wall street analyst, when does that happen fully and what did they teach at mba school? jan: the last time i mentioned this i think i got raised eyebrows but i do believe firmly in the next five to 10 years we are in the business of building an autonomous investment analyst. vonnie: that is a scary thought. jan: and the goal is along the way you are really building a

set of superpowers you are giving to a portfolio manager, to a cio and so on, that helps them tap into that data. i think what you will see on that time horizon is a much, much bigger presence of that kind of intelligence. because there is nothing that says that humans should be the best at trading. carol: i wonder if it is insane as venture capital. venture capitalists don't have time to look at all the proposals that come across her desk, especially smaller deals. i wonder if that is the same for the analyst community. we track analyst coverage and some of those smaller or mid-cap names where there is not that much coverage. how does ai maybe give us insight into some of those firms and investment opportunities? jan: again, spot on. which is that with the large language models as the interface with which you are able to communicate, it makes it much easier for you to tap into the whole power of cloud computing meaning you can say this is what i am interested in and rely on the engine to be monitoring a much vaster universe of market

data. what is happening here? something where a tree falls in the forest and you would not have known but now you do because the forest watches itself. vonnie: how do you account for the better information versus the worse information? there is so much rubbish, frankly, online. can you take that out of large language models? jan: the first thing we did is we constrained the data it has access to it. it cannot just go out and find some crazy blog somewhere that you cannot verify. it has access to data that we have checked for integrity. it has access to data investors are familiar with. it is just able to go through it much faster in highlight things that you would not have the time to do because you only have so much. carol: about 20 seconds left here. there is so much information out certainly in the social media world that there is the way of ai not only complicating the space with more information but identifying that information, good information.

do we get to that space? jan: definitely. you compared to what happened pre-and post bloomberg, bloomberg took a lot of information and made it more accessible. i think ai will take a lot of information and be able to do that kind of parsing, good versus bad. carol: going to be another interesting year no doubt about it. jan szilagyi, cofounder and ceo of reflexivity joining us right here in our studio. we are going to continue thinking about the year that was and the year ahead. the s&p financial sector saw gains outperforming the broader market of 28% in 2024. what lies ahead for wall street in 2025? that is coming up next. this is bloomberg. ♪

i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. vonnie: welcome back. this special december 31 edition

with me and carol massar. for the moment the s&p still down about a third of a percent. the nasdaq 100 down .7%. we continue the drop into year-end. bank stocks have been outperforming the s&p 500 and nasdaq 100. chairs taking off big time since the election on excitations of fewer regulations for the banking sector. ? can that momentum continue? for more we are joined by senior finance reporter serene nausea ride and. since the election a little more relaxation post the silicon valley bank collapse and so on. everything looks to be going right for the banks. does that continue past january 20? >> if you look at the first week after the election results you saw the impact on bank stocks. they all soared. in the six weeks or so since that point they have given up half of their gains. it is still up but not as high as they were on november 10.

having said all that just look at the results this year. look at the stock performance for the biggest banks. jp morgan up more than 40%. wells fargo 43%. citigroup which is a turnaround story up. jeffrey's up 95%. so clearly if you had to look at stock price movement as an indicator for what the future holds, what it is telling you is that 2025 is going to be a really good year for the big banks. and the reasons are sort of clear. even without the election result going the way it did, we were entering a phase where after a very difficult and challenging dealmaking environment, capital is opening up again. deals are resuming and yet they are below long-term averages. so the expectation is that is going to rise up. with the new republican administration and the belief that there will not be that many

blocking's regular's, that that activity will ramp up. they are that with all the talk we have heard around lowering taxes and deregulation, and regulation is certainly a big part of the peace of the puzzle when we think about what will affect angst next year, it points to a very rosy environment for banks. yes, there are crosswinds out there and and unpredictability of a trump 2.0 cannot be discounted even if on the surface all the noise sounds like it will be really favorable for banks. net-net i think all the ceo's would ring in the end of this year we walk into 2025 with a lot of confidence and optimism. carol: is ifect storm a perfect sunrise for banks in terms of m&a activity, markets may be expected to do well overall? just pick your business and it is expected to be pretty upbeat.

so fundamentally it is a lot of different things that should support them next year. sridhar: if they were to wake up torrow morning and open the lines they would hope they are expecting to see a perfect sunrise. said that, how often does expectation truly mirror reality? yes, they were all juiced up and boosted up on the optimism. you still have to be mindful that you can have a greater dealmaking environment some of that cannot be discounted. but again, having gone through the last two years and seeing how it was and how difficult it was in some ways, especially since the craziness and frothiness of 2021, it has not been a great environment. we have talked a lot about capital markets and investment banking. the other big part of the

equation is the health of the economy, the broader consumer economy. and really, we have not seen signs of that falling off a cliff. that has been pretty stable and steady. if that changes, that could be in the works. but again, we are not seeing any reason for bank executives to be staying all night worried about that. vonnie: the earnings season starts with jp morgan in two weeks. what will be the magic words? sridhar: recap of 2024 which has been exceptional. one investors will be curious about and one piece i'm interested in is the kind of commentary we hear around net interest income. largely because we thought the boom the banks caught with the names went up and there has been some catching up in terms of what you have to pay depositors but generally higher rate environment has been good for nii.

the excitation is you are going through rapid rate cuts and that will go down in the boost and the benefit from that will go down. however if you listen to the most recent commentary from the fed they are keeping a watchful eye on what the trump administration policies will do to inflation, the effect of tariffs on inflation. will there be a real effect? you are already getting the sense that rate cuts will not be as rapid and precipitous as we once thought. which again, i would have to think is a beneficial piece of the equation for the banks. carol: sounds like some optimism but certainly we will be keeping a close watch to see if anything changes that. there is a lot that can come. always appreciate your reporting. senior finance reporter sridhar natarajan joining us in the studio. nippon steel offering president biden a new u.s. steel proposal. i know we have talked a lot about that. this is coming from the washington post. back to bank stocks. outperforming as we said this

year, the broader market. a big question mark on the minds of major big banks and financials it is what is going on in china. the golden dragon china index just up about 5% so far this year. up about 26% since late summer. this is after several stimulus efforts were implemented in the back half of 2024 and continued to be announced. earlier today the company -- country saying they were increasing salaries to try and increase spending. president xi saying support for the economy will continue in the new year. signs of green shoots perhaps. chinese factory data also showing expansion. one area that is important to watch his chinese luxury spending. bloomberg's china correspondent minmin low breaking it all down for us. minmin: this flagship store in beijing was supposed to open to stores to shoppers in early 2024.

the lvmh ceo told bloomberg he was optimistic about the group's growth in its largest market. >> i am always optimistic. and the people have often concerns which are not materialized. minmin: now sources say the store may not open until as late as next year. the slow progress, symbolic of the challenges european luxury brands face in china. lvmh shares have plummeted since the start of 2024, revealing the scale of the slump in demand from chinese consumers. another luxury group worrying that its annual profit will fall to the lowest level since 206 due to weak chinese demand. prestigious brands are also affected. swatch shares tumbled this year after sales in china, which account for about a third of its revenue, fell sharply. >> many watch manufacturers are

really dependent on china generating 40%, 50% of their sales. minmin: this pullback in lavish spending is hitting some of the world's richest. the ceo's fortune tumbled from the top spot in the bloomberg billionaires index. he fell out of the global 100 richest. shoppers are shying away from excess buying is beijing grapples with low domestic consumption and a shaky property market. president xi jinping's government has rolled out a series of stimulus measures to boost sentiment. bloomberg intelligence says china's luxury goods sales and the downturn in the industry may reverse any second half of 2025 if beijing continues to rollout economic support. minmin low, bloomberg news, hong kong. vonnie: and that was minmin low there. these u.s. steel headlines extraordinarily interesting.

shares extending their gain. the washington post reporting a new idea has been put forward that nippon steel would be offering president biden a veto over u.s. steel output cuts. carol: giving the u.s. cut a veto over any reduction in u.s. steel's production capacity. this is a last-ditch effort for president biden's approval to acquire u.s. steel by nippon steel. according to a document sent to the white house on monday. continuing to watch u.s. steel shares. jumped as much as 7%. still up about 3.5%. vonnie: coming up we are going to talk about safe havens. that might even be the case for a new type of one. this is bloomberg. ♪

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carol: welcome back to bloomberg markets, cross platform on radio, tv, youtube, and bloomberg originals. it has definitely been a mixed year for metals but old, it has not been a mixed case for that. it gets the gold star. commodities headed for its biggest gain in 14 years fueled by u.s. monetary easing, geopolitical risks and central-bank purchases. there have been a lot of factors at play. mike mcglone joining us to break down what has happened and look ahead to the new year as well as

maybe measure it against another asset that soared in a much bigger way. it is the battle between gold and bitcoin. good to have you back on our last trading day of 2024. talk about the run-up in gold and how you continue to think about it against bitcoin. mike: gold has taken the gold versus s&p 500 this year. as of now it is up about 26%. s&p 500 total return is around 25%. that is not a good sign for liquid assets. bitcoin has obviously outperformed. i love to watch the bitcoin to gold ratio. right now it takes about 36 ounces of gold per one bitcoin. that is about the same as the peak in 2021. that is the problem, it is not inching higher. so i am worried that next year i will make one prediction, that we get a 10% correction in the s&p 500.

we used to get that all the time. when that happens then we will see the beef of whether bitcoin is a risk-on or risk off asset. i suspect it is more likely to go down about his normal correlation versus the s&p 500 which is about three times more. i am worried that next year gold will beat most commodities, but i am worried it might even beat bitcoin. vonnie: what is its correlation? i know it is difficult to tell whether it is risk-on a risk-off, but can we say anything about it? can we say anything relative to where interest rates ago? mike: the significance as part of correlation is the 100 a correlation between bitcoin and s&p 500 is the highest ever on the way up. the thing i like to point out about interest rates is interest rates in this country -- yields are high, interest rates are dropping. i like to say when you add $13 trillion the total market capital stock market s&p 500,

which is almost half of gdp, you cannot expect yields in interest rates to go down much. that is what i am worried about. now we walk into this new administration with a very uncertain presidency and volatility on the stock market and brought commodities at almost decade lows. the key thing i think is bitcoin is the number one leading indicator on the planet. our new administration has put a lot behind it continuing to go higher which means maybe and reaches a pretty good resistance threshold around $100,000. carol: you have been in the markets for a long time. you are our senior commodity strategist. commodities that are actually tangible, and i still feel like when it comes to cryptocurrencies and bitcoin, we are still trying to figure out exactly what it is. do you think it is silly we continue to have these conversations about comparing something like bitcoin to gold? mike: i think bitcoin is digital gold. i like to describe old as

somewhat irresponsible to hold gold without bitcoin. the problem is gold only has three other competitors in terms of precious metals. silver, platinum, and palladium. bitcoin as far as cryptocurrencies, there are 2.5 million, which i am really worried about. things like dogecoin. dogecoin recently got up to $60 billion market cap. now it is around $50 billion. and what is it? the future will look at some of these valuations as silly digital assets is just silly. vonnie: if there were to be a bitcoin should she degrees of, for whatever reason -- strategic reserve, for whatever reason, with that put a floor under it? would there be any reason for bitcoin being? carol: for anybody listening on radio, mike is smiling. i cannot tell if you think this idea of a digital reserve is grady -- is crazy. mike: we know the answer to that

. if the u.s. government starts porting and making a strategic bitcoin reserve, it is a silly concept. the u.s. government does not need to prop up the dollar. the history of the dollar is usually too expensive. we have issues that push it down lower because it is the only reserve currency on the planet. i think it is just a silly concept that has kicked into the forefront in this faustian bargain with the new president and the cryptocurrency people. and we have heard this before. i am really concerned about that being a reason for people to buy more of it. it is quite expensive. is it going to get better than 2024 for bitcoin? things are looking forward to things like that. but we had the etf's, we had the halving, a record-setting stock market. our former antagonist sitting over to crypto is now president. these are good reasons for it to go up but i think it has peaked.

carol: there are fundamentals and then there is momentum. one last question, alan hibbard at goldsilver.com, you can buy different bullion products on his platform. what is your number one question for him? mike: why -- where he think gold is going to go in 2025? and what are the key risks? i think gold might be getting above $3000 and i worry what he thinks will be the key risks. carol: i think he has interesting thinking that gold does not go under $3000. that is certainly a great question. vonnie: we will go directly there right now. mike mcglone, thank you so much for getting us that introduction. as we have been saying, the banner year has investors making the case that crypto could be an alternate safe haven to gold. so let's get to alan hibbard now from goldsilver.com. we may as well start with the questions that mike had for you.

where does gold go and what are its key risks in 2025? alan: i am definitely expecting gold to have a great year in 2025 just like it did in 2024. i would not be surprised if it clears the $3000 announced threshold. it could be the last time to buy gold under $3000 an ounce. there are two things that i see. one is bitcoin. if capital is attracted to bitcoin instead of gold, gold might not creep that high. the other risk factor is actually world peace. if all the wars and conflicts in the world settled down in our leaders to negotiate peace, capital might not flow into gold like it has been the last couple of years. so those are the two risks that i see. bitcoin and peace. carol: for the run-up that we have seen in 2024, is it because of geopolitical concerns? we know gold has historically been a safe haven. is that the reason why we have seen such the run-up in your

view? alan: i think that is the main underlying factor because it is that geopolitical uncertainty that causes so many other things. we saw china buying a ton of gold. not only is china the number one producer of gold in the world is the number one importer. that is very unusual. investors around the world are also buying gold because of inflation and the inflation is caused by all these countries fighting wars running their printing presses. if it were not for the wars they would not be running the printing presses so heavily. and they would not be running for gold. it starts with all the geopolitical uncertainty. if we all got along we would not have to buy gold, we could just live our lives. vonnie: we were speaking a little about crypto and mike maintained this idea of a strategic reserve is a faustian bargain with the crypto people and the incoming administration. is that true in your view? alan: i think bitcoin is best thought of as superior money.

and any time that two different moneys come against each other, the same thing happens. every single time throughout history, capital flows from the weak money into the strong money and it is only a matter of time. if you want to discuss the strategic national bitcoin reserve, is it a good idea, a bad idea, is it going to happen in the first 100 days or not going to happen? all that does not really matter. capital is going to flow from weak money like the u.s. dollar into strong money like bitcoin. it is just a matter of time. vonnie: you need to back that up. why do you say bitcoin is superior money? carol: no offense, i have yet to transact in bitcoin. and if you ask most people, they have yet to transact in bitcoin. alan: it is a great question and i'm glad you asked. i could talk about it for hours. there are really two ways to think about money. first is as a medium of exchange which i would call a currency.

if you're going to buy a cup of coffee or a grocery you're going to use currency and you want something that moves quickly and has low transaction fees and doesn't take a lot of energy. and the u.s. dollar is great for that. the other reason you have money is as a store of value. that basically means you acquire it and then you hold it for 10 or 20 years and it just sits there. you might even forget you have it. the whole point is for it to stay in one place and secure your value over time. that is gold and bitcoin. when i say money i am referring to that store of value functionality. whereas a currency like the u.s. dollar is more the medium of exchange. by the way, don't hold your breath on being able to use bitcoin to buy a cup of coffee. it is not going to happen, it doesn't happen. vonnie: why are you so convinced it is a store of value? because it is finite? alan: it is partly because the supply is finite more importantly it gets increasingly more difficult to make another

bitcoin. that is so critical. that happens naturally with gold. but if there are two different ounces of gold sitting in the ground and one is really easy to get to and one is hard to get to, you are going to mine up the easy one. so later in the future you're going to have to go after that hard-won and spend more energy to get a unit of gold in the future. bitcoin mimics that same property artificially using code so it takes more and more energy to mine each subsequent bitcoin could that is good news for anyone holding bitcoin because if you acquired it earlier it did not take you that much energy to get it. however anyone who wants to acquire bitcoin in the future has to give up a lot of energy to get one. carol: i would ask if there is -- i understand the dynex of supply and demand but if there is a limited supply, how can it be used more broadly? i understand the value of may be in terms of transacting. but the individual bitcoin as a

way of transacting. if it is going to be limited in supply forever, how can it be something that is much more broadly in use in terms of how we look at the u.s. dollar or other currencies? alan: it sort of relates to my previous answer which is i would not expect going to be used in day-to-day transactions. even if you develop something like the lightning network or other layer two solutions. i do not think it will be that comment to transact bitcoin. it will be more common to transact u.s. dollars, euros, yen. vonnie: didn't people say that about nft's? and they are worthless these days. alan: i would not go anywhere near nft's, no. i only go near bitcoin. i made a mistake going after a dozen other crypto is when i thought they had attractive use cases but they are very hard to value and they have real idiosyncratic risk. i even went so far as to visit one of these cryptocurrencies in person. i looked at their code and i met

their team. i did my due diligence and i lost 99.99% of my value on dogecoin. most of these cryptocurrencies --, some are designed to be scammed, some of them are scams because they have so many idiosyncratic risks. you have to have execution on the part of the software team. you have to have marketing, adoption, functionality. and you cannot really have competitors that accomplish the same thing better than the way you accomplished it or you are not going to attract capital. vonnie: if you say it going is still in the price discovery, how do you discover a price when it is very clear -- unclear what the fundamentals are? carol: it's value is outside the establishment and yet that lack of transparency raises so many questions. alan: bitcoin is transparent. it is a public blockchain. you can look online and see where all the blockchains are sitting, with the history of them has been, you can see all of that.

transparency is actually pretty fantastic on bitcoin. however if i want to see how many dollars exist i have to trust the federal reserve data, and i don't. it could be outdated and i don't know who is holding those dollars. carol: i know some could debate the fate of the u.s. government -- the faith of the u.s. government. listen, we could go on for another hour, this means it is going to be a hot topic in 2025. alan hibbard, precious metals and alternative money specialist at goldsilver.com. we are headed to a break. coming up another big year for eli lilly as it rides on the tail coats of its gop one success. how the ceo has potential plans to use the drug for something other than weight loss. ♪

(♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com vonnie: eli lilly will begin studies to see if it's blockbuster weight loss medicines are also effective at

other addictive behaviors. he spoke to david rubenstein earlier this month and here part of that conversation. >> we talked a lot about cardiovascular health, diabetes, these conditions we think about as being with overweight. but we think these medicines can be used with other things we don't think about connected to wait. they are reducing the desire cycle. next year you will see lily start large studies in alcohol abuse and nicotine use and even in drug abuse. we will begin studies in anti-inflammatory conditions because you don't think of that with weight but there is a strong signal in anti-inflammatory. beyond that we need to make important medicines for the long haul. we plan to be here for another 150 years-plus. my excitement about brain health is the next frontier. >> have you ever thought about eating a lot, gaining want --

gaining weight, and then going on your drugs to experience it? >> i would like to avoid that but it might happen and i would not hesitate to use them. >> yesterday you announced a $15 billion tyvek buyback -- stock buyback. many people criticize stock buybacks. how do you respond to that? >> i don't understand that argument. stock buyback is a way to essentially by buying shares, you give the people who already own your shares the opportunity to sell at a higher price and get a return on investment. i don't know why that is bad. i would also point out in our current situation we are spending almost more than anyone in the world on r&d already. we will spend $11.5 billion this year on r&d. the country of germany spends about $8.5 billion on all of its medical r&d. so we are at the nationstate scale on r&d.

we have announced investments of 23 billion dollars in new capital in the united states for factories. we cannot go faster. there are no more vendors. so returning some of the rewards investors deserve seems like a reasonable thing to do. carol: that was the cei of -- ceo of eli lilly speaking with david rubenstein here on bloomberg. be sure to check out the bloomberg and had to bloomberg.com for more of that conversation. we want to stay with this space because it was one of the big themes of 2024 and a second year. 2020 three was also about these glp-1 drugs. for more on this group, what to watch out for, we are joined by madison muller who is a must read on all companies in this space. good to have you without us. i am thinking about 2024, and explosive year.

bloomberg news wrote 2024 was the year weight loss drugs took over. what was significant about 2024 after what was a busy year for this space also in 2023? madison: 2024 was really the year that we saw the real world impacts of these drugs start to take shape. it is not just talking about the clinical studies and how much percent weight loss and how great these drugs are but we were actually seeing what happens when you put these out into the general population and the challenges with insurance coverage, the challenges with affordability and access in general, supply shortages. i know we have talked about on the show we rise of telehealth companies that are making -- selling cheaper copycat versions of the drugs and advertising them widely on social media. and the sort of battle that has ensued between the drug companies and the compounding pharmacies that make these copycat drugs. there'll there was a lot that

was unexpected that happened when these drugs got out into the world and i think 2024 was the year that started taking shape. vonnie: where are we on supply demand medicine? can people access them now who need them or want them? madison: for most of 2024 both novo nordisk and eli lilly struggled to get a handle on the supply of their drugs. we saw wegovy and zepbound and mangiamo and ozempic in and out of -- according to the u.s. food and drug administration, zepbound and monde john elder are not -- a group of compounding pharmacies are suing the fta thing the drugs are instill shortage. the drama is still continuing. novo nordisk's drugs are still in short supply as of yesterday and today when we last checked the usfda website. that being said, all the doses

are listed as available. they have gotten a better handle on their supply as well. from talking to patients, some of the drugs are still hard to find, just with different supply chain dynamics. people are still seeking out the cheaper versions that are may be more readily accessible through telehealth companies. carol: how are you thinking about 2025? madison: 2025 is going to continue to be an exciting year. we have data from eli lilly's oral drug coming in 2025. it's in late stage studies and that will be a big deal. we have talked about how people want an oral version of these drugs. the current medications are a weekly injection. for a lot of people that is not super appealing although for a lot of people it is because clearly there is no issue for demand. but in some other markets, pills are preferred. so we have a lot of companies that are trying to make oral versions of the drugs including

lily and novo. we have structure, viking, smaller companies. pfizer as well. lily has phase 3 data from their drug coming out in 2025. we're going to see that. you're going to see other companies coming out with data from other trials. the competition is going to continue heating up. insurance coverage is also a place to watch. we had the biden administration proposed a new rule that would allow medicare, the government health insurance program for people over 65, to cover weight loss drugs. so it will be up to the trump administration in a few months whether to pass that or to block it. and so we could see medicare begin to cover these drugs soon. so that is an important development to watch as well but it remains to be seen what will happen. vonnie: that would be a big relief to a lot of people. more broadly, how are hospitals, doctors, health insurers, preparing for a potential raft

in changes in regular when we see the incoming trump administration nominating these people who have raised doubts about vaccines and other treatments? and of course ralph g -- rfk junior. madison: there is still a lot of uncertainty with rfk junior in particular. on the topic of weight loss drugs, he has come out against the pharmaceutical industry at large but has commented on ozempic and other glp-1 drugs saying his view is that america's food system should be fixed before we turn to pharmaceutical interventions. i know that has been an area of uncertainty. but until he is actually confirmed, then we don't know what will happen. we don't know exactly what the policies will be. but there definitely has been a bit of uncertainty, with some of the picks more so in particular than others. dave weldon is someone that has

said a lot about vaccines in the past. marty macquarie is actually viewed as more industry friendly. it is a bit of a spectrum with the various picks and how much uncertainty and how friendly they are going to be to the sector. so that is something we are going to have to watch early in 2025 and see what policies they are talking about, whether these people are confirmed or not, and go from there. carol: we have had some any conversations with you. i joke with you that this is like the perfect drug that is going to fix everything that ails all of us. having said that, you are someone who critically looks at this space. what is the thing that could go wrong? have they been tested long enough? do we have to worry about safety concerns longer-term? what is it? madison: one of the things we are already seeing go wrong and it might not be the fault of the drugmakers or the actual drugs

themselves but the widespread availability of these drugs, especially through telehealth companies and these cheaper copycats that are being marketed and made. they are getting into the hands of some people who should not be using them. which generally is maybe not a safety issue for someone who just wants to take one to lose a couple pounds, even though they are not the population is drugs are meant for. i did a story about people with eating disorders getting access to these drugs through telehealth companies that don't have checks in place to make sure the right people are getting them. it is a little concerning. carol: good stuff as always. happy new year. by the way, david rubenstein's interview with the eli lilly ceo, you can catch that january 8 at 9:00 p.m. new york eastern. vonnie: we are about to enter the final hour of trade of 2024. stay with us.

we are going to break it all down with matt stucky. this is bloomberg. ♪

carol: we are one hour away from

the closing bell getting ready to wrap up the trading year of 2024 this tuesday, december 31. i am carol massar along with vonnie quinn. i gotta say, s&p 500 down, a bit of a whimper. vonnie: it is not just the amateurs out there. carol: it is like, where are you? it does feel pretty anemic. we are going to get into the trade. we are also going to talk about the treasury trade. and the $50 trillion daily use. this is all happening one day after the u.s. treasury was tested by what is being called a major incident caused by chinese hacking. all eyes, ears, nose and toes on the u.s. treasury. vonnie: we are all vulnerable to cyberattacks but do you want the treasury department to be that vulnerable? carol: speaking of bumps in the

road, electrification, the road to electrification, ev's specifically. 2024 we saw a lot of people moving more into hybrids. still growth in the ev market but the rate of growth slowing down. we have a big question about what the road looks like in 2025. vonnie: especially with elon musk right beside the incoming president. does that make a difference? tesla is not exactly at its size. maybe we should speak to somebody about that. carol: we are going to check in with our own team here on the ground. and the winners and losers of 2024. i was kinda surprised when the list was shared with us. not many mag-7's. vonnie: no. and chunks of the year were dominated by one particular stock and then that stock would go away and another stock would come out and dominate. it was fascinating that way. carol: then we are going to look ahead to 2025. first up let's get into this

last trading day of 2024. for that we bring in jess menton back in our studio. here we are, what, 58 minutes to go? i know the s&p 500 is down four days in a row. it feels like things have been mellowing out. is it a case of investors saying a good year, a bullish year, and just taking a breather? jess: we have seen in other really good years. of course with the caveat that year was in december when powell was signaling they were going to start hiking rates. to your point with the s&p 500 down four consecutive sessions, he is very onpoint when it comes to technical seasonality. he was looking for the long streaks when you see something like this happen. four consecutive sessions if it closes lower, it would be the

longest losing streak to end a year since 1966. and in that year the longest was five sessions. about the silver lining if you look out a one-week, one month basis usually you see the s&p 500 rebound after something like that. vonnie: the data track note pointed out it was only 16 days that made the year, 16 days that explained the index's entire rice return game. it has been a phenomenally volatile year. can we assume next year will be as volatile? jess: i like to look at the cost of hedging. we saw its bike and get more expensive, especially after this last federal reserve meeting. but it has come down significantly cents. that tells you that people are not jumping into hedge more. specifically if you are looking over the next 30 days. obviously that will not think --

it is towards the end of january. you will get that in the vix data for the next 30 days. of course we have the jobs report january 10 and carol was mentioning will have jp morgan earnings on january 15. if you are looking at over the next 30 days what we might have seen a couple weeks ago post fed you are not seeing the volatility spike up for the cost of hedging pick up as it would have had in the preceding and subsequent days after that. carol: i am curious if that happens in the first few days. in january you have a fed meeting and inauguration, earnings getting underway. there is a lot to come at investors and you wonder whether or not, the vix is about 17 and change here. you wonder if we see more swings. jess: thi hd a triple witching a couple weeks ago. if you are looking at the jp morgan collar trade i had mentioned, that is jp morgan's

hedged equity funds where they have short positions in the s&p 500. the call options to remove about 45,000 stuck above 6000. you are thinking how people have -- have to position on that. you might see some exacerbation. that would not be the only reason but it is something option traders are watching. vonnie: any idea of figuring out how the retail trade did? jess: not good. this was the second worst in the last decade. you can usually use those as how institutions are performing. usually when you see retail traders trying to chase a particular trade that is when you get concerned about frothiness in the market. i was looking at goldman sachs today as well as goldman sachs nonprofitable tech because those are the frothy are corners of the market. both well underperforming the market, down more than 1%.

people are not jumping into short cover at the moment. carol: people are kind of done. as we getis final trading day of 2024, what are you watching? jess: the stocks just had a death cross. it is the first time that has happened. not good. it is a lagging indicator so that could show you that even the underperformance with, say, chip stocks like nvidia, we could see better performance for chip stocks even though people to use it as a doom and gloom signal. vonnie: nvidia the worst performer right now, down 1.7%. i wonder if there will be any buying. never mind. that is jess menton joining us. with more context on the markets we have matt stucky joining us, chief portfolio manager with northwestern mutual wealth management. you heard jess and her

explanations. was there anything you'd agreed or disagreed with? matt: just to add, what we are seeing here is a little of the froth coming out of the market. if you looked into the sentiment you near-term across institutions as well as consumers, there has been a buildup in enthusiasm for equities. that is a shorter-term contrarian indicator. just as an example if you look at the question to consumers, where you expect stock prices to be a year from now, over 50% said they would be higher than where they are today. that is a 40 year high. if you look at the bank of america institutional survey for how they are positioning, over 40% were equities overweight. that contributed to a strong flow environment for u.s. equities. that can continue any shorter term but typically that is a contrarian indicator. i think some of this weakness is some of the froth coming out of the market. carol: so what is the focal

point for you? i am thinking of the fed meeting on january 31, economic news, jp morgan kicking off earnings january 15, the inauguration. what is key for you, especially when i think about what ultimately supports equities and continued gains? matt: the path of inflation is what we are going to watch the closest. the reason i bring that up is the path of interest rates in the level of interest rates has dipped to pay winners and losers in the economy as well as in the markets. you look at higher for longer and who that helps and who that hurts. it is how they are affected by interest rates. larger companies that have turned out that have not seen ink -- interest costs increase at all and that is not the case for smaller companies more tied to floating-rate debt. you can use the same analogy to consumers. wealthier consumers that have locked in mortgages are earning higher interest rates on those savings.

that is not the case for lower income americans who are feeling the pinch of higher credit card rates and higher automobile rates. if inflationary trends were to resume their downward trend that we saw in the front half in the middle parts of 2024 into 2025, we think that gives the fed more room to start cutting rates which hopefully allows the economy to broaden back out and broader market participation to take place into next year. we can see that happen. we can also see higher for longer sticky inflation happening. the question is how do you position for this uncertainty at both ends of the spectrum? if you look at the fixed income markets today we are seeing near 20 year highs in real interest rates. that is something we think investors can do a lot of good by positioning themselves towards that asset class a little more than maybe the markets would dictate per furthermore if there is a broadening out that takes place, if this nation --

we think some of the smaller cap, mid-cap areas of u.s. equities are pretty attractive here for a couple reasons. first and foremost they are priced more attractively than u.s. large caps. secondly if you look at where earnings is it for these asset classes relative to the high bar where put in place a couple years ago we think the path forward towards rebounded earnings is easier than the continued march forward receive earnings estimates in large caps which are really reluctant. vonnie: does any of this depend on the fed cutting rates more than once next year? matt: i think it does require the fed to continue on using path. more than just one or two cuts. that is why the inflationary dynamics are so critical as we think about the path forward in 2025. the back-and-forth inflation dynamics have caught investors offsides. we started 2024 with six to seven cuts and we are ending this year would just one or two

cuts. and so the path forward for inflation i think is the critical place to watch in terms of where market either ship is headed. carol: i want to go back to small caps. i feel like people have been small and that small-cap outperformance or mid-cap outperformance and i am just looking on my bloomberg, comparing the past few years of the s&p 500 versus the russell 2000. it has been really hard and i understand the s&p 500 influenced by some of the big megacap tech names. nonetheless hard to beat that outperformance. matt: i think that is right. there are a couple things going on. one is how interest rates impact of smaller companies relative to larger companies. the other is the phenomenal growth levels we see in the mag-7. if you look at just the top 10 of the s&p 500 today it is roughly 40% of the index. just five years ago it was roughly 23%.

so these higher cap weighted names are having either great -- even greater impact in terms of performance of the s&p 500. fundamentally that is where the growth has been as well. if you look at the last couple of years it certainly makes monetary sense why u.s. large caps have led. but does that narrow? i think for the first time as you are looking at what is priced in and what is expected, the gap between the mag-7 earnings growth and the rest of the market is starting to look more and more compressed versus where we were when we started 2024 and 2023. whether that comes to fruition or not will dictate whether or not this outperformance can continue into next year. carol: we shall see. and whether or not we have another year where fundamentally the big megacaps lead the way. good to get your thoughts. matt stucky, happy new year. chief portfolio manager over at northwestern mutual wealth management joining us on this

tuesday, december 31. coming up we are going to get into what is one of the most read stories on the bloomberg. abend yesterday. we are talking about the u.s. treasury department saying hackers backed by china gained access to their systems earlier this month. it begs so many questions in terms of securities that is going on. you think the government to secure but it is a reminder this is one of the big stresses of our economy. vonnie: and it is the manpower because who goes to work for these hackers? it is people who used to work in cybersecurity or vice versa. it is a difficult problem to solve. carol: that story is coming your way. it is among the most read stories on the bloomberg on this tuesday. you are listening and watching a special edition of bloomberg markets. this is bloomberg. ♪

vonnie: welcome back. i'm vonnie quinn along with carol massar. we want to talk next about the

treasury and some security breaches that have happened that are concerning. america's debt levels poised to balloon, leading to a decrease of primary dealers. it has led to concerns about the potential for such breakdowns in the treasury market. joining us to discuss is michael mackenzie. several concerning headlines over the last few days. how can we be sure that the treasury, if it is not now, becomes impenetrable? he needs to be, right? michael: absolutely. u.s. whether it is exchanges or any kind of marketplace, they spend a lot of time and effort making sure they can be protected from hacking. i know covering equities more than 10 or 15 years ago, all the major exchanges were well on top of this. it was the only time they worked together.

i am sure the treasury is on it. again, it is something i think every company has to do this. carol: i want to get to the story you did about the pipeline, the primary dealers. i think this gets into the wonky ness of following the markets. explain the role of primary dealers. michael: it was created in 1960 by the new york fed. they select the primary dealers and their job is to interact with the new york fed markets desk. so when the new york fed does repo and all kind of money market type operations on a daily basis, they are interacting with primary dealers. primary dealers say we are the registered market maker who does that for you. you have a lot of big asset managers, hedge funds, all types of people. they normally go through the

market. carol: your story gets into there is not as many as they used to. we only have a couple minutes but i want to get to the point because it is an important story and the kind of story bloomberg does so well and you do so well in explaining why we should care. michael: we should care because the real problem is yes, the number has shrunk, but a lot of that is due to consolidation. what is really the problem here is the amount of u.s. treasury data outstanding has rocketed. it has gone up something like $15 billion last 10 years. key treasury market is about $29 trillion. they think it could get to $50 trillion in the next 10 years if the present ace of spending continues. so this is a wake-up call to people in washington. you have to get serious about spending. you have to find new sources of revenues, i.e. taxes, to kind of

settle the system down. because the system is showing signs of stress. dealers cannot be as active as they used to be partly because of the post financial crisis regulation. in a story we quote jamie dimon saying we have a trillion dollars of cash we can put to use but we cannot because regulators say we cannot do that. so there is a real tension here. we have been to a couple of conferences this year and this is the number one issue. the debt keeps going up, the primary dealer system is instructed to work on behalf of the treasury to sell debt smoothly, make sure there are no blocks in options, but they are coming under a lot more pressure. if the debt continues to rise this is a problem. if we look at the 10-year treasury yield when the fed began cutting rates in mid-september, that was yielding around 360. today it is closing at around 360. if you go into the wanting us of

the bond market about three quarters of that rise the 10 year yield is due to a high return premium. that is what investors are demanding in terms of extra yield to take down u.s. debt and that is really a worrying sign. carol: all right. just another thing to think about for 2025, where i feel like a lot of things are going to come at us. an incredible deep dive by you guys and i highly recommend everybody check it out. happy new year. be well. michael mackenzie who keeps a watch on the rates market and certainly the treasury trade. we are going to stay with the treasury. you kicked off the story that caught our attention yesterday, the u.s. treasury department hacked by chinese state sponsor through a third party software provider. it is how the world works and yet you expect it to be safe and secure. cuity incident.

firm. your thoughts when you heard the story. wendy: there are a few reoccurring themes we have certainly talked about before. vulnerability in a third-party technology that enabled the attackers to bypass security measures and access treasury workstations and documents. and the theme of while no one has claimed credit for this attack, a high-profile chinese state-sponsored cyber activity for these are recurring themes and certainly this is a major incident as we caps off this year. vonnie: how do we know it is a chinese state-sponsored actor and if we do know that, if we have the tools to tell, why can't protect against that kind of hacking? wendy: it is a good question. the treasury has confirmed they have identified a number of indicators that point to a china state-sponsored ap t, or advanced persistent threat actor. the ways that you protect

against this whether you are a government or a business, remain the same. you have to be able to prevent everything that you can. but because we are so incredibly interconnected via software, vs a fly -- via supply chain vendors, we have to prevent as much as we can but frankly be ready to protect and respond quickly. if you look at the date they first detected anomalous activity it was december 2. we are sitting here on december 31. patches were issued mid december, added to the known catalog mid december. it takes spayed to identify something is hitting and to be able to protect. that is a holistic approach. vonnie: is there an argument that the public should have known sooner? when does the public get to know about such things? wendy: there has been increasing

work by the u.s. government over the last couple of years for organizations to report quickly, particularly publicly traded companies, in this case obviously a key government institution impacting our economy. but there is a bit of fog of war when you have a cyberattack inditex something that is certainly anomalous but not sure if it is malicious. that is companies like ours come into help quickly attribute anomalous activity to certain threat actors and to known exploited vulnerabilities in order to protect the actual breach of information or documents or encryption through ransomware. carol: is this just a case of this is the environment we live in and we are going to hack into chinese systems and vice versa and this is just the way it is, despite cyber companies like yourself out there? this is just our continued new reality? wendy: i think the reality is the attacks will continue right

as 2025. we look to have heightened geopolitical tension which could contribute to additional escalating cyber activity particularly with china. whether that is increasing tariff policies that may come into play, the tiktok january 19 deadline coming around the sale of the company. carol: does something like this make you think tiktok understands u.s. concerns? wendy: absolutely. anyone using tiktok should do so with caution. that is why i think you have seen firsthand in government institutions where you can no longer mix personal mix of tiktok with a government used device. vonnie: that is so terrifying. is it worse than some what american corporations are harvesting? wendy: it is a little different where we do have disclosures around the data being harvested

and used for algorithms and the opportunity to opt out. this is a foreign power looking to harvest individual data. we do not know what that might be used for. vonnie: thank you so much for joining. that was very helpful. wendy thomas, ceo of secure works. stay with us. we only have 35 mormon it's of trading in 24. i am getting a little teary-eyed here. imp i am sad we are ending on a down note. think we can make it perhaps to the green? carol: it has been a great year if you are a bill. vonnie: that is true. stay with us. ♪ makes for working adults and parents to accomplish their dreams. we are thrilled to be celebrating our graduates. snhu, it's worth it in more ways than you can probably even imagine. as you start that momentum and get that first class going,

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vonnie: you're watching is a special edition of "bloomberg markets" on bloomberg television and radio. i am vonnie quinn along with carol massar. we have 14 minutes -- 30 minutes and 14 seconds left in 20241 trading. we might make it5 into the green. the dialogue30-1630. let's look at the winners and losers of 2024. there were a few losers.

bloomberg's is a bill lee joined us. let's look at the winners first. >> the biggest winner is something that we would expect. it pulled off a feat no other utility stock has managed since 2001, it was at the top of the leaderboard. i thought it would be a big tech stock. it is vistra, with a gain of 250 9%. the shares posted their best year in history. you would think why? stocks which are a defensive play, why see their biggest gain? it's because of utilities grew due to aia. vonnie: you say it's not a tax play but it really is, it is definitely tech-like. isabella: and second is nvidia. it gained 176% this year. its dominance has been unrivaled. yesterday it closed in of the acquisition with an eye.

it's exciting what will be in store for 2025. gov. cuomo: it continues to keep giving. it's interesting to have a utility at the top. just a reminder, what we have been talking about the last couple of days when you think about ai, a lot of it is thinking about ok, how do we make it happen? if we don't have the energy, it's not going to happen. isabelle: yes, i feel like in 2025, investors will be looking at how ai will actually feed into the company's bottom-line and topline. it's not just about potential and promise, it's about what it will give us, roi. we saw some players this year disappoint when it comes to earnings because investors were asking, when do we see results? vonnie: i am curious about ge for nova. i assume it is a spinoff from ge. what exactly is the nova? isabelle: it's an independent

supplier of power generation equipment, the maker of the wind turbines. it's shares saw more than doubled this year. it's ceo says sales of natural gas are surging, but the company sees great prospects ahead because we have sales of offshore wind struggling. the company ceo said it hasn't really booked a single new sale in three years. it had a good year this year, but we don't know if it'll have a good year next year. carol: with the spinoff, they are still $891.5 billion market cap company. massive. but we have talked about the turn in terms of alternative energy. we see them in the ocean, the wind farms. you wonder whether or not through policy, we start to see a slowdown. isabelle: exactly. it's interesting, a lot of companies spun off this year and performed relatively well. we have a gauge, like kenvue

constellation, so it remains -- it makes you think that maybe if you are a smaller firm, you are more nimble. carol: or if you are a pure play, investors know what they are buying. let's get to what investors want so much buying in 2024. when there is a buyer there is always a sailor and vice versa. talk about the losers. isabelle: first was cvs, it continues to face mounting headwinds, this includes the pharmacy benefit manager legislation, a new doj complaint related to opioids. three consecutive profit warnings and a decline of 40% in its share price. it continues to be a tough year. and just anecdotally, matt miller earlier said going to cvs have become less pleasant. that is true. carol: he is being kind. it's not fun. sorry. [laughter] i feel like i am begging the people there, excuse me, can i

please get vitamin c? it was behind a lock. carol: behind the plastic and you have to get somebody to help you out. isabelle: yes and it makes you think ok to do people really shoplift that much? sometimes i play a game with myself like why is this behind a lock and this product isn't? vonnie: yes, that is a tough one. humana is another one down 40%. isabelle:. isabelle: it faced shock this year, including hikes in expenses and the deterioration in medicare quality scores. so investors have been growing impatient. impatient for the signs that the new ceo can turn the business around but it issued a more optimistic 2024 third-quarter profit. but it is also another one of the biggest losers we are seeing. carol: last one, dollar tree. the retail environment, yeah? isabelle: we have walmart doing well. everything else is not doing well.

dollar general also down 44%. it's as consumers tightened their belts as inflation soars higher. products are becoming more and more expensive. it remains to be seen. and people buy more online these days. carol: it's interesting you mention walmart. i think they talked about that in earnings, they are finding that their clientele is moving up more to the higher-end. this is something we talk about, when you talk about the k shaped recovery, or a bifurcation in our recovery, those at the lower end of the economic strata are having a tough time making ends meet, and that is the bread-and-butter of something like a dollar general. isabelle: joe weisenthal pointed it out on twitter, this is the only time of year for the year to date button on the terminal is the same as the one here. i was just looking at all of it and i was like yes, it's the same. vonnie: you don't have to change the date. only you will get it. [laughter]

carol: hey, isabelle, thank you so much, with some perspective on 2024. bloomberg's isabelle lee. let's talk about the year that was and they are to come. our next guest expect inflation to be the biggest issue leading to a potential hike from the fed, and we do have a meeting about a month away or so. he is managing director of investment decision research, nice to have you here. reignited inflation. talk to us about how much it will be in 2025. melissa: well, i mean, that is still out of uncertainty with tariffs, what is going to happen with deportations. if we reach the maximum of both of those, you can see a substantial increase in inflation. carol: what is substantial? 1%, 0.5%, how do you quantify it? melissa: i think if we get about

3%, people will start to get nervous. because that also will be going in the wrong direction. so, that whether it goes up substantially higher than that, i think will really depend on how forceful we are with imposing some of these things that we have talked about. there is also so much uncertainty that that, in and of itself, can drive inflation and drive markets down. vonnie: there is a lagged effect though, right, once we get through inauguration and the executive orders, it will still take some time even for the deportations? melissa: yes, absolutely. and it's hard to see exactly how long it will be before we really start to see the impact. i think the fed is going to wait until they actually see it in the numbers, they are not going to say oh, we have imposed tariffs, maybe we need to act sooner.

but it will eventually make its way. carol: one thing i am curious about, are you thinking about from 2.0, is it good to be a lot like his first time in the white house, -- he has definitely moved much more rapidly in terms of filling out his team, he understands more about how it works or he has advisors understanding. i am just curious, is it a second version of what we got, or something different? melissa: i think it is likely to be something different. we have this kind of push and pull between musk and the traditional maga people. it's not clear if he will come down on one side or the other of those. he also, like any president in their second term, doesn't have to worry about re-election and can possibly do more things rapidly. so i think it will remain to be seen. but definitely he has acted much

more quickly this time even before being inaugurated. vonnie: sounds like you have a lot of concerns. the potential of tariffs, and other inflationary policies on u.s. inflation, the potential for fewer rate cuts, the potential that valuations are too rich. what do you do then is going to the beginning of the new year even as we have a selloff today? melissa: we have had these concerns for a while and the market has continued through although it's going up very narrow, only a few stops leading the market of. i think in terms of a portfolio positioning, i don't think it will be a bad idea to position yourself a little more cautiously. carol: what does caution mean, cash?

melissa: i think even within the equity markets, some of the more defensive types of plays. we talk about factor investing. so looking at the types of factors, if you want cheaper stocks. you may want to stay in the larger stocks so -- although you don't necessarily have to be in the seven biggest stocks. and just being a little more defensive. you may also want to look at fixed income. i mean, rates are attractive. right now if you are looking at a 10 year yield or even a short-term yield, it's quite attractive even relative to the dividend yield on stocks for expected returns on stocks. carol: the 10 year right now at 4.56. exactly. it's attractive. in comparison. vonnie: vonnie: would you move any money out of the united states and look at other economies, the way, look like that is done? melissa: we certainly don't see

the same kinds of high levels of valuation outside of the u.s.. markets in general haven't done quite as well. they have done quite fine if you have been invested in euro four for example,, you have done ok. but i think the relative level of attractiveness, it may be time to start looking outside the u.s.. carol: i am curious what you guys are in the office or on a conference call, what are the things top of mind. there is a lot of things we have been talking about with guests, whether it is concerns about inflation for tariffs, yet investors still have to continue investing. when you are an institutional investor, you can't just throw everything in cash for you probably aren't going to. so i am just curious, when you sit with your team, what is it you guys talk about the most? melissa: one of the biggest areas of concern is concentration in the market. carol: still? how many years have we talked about the concentration?

melissa: and it is getting worse and worse -- as you make of that vision it is getting worse. but historically, when markets have been concentrated, that hasn't necessarily been a good over a medium to longer term. because these stocks are getting very overvalued, and so what else can you buy? it's not necessarily true that investors will turn to smaller stocks to broaden out their views if they are very concerned about the economy. vonnie: just curious, how much would you want in cash going into this crazy but potentially volatile year? melissa: that is tough to say. we don't do any traditional asset allocation. i wouldn't go all in cash. it couldn't hurt to hold cash since yields are high. but the market could continue --

a lot of people are expecting a good stock market this year. vonnie: alright, melissa, thank you for joining us in the study up on this last trading day of the year. melissa brown is managing director of investment decision research at simcorp. we will talk test tesla next. potential speed bumps ahead, we will discuss with ross gerber, co-founder and ceo of gerber kawasaki, he has a particular bone to pick with elon musk these days after himself being the owner of a cybertruck. carol: the stock has been on a tear, 564% especially of his relationship with the president-elect. we will see what story holds. this is "bloomberg markets." ♪

carol: own right, we are back on "bloomberg markets." carol massar, vonnie quinn across tv, radio, youtube and

bloomberg originals. top of mind this year seven certainly will be in 2025 is the auto universe, automakers across the globe facing mounting pressure. a lot of things. growing competition from china, even though you can't buy it here yet in the united states, it is on everybody's radar. then you have a about ev regulation whether it is in the united states or in europe, so a lot coming out of the auto universe. let's get more with bloomberg's detroit bureau chief. david, sounds like a fair amount of speed bumps out of the ev universe. walk us through it and what you're thinking about through 2025 2025. david: sure. when we think about what will probably happen, most forecasts say auto sales will creep up a bit. three seems to be the betting odds.

so let's say it is 60 million vehicles plus, a little bit of growth over overall retail vehicle sales -- 16 million. if trump takes over the $7,500 credit, that puts pressure on the ev market. all -- the automakers non-tesla for the moment, are trying to get the costs down so they can play the price game and lower prices because they may not have that federal money to play with. but they will be doing that with the wind in their face. it will be tougher to get growth. i think we will still see some growth in the ev market just because you have new entrants coming, cheaper models. tesla is supposedly coming out with a model 2 sometime this year. the law has talked about a cheaper vehicle. gm will be ramping up the equinox suv. you're starting to see some that are lowering prices. this comes as well.

but tesla is not immune to this, companies will have to discount to keep growth growing, and that is not good for margins. so we've got a steady market, not a great one, maybe some ev growth, but you will need discounting to get there. vonnie: it's hard to see the incoming president not wanted to make friends with all the american companies and have all the american stock market go higher and please investors. would you do anything that would hurt the stock prices of these companies? david: in some ways it could help in the sense that what trump wants to do is undercut ev sales. he wants to water down fuel economy standards so that companies like general motors and ford can continue to sell big gas guzzlers, by far their highest margin vehicles, large pickup trucks and suvs. . he has also talked about drill, baby, drill, drop the price of gasoline so that more consumers will buy those vehicles and be

less interested in electric vehicles. if you are an automaker, you have to be worried about the investment you have already made if trump comes through with all these things. but they could also make a little more money if they sell more vehicles. gas guzzlers, trump is good for that so they will end up making more money. investors will like that and bid up the stocks. carol: it always feels like in the ev space, it is everything measured against tesla and elon musk. there are concerns in the run-up with tesla shares this year. put that against what could be a potential annual sales drop. what do we know about what might be to come that might be disappointed to tesla investors? david: how he will get the 15% to 20% growth he has talked about, the street is not giving that a lot of credibility, because we don't know where it is going to come from. he will either have to discount the vehicles he already has on the markets. the cybertruck is not a

high-volume vehicle, it's more of a niche truck. we don't know what will happen with that cheaper tesla, if it will even be on time when he is frequently not on time with his vehicles. so we don't know where he will get the growth. i think the run-up has been from a variety of things. one of them is he is just tight with former president trump so whatever it takes to help tesla's business, just selling ev's, maybe it is not having him selling ev's, but undercutting competition from general motors, hyundai and et cetera, that will help him hold or gain market share. number two, is there is the -- from the trump administration to have an autonomous vehicle policy, which we don't have a federal autonomous vehicle policy right now, it is a patchwork quilt among states. if that happens, it could help pave the way for the cybercab elon musk wants to put out. that is what has driven a lot of value in the stock, this year people think that he elon is pivoting to an autonomous vehicle company and they have

given him a lot of credibility on that. both these things have driven it. that is the policy side of it. but i don't see where he will get a lot of growth in ev's because i am not sure anyone will get a huge ev sales growth this year. vonnie: david welch, thank you so much for your hard work all year long. we will be following your writing this year. someone whom still owns tesla shares isao drives a cybertruck. we are at $407 on tesla. would it be something to buy some stock going into the end of the year as it is down today more than 2%? it has been pretty volatile. ross: i am having a flashback from three years ago when it was at $407 and it closed at an all-time high, exactly on new year's three years ago. i thought i was doing pretty good. they reported good numbers three years ago. then it has gone down for the last three years. we are back to where we were.

tesla has a lot to prove with the numbers coming out this week to make their quarterly and annual numbers. they have had to pull out all the stops. it's going to be hard for them. that is where we are on the short term. on the long-term, they went to build robots and cybercabs. . i am not sure people went robots yet. i certainly know that cybercabs will have tons of competition from the likes of waymo and uber. carol: are you ok with the distractions that seem to come up from elon musk? he has shown he can handle a lot on his plate. how are you thinking about the elon universe and also his relationship with the president-elect? ross: it is still up for grabs, as we have seen maga attack elon for some of his views. he has his own views with the way he wants things done. it will definitely clash with republicans who want to spend money. how that will extrapolate out into people liking or hating

elon musk, basically i thought all the progress he had made in building potential customers in the maga universe has all of a sudden been reversed. so, this is the game, is, why is being friends with trump going to help tesla? where i think it will really help him is in areas like ai that he really cares about. tesla is in a really tough position in that they don't have direct leadership and have a lot of important things to accomplish in the next 12 months, including full self-driving you know, getting these cabs out in whatever vehicles they are supposedly making. but there is nobody really there every day. we all know that elon works for trump now, or trump works for elon, one or the other. so it is like how tesla does, it's a pivotal year. valuations are fully stretched and assuming a great future. anything less than that happens, i think it will be a tough for the stock.

vonnie: what would make the market lose confidence in elon? he is running six companies and spending his time at the moment trying to come up with a plan to cut government profligacy. carol: make it efficient. ross: yeah, good luck with that. the point here is that it is all about autonomy which is really a key in its best use case for helping society currently, which is safety of our children on our highways. full self-driving has the potential to make the roads much, much safer and that's what i am a big supporter. the version i am using now works pretty good. it has improved a lot, but it is not an autonomous vehicles like a waymo. i will get in a waymo with my kids right now and feel very confident with no driver driving me around and lay in very difficult conditions. tesla is not. there are hardware and software

issues that need to be resolved. if it's not done this year, stuff will hit the fan. carol: we got into a waymo recently when in san francisco. tim was blown away. he said, that is what i want, the safest ride i have ever had. ross: it is so good. that is the issue, they are much safer vehicles at this point than the teslas on autonomy. it's a big thing. it's a hardware and software solution that needs to be addressed or is it just a software solution? i am starting to think it is both, and that will be a huge challenge for tesla next year if that happens to be the case. carol: we will be watching. be well, ross gerber. ross: happy new year to you and the viewers and listeners. carol: president and ceo of gerber kawasaki. we are headed to big. coming up, the closing bell, just four minutes to go.

the chief investment officer of abound financial will be taking us through the close on this last trading day of 2024. this is bloomberg. ♪

carol: alright, last trading day of 2024. foregrounding days in a row for the s&p 500. finishing off our worst levels

of the session. we are at 5881 on the s&p, down zero point 4%. dow jones relatively flat on a percentage basis. down 20 points. nasdaq almost down a full percent, down 0.9%. we saw an even split in terms of gainers and losers found this final day of 2024. vonnie: yeah, it was sad not to see some of the indices eke out a gain at the end. if you look into the map of the s&p 500, you will see about six of the sectors were in the green. only 5 in the red. it was the depth of the red that drives the index lower. real estate higher on veteran real estate data this morning out of the s&p home price index. materials higher.

health care a bit higher. consumer staples as well. plenty of good news to go around, just not the entire index. carol: just want to give you some year-end totals. the s&p gained 22% in 2024. nasdaq 100 in particular up just shy of 25%. small caps, something we talk about a lot, finishing 2024 with about a 10% gain. in terms of the trades and some perspective on how we are wrapping up the year, backward pass is jess menton who has been one to the markets for us. not a surprise to see how we are settling in here. jess: you mentioned small caps, month to date, the russell is down 8%, worst month since september 2022. same for the people alluded index, the spw, its large cap counterpart, it was down 6% this month. carol: big decline. jess: west since september of 2022. we have talked about this recently, the s&p 500's

round-trip trip from election day till now, basically giving up the gains. those other parts of the market that had been taking off after her election to have given up those gains. vonnie: is a business people got confused? four words it's really generally intentionally trades? jess: i think it comes down to the said policy. people want to talk about washington and the change in the new administration. but what will dictates the stock market, you think about earnings projections, is a longer-term driver for stock prices. also, we are on pace potentially in the fourth quarter for the sixth consecutive periods of earnings growth for the s&p. but an hour ago we were talking about the divergence between the bottom-up estimates versus where the s&p is currently priced. if it is priced far north of 20% eps intro 25, but bottom-up estimates by 13%, something has to give. even with the tax overhaul, we

don't know what will happen. it's not going to be a steep cut. gina martin adams, her team have argued that it is hard to from a profit and our next prospective to have as dramatic of a swing. in 2018 if you think back, that is when we saw those massive buyback programs. but it is trickier in this dynamic because of the market set up. carol: i went to step away from equities for a moment. looking at our markets live blog and wondering what happened to treasuries. as you said, it will probably come down to fed policy. it affects how you look at valuations. the mliv blog, 10-year treasury yield's, some perspective, started 2024 at 3.92. hit 4.73 in april. 3.59 ed davey day before the fed started easing on september 18. since then, after 100 basis points, 10-year yields have risen, closing the year at 4.57.

kind of a counterintuitive response to the rate cuts. this is again, what our live blog is saying. that that trajectory and those moves, just when we think we have understood the treasury narrative, the fed throws us a curve for traders throw us a curve. jess: even when the fed begun its cutting cycle in september, it was an aggressive pace, coming off the back of a few disappointing jobs reports, but since then, we have had growth. so they were trying to signal there wouldn't be as aggressive cuts as traders hope for. we continue to have that debate, where is the neutral rate? they potentially might be a lot higher now than coming out of the housing crisis. before covid, it was thought the neutral rate would be about two and a half percent. but when the fed started cutting rates in 2018 the economy began to slow. but coming out of covid, year

after year, it has continued to outpace growth. so if it is higher, not as many rate cuts. if yields continue to rise, that is where you see pressure on the growth stocks. vonnie: are there no bears out there, what does it look like? jess: jp morgan had a 4200 price target on the s&p 500 in the last two years. now it is finally above 6000, so you are starting to see the most bearish strategists start to increase those targets. carol: a little capitulation? jess: exactly. one of them had a 6000 target for the end of this year. you saw a lot of people chasing them. sometimes people like to use it as a contrarian indicator. if you see more people are typically thought of as parma bears, like mike wilson, he also capitulated earlier this year.

this was back at the beginning of the summer when they said we were wrong. when you start to see more of the bears throwing in the towel -- when i talked to strategists -- >> carol: when you're talking to folks, what is berchtold? we know the targets set and they often don't get it right by the end of the year, but i am curious the tone, is it more caution or are we going to see the gains continue? jess: in our function for the s&p 500, it is around $6,500 target for the sell side analysts next year. but i love the people managing money to hold those targets to account. they look more at positioning, and economic data. but a lot of economic data is backwards looking. they want to see exactly how hedge funds are positioning into this. if you are looking at the positioning, it's not quite as stretched as it would have seen in july when the indexes peeked

out. . but it is getting closer to that. that could be a reason why we have seen kind of a slip in the tech admit the cap growth stocks. vonnie: you have been an absolute treasure all year long, jess. thank you so much. you have taught me so much. [laughter] that is jess menton, team leader for u.s. equities, our equities groups. coming up, we are going to be continuing to take a look at these markets after the closing bell. david laut joins us now, chief investment officer at abound financial. david, you heard what she had to say, how all the analysts had sort of capitulated and basically she sees no bears out there. are you in that camp? jess: i think it is better to focus on the immediate term. for me i am looking at what that equities have done for the last two years, let's celebrate that. and happy new year's to both of you. i am looking at on average, after a 20% correction in the s&p 500 following five years, we

have averaged a return of 67%. if you go back to october of 2022 and you roll that forward to the 6100 we have today, that was the 67% return, a couple percent below that. on average we have to a high to a low decline in the s&p each year for 14%. we haven't seen that in two years. we see the mag 7, as stretched as they have been 39, percent of the s&p 500, just as high as they have been from a multiple standpoint. and the multiple issues in the s&p are largely baked into those companies. so next year i am thinking to myself, it seems like there might be an opportunity for some softness. some consolidation within a secular bear market. the idea that we could pull back 15% potentially in the first six months of next year, would not surprise me. and i think you are seeing other people with those thoughts.

look at today where you see the nasdaq underperforming, small cap underperforming, mid-cap underperforming the dow. all of those add up to maybe we have a bit of softness in the large. carol: tax companies so what would be a catalyst for the market? we have had some guests come on, they say most importantly it is what the fed does. you talk about watching the intermediate market, but is it really the fed that you are watching to figure out where we go from here? david: of course you don't want to fight the fed. they will continue to lower interest rates. they are working towards helping the economy over the next 6-18 months. not hurting the economy. we were mentioning the 10 year earlier, it was a confusing situation 12 months ago because the 10 year was lower thinking that we would have a recession. now 10-year is drifting higher because people are saying, hey,

would know recession, things look good. but what will happen with trump's policy? this is now the things, he is talking about doing is no. how will that impact growth? i think the policy, has fallen away a bit since election day, and it has become more about the recent fed meeting. as we get closer to the inauguration, i think those policies and what will happen there is going to come to focus. is it just talk, or is he going to be tough when it comes to tariffs. that will cause the market to jumble a bit. , ultimately, i think de-regulation, business friendly environment and innovation like ai will carry the day, and it will be interesting to see how that opportunity centers into value stocks. places that are necessarily thought of as the exciting part of ai, how can they use that in supplying their products and creating new products and managing their people and doing customer service?

vonnie: you must have your eye on a few of those value plays already then, what are they? david: you know, what i am looking at in particular is small-value financials, industrials. think of a firm, it would be a great example this is a technology oriented company that is providing services. they have got great culture and transparency. in my situation, i happened to him by a golf simulator recently. pretty expensive purchase, but affirm was able to offer that to me for four years interest free. they want because they got a matching commission from the product provider. the product provider won because he was able to sell a higher dollar item. and i won because i was able to finance it for free for four years. when he think about innovation ai, they are using ai to underwrite those deals, to

monitor for fraud and they are using it with customer service to drive products. carol: but not we have to be worried if that customer can't hold up. affirm is up almost 24% in 2024. kudos to you for being able to buy a golf simulator. but i am just wondering, the consumer continues to surprise us and has been at their spending. but it might 2025 go differently? david: still half of the consumer spending in the united states comes from people who make more than $141,000 a year in combined income. we are not talking about rocket scientists or celebrities, we are talking about a teacher and a firefighter. will they continue to have jobs, to spend and be strong and drive our economy forward? i think so. yeah, the labor market is so often, but we are not in a dangerous place. and we have a floor there with a fed that is becoming more and more focused on the job market and less focused on inflation.

vonnie: you can get golf simulators for less than five thousand dollars of the way up to $27,500. i am not going to ask. [laughter] carol: she played golf, so this is her world. vonnie: if i was at miami dolphin, would have one right now. was it worth it given gifts of golf simulators? [laughter] david: you know, it is one of those things where you have it -- vonnie: thank you so much for joining us, david laut is chief investment officer at a bound capital coming up,. carol: shipping companies are front-and-center as tariffs loom. we will talk about that with lee klaskow who keeps an eye on it for bloomberg intelligence next. ♪

vonnie: you're watching the final "bloomberg markets" for the year 2024. congratulations if you made it

through. i am vonnie quinn along with carol massar. shipping was hit with challenges in 2024, and 2025 might shoot up to continue with that. ryan petersen joined the earlier to discuss how he is charting the course for his company. >> people are trying to get goods in before a potential strike or tariffs. if you are concerned about those things, which you should be, you have the flexibility to get the goods in as soon as possible to avoid the deception. >> how much can we draw on the experience of the toy for an election and the first trumpet administration when it comes to mapping out the potential impact of some of the tariffs that we are talking about? >> we have seen this movie before him anyways. the tariffs were not as disruptive as people expected them to be. they have existed through all of human history, it is basically how governments have always funded themselves.

people were able to adapt. but the big thing right now is the uncertainty. what exactly is going to hit and when and how it going to hit? for example this week, the president of mexico imposed large tariffs against imports from china. to everyone's surprise, those actually affected mexican fulfillment centers, e-commerce warehouses who are not shipping into mexico but import to mexico in order to re-export those goods into the u.s. that is the way that u.s. e-commerce is done, is actually out of fulfillment centers in mexico. last night, the largest fulfillment centers in mexico had to email all of their customers to cancel their contracts. so a lot of american businesses are scrambling today to find new fulfillment opportunities and new ways to serve their customers in the u.s. even though it had nothing to do with the u.s. government.

>> yeah, that feels like a complete wild card. so when something like that happens when somebody throws a deck of cards up in the air, how long does it take for the new normal to set in place? >> the fun part about working in logistics, we figured out a few years ago there is no such thing as normal. we have to be ready for whatever it happens. each day there is anything between the strikes in the red sea disrupting ocean freight, you have tariffs, you have a drought. you just have to be very nimble and agile if you want to run a supply chain in the modern world. >> makes sense. going back to the tariff question the details are to be decided, we do know some form of these tariffs are coming on imported goods, and, and and the mechanics are pretty clear in terms of tariffs, they tend to reduce demand for imports at least if you are american. you pointed out we have seen a decrease in freight weight from china and that could be an offset. walk us through what that might mean for goods being imported

from china and how manufacturers think about that? >> ocean freight rates have been very high throughout the year, sort of two to three times longer on historical averages, and and this is in a market where the supply side of the market, the number of shapes in operation and capacity has ballooned. there has been a huge deployment of new container ships that as these carriers made a lot of money doing covid, day reinvested that into new shapes. one would predict with this huge surge of supply that the supply would come down. the reason that hasn't happened is because the red sea is absorbing capacity as a ship have to go around the southern coast of africa. if anything is to be done in the long container ships to return to the red sea, that would instantly bring the price of ocean freight down by two thirds or so is our guest, it may be

morem that was ryan petersen, founder and ceo of flexport. carol:. carol: talking on christmas eve with our own katie greifeld and scarlet fu. we want to continue with this theme, what 2025 might hold for that industry. let's bring in lee klaskow from bloomberg intelligence. good to have you here. let's start with what you heard from the flexport ceo. sounds like he said try were not so disruptive during the first trump white house, but there's lots of questions about what is to come. how are you thinking about how the freight and logistics industry might be impacted with the new trump administration? lee: i think the new administration brings a lot of uncertainty about what we can expect. the tariffs, we don't really know the negotiating point. will they actually go to fruition, will they be placed as a threat? there is a lot of unknowns we still need to figure out and work through. when looking through my crystal

ball, when we are looking into next year, i would echo a lot of things that the previous guest from flexport was talking about, you know, we expect ocean shipping rates to come down. they were unsustainably high for most of this year, and that could drive earnings significantly for a lot of the ocean carriers. but these disruptions do create opportunities. in the freight, transportation and logistics market generally speaking. these disruptions are great for freight brokers that are working with shippers that are looking to scramble to find new supply chains, you know, getting freight from maybe a new source to where it needs to go. there is a lot of uncertainty just around the bend. in mid-january there could be a strike in east coast ports and

the gulf ports. a lot of shippers have been diverting freight either to the east or pulling forward a demand, which could impact seasonality next year. it makes comparisons little more challenging on the ad-buying side. but net-net, we think 2025 will be a much better year for our domestic transportation industries that recover. truckload less than railroads. even the freight brokers, the ch robinsons. that will be driven by a market that is fluently tightening. that will drive -- we view that contractual rates, which is what a lot of the trucking companies that we follow, they jb hunts of the world, that is where they operate, we expect them to be up by single digits and that should flow through to the bottom line.

it could drive earnings up by 60%, 70% for a lot of these companies. vonnie: wow, so you would stick with rails, not shippers? i am thinking mayor scott didn't have the best year. stock price was down 4% -- maersk? lee:? lee: the abortion providers benefited from this high rate environment. driven by the fact that ships have been able to go through the suez canal, there were issues with the panama canal. a lot of these disruptions at the fourth kind of force to the shipping companies to add surcharges for the additional costs that they might have to undertake. what we have been seeing is that since july, these really high rates have been coming down. as the previous guest mentioned, the supply and demand feature is really not good for the marine

shipping market. if there is a lot of supply coming online. it has been artificially absorbed because ships have been going around the cape of good hope, around africa. so that's as 10 to 15 days to a voyage and that sacks of thus lacks capacity. -- sucks up the slack capacity. we have no idea when ships will be able to go through the suez canal safely. that will create a flood of capacity of the market and that will really exacerbate the slack capacity that is out there and drive rates lower. so that's, out of all the markets we follow, we are probably the most pessimistic side of the container line market. vonnie: does the industry regard this panama canal situation is a threat, will the panama canal stay with the panamanians? lee: my guess is probably. [laughter] we will have to wait and see. you never know. it should be an interesting four years. vonnie: that is for sure.

the, thank you for joining us for our last trading day of 324. i have to keep saying it. lee klaskow bloomberg intelligence. carol: i just want to give him a shout out. he has a talking transport podcasts. highly recommend. logistics is such a good indicator of what is going on in the global economy, specific nuances and narratives about what is going on in the middle east, so on and so forth is also a great read of the economy. vonnie: always, always fascinating. stay with us. another 35 minutes in "bloomberg markets" for you on this last day of december. jeff taylor will join us, founder of mphasis digital risk. this is bloomberg. ♪

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carol: you are back on bloomberg markets. a special cross-platform broadcast. one thing we have talked about a lot is certainly real estate commercial office. yeah, we've done that. but what about the housing market and what is in store in the new year? we have data on the housing market today. pending u.s. home sales touching their highest level since 2013 according to new numbers. let's get a great look at what is going on in terms of u.s. housing with the vantage point is katie hubbard, executive vice president of capital markets for the privately owned asset and

real investment company walton global. they have roughly $1.4 billion worth of land under management. the operate in retail come industrial and commercial sent there is. so good to have you here. how are you, and how is the u.s. housing market doing, and what indication do you have a what is to come in 2025? katie: thank you so much for having me. i am doing well, happy new year. we are definitely seeing a positive outlook for the housing market in spite of some challenges, as your previous guest spoke about. there is geopolitical uncertainty also affecting the housing market but still a positive outlook both on new-home sales and existing home sales in 2025. vonnie: give us some of those bright spots pretty even though the data has been coming in sort of mixed to good, it is difficult to know why housing is holding up so well in the face

of such high mortgage rates. katie: thank you so much. i would say the demand is there. in spite of the affordability challenges and elevated mortgage rates that continue to stay in the mid-6% range, there may be good news for parents who still have 25 to 34-year-olds living at home going into 2025. we are starting to see a continued decline in people wanting to get that first time home and they are settling into those higher mortgage rates. so we anticipate we are going to continue to see really strong numbers in the first time home buyer market. [crosstalk] first-time homebuyers, the age has increased to 38 years old because of the lack of affordability. carol: we talk about affordability all the time. i think we have talked about it with you. people say more homes need to be

built but i think more affordable homes need to be built in the places where people need them so they are not traveling 1.5 hours to get to work. you guys are in it when it comes to land management. tell us what you are seeing in terms of those initiatives to build affordable homes where people really need them. katie: our clients are the public homebuilders and there are really two ways they can help with affordability. one, they are building smaller homes and they are doing tighter lot lines. in order to entice people to want to have a smaller house closer to your neighbors they have to have amenities and good locations. what happens is you have increased amenities but that could increase cost and offset affordability because oftentimes you're going to have an hoa. they can reduce the size of the lot lines. on the other side they can go further out from the core and we have seen the hybrid worker, remote worker increase. the past years we have gone from

27 million to 37 million remote in hybrid workers. for home builders that gives them the opportunity to build farther out where people don't have to go into work and land is more affordable. vonnie: it is $1000 a month cheaper to rent than to buy your first time home. historically that number was $233. so why would anyone want to own their own home when renting is maybe other leaves he or and definitely more affordable? katie: what we have seen is we had -- we anticipate rents will increase in 2025 because there is that big spread over the historical norm. in some markets you will not have that affordability. also because real estate is one of the greatest ways you could generate wealth. for people who want that american dream, they want to own a home, at some point they will have to move to where they can afford the house. carol: what are you seeing in

the housing market that you think is not being discussed and should be? katie: i just think that people are not really understanding that rates are not going to get down to that 5.5% fixed rate and a lot of people have that number in their head. you are seeing some groups come out and saying they are going to see rates get down to 6% in 2025, where we just do not believe that. we believe in 6.3%, not getting 6% until 2026 and staying at 6% in 2027. what is not being talked about is the reality setting and for people that if they want to own a home to have to either go to a new home builder where they are buying down the rate. 74% of public homebuilders are buying down rates or 54% of them are paying for closing costs. to consider a new home if they do want that homeownership, or they will be renting and then the rents will be going up in the next year or two. vonnie: what might immigration

policies and a change in immigration policies mean for homebuilders, the affordability of building homes, and so on? katie: our clients are on the wait and see on tariffs and immigration policies that will be coming with the new administration. but there is a high propensity of the construction workers to be foreign-born. 28% of all construction workers in the new home industry are foreign-born. if immigration policies affect that labor policies could increase and that could drive prices to continue to go up in homes. carol: everybody is still moving down south. i have a large family and i have two or three of them who have moved to outside charleston, south carolina the last couple of years. where is the building happening? katie: charleston is number two in net migration. more people are moving they are then out of the state. it is affordability jobs, quality of life. what you are also seeing in the south is you are having an increase in insurance costs.

in some places along the gulf insurance costs have increased up to 80% in the last three years. in addition in the west where there is a high propensity for fires, insurance costs have increased. you are still seeing people going into places like florida, south carolina, idaho, for that affordability. vonnie: sounds good as we are expecting a frigid january here in new york city. thank you so much for joining us and happy new year to you. hope you have some great plans for this evening. we are going to continue this conversation now for more on the outlook for homebuyers and mortgage rates in the new year we are joined by jeff taylor, founder of emphasis digital risk. i don't know if you heard that conversation but katie was talking about six or 7% mortgage rates through the next two years, potentially beyond 2026 even. do you agree with that given we are expecting even less than two

fed cuts next year? jeffrey: thank you very much for having me in happy new year. as we look into 2025 here's what we know. we are going into the market around 7% right now. we have a low of 6% and 8% around september. 2025i am looking for the 30 year fixed it around 6.6% going into the end of the first quarter and i think by the end of the year move will be at 6.3%. we have a new president coming into office and there will definitely be some volatility going on as far as potentially with rates. i don't know what rates are going to be in 2026 but in 2025 you will see somewhere between 6% and 6.5% second half of the year. carol: what is more important at this point, mortgage rates or housing supply and supply and demand imbalances when you look at what is to come for housing in 2025? jeff: that is a great question

and deftly correlated. on the supply side we have 400,000 new houses on the market right now. up 8.9% from this time last year. in the existing home market we have 1.3% on the market right now. we have a decent amount of inventory and homebuilders are leading the way. you couple that with a 6.5% interest rate and the people who want to go ahead and buy, they will make the decision to do it. affordability is not nearly as bad as a lot of the headlines are talked about. if you put 5% down on a house at $400,000, rate of around 7%, a joint income of $115,000, $600 in other expenses, you can afford that house. it also comes down to when people feel comfortable with their job, they go ahead and make that home purchase. vonnie: we talk so much about

the american dream and every now and then the idea comes up that maybe the american dream is changing and homeownership is not part of that so much anymore, like it is not in many parts of europe. is that a possibility? is it a possible outcome that americans won't tie their identity to the home that they own? jeff: again, another really good question. if you look at creating wealth or security for your family i still think there is nothing better you can do than buying a home, making those payments to create that. still think the american dream is to be able to come here. unlike many other countries, we had a program replaced that allows people to be able to come in and put 3%, 5% down on house. i don't know anywhere else in the world that allows that. you come to america i still think the number one thing of

the american dream is having a home. carol: you have a lot of data that comes across your platform in terms of what you do. you have a unique vantage point. so i am curious how much sensitivity you continue to see potential homebuyers, whether because of mortgage rates, whether it is economic news, fed policy. give us insight based on the data points that come across your desk and your platform? jeff: thank you. at digital risk we work with the largest banks in the country. what we are seeing right now and as we go forward is the housing structural system is very solid. putting low products out there that people can afford. where rates are volatile and they fluctuate, but right now we think the housing market is extremely structurally sound.

the data point is right there. 62% of housing, especially in maryland and miami, are still cash buys. we still expect 3.5 3 million houses to be financed and that is even with people calling for high interest rates. the big thing in the housing market is set -- is having a structurally sound mortgage product. that keeps us out of the 2008 era where that did not make a lot of sense. from a data point perspective i would say the regulatory market is you are very structurally sound and therefore we expect a lot of good outcomes in the years to come. vonnie: if you had to put odds on it, what are the odds of exiting conservative ship under a trump administration? jeff: very low. on the board we talk about that

a lot. it is something we are very active. i think it is very low. it is hard to put an over emphasis on how important it is to have that government explicit backstop on a residential mortgage market. if you are going to somehow take away freddie and fannie and how world bond investors believe this simply guarantees the mortgage bonds themselves, for me that is hard to get my head around. ultimately i think it will be very loud. carol: thank you so much. so appreciate your time on this tuesday. happy new year. jeff taylor, founder of mphasis digital risk, giving us some insight into the housing market. i feel like it was a great back to back of station because the housing market is one of the major purchases for most americans. so getting some insight into maybe what is to come next year. although homebuilders, they have

not done much this year. they are down about 1%. vonnie: almost like the market is not taken a position on it because the market has not done so, so badly. it has not been in the doldrums. you know who else is not the doldrums? our next guest who is excited for tonight. carol: uh, yeah. there is a lot going on in times square right now. vonnie: he owns the building. carol: we will see what he has to say about what is going on in that area. we are curious about office properties and so on. we are going to be talking with the owner of one times square at the home of the new year's eve all. that has got to be exciting. michael phillips on the other side of this break. this is bloomberg. ♪

vonnie: you are watching the last addition of bloomberg markets for the year. i am vonnie quinn along with carol massar.

north american box office grossed more than 44% more in 2024 than in 2023. over this past weekend. one of the films continuing to define gravity is wicked, which has grossed a domestic total of more than $424 million. chris palmeri joins us from los angeles. was that in the forecasting books, that it would grossed that much to mess tickly? and what could we -- that much domestically? and what could we ask universal to outdo that? chris: i cannot resist enough wicked puns. this whole year has been a bit of a surprise. it started off down dramatically, partly because of the strike and a dearth of films. by june it was off by 27%. now it has come back thanks to movies like wicked, moana 2,

deadpool and inside out 2, two of the biggest movies of the year. so we are going to finish almost about even, maybe about 3% down from 2023, which is good news for the theaters because they are still struggling to get back to pre-pandemic levels. carol: i have yet to see yet and i know they have a part two to this, so i can imagine the studio must be excited about getting onto the next one. let's talk streaming because they have to say, i am upset with shrinking. i'm so sad the season is already over. tell us about the streaming world. lots of competition, lots of movement. chris: and the big news today was squid game 2, the second season of that, 68 million views in his first week, the biggest debut for a show on netflix, number one in 92 countries. so they have proven that they can get over that sophomore slump.

it didn't even get great reviews. it is one of those weird ones that got better reviews from critics than it did from the general population. but still seems to be strong. they promoted the heck out of this. they had the red light green light contest from paris to jakarta. they have video games and all kinds of tie-ins to that and another season coming next year. carol: i have not seen that either. have you seen that? vonnie: no, i think i am fine. what will the fcc's brendan carr mean for the industry? chris: a lot. he had sent a letter to bob iger at disney saying he has to do a better job negotiating payments they get from cable companies and they share with local tv stations. that has been a huge cash cow for local tv stations, retransmission revenues. carr has tied to this whole issue. he is outspoken about it. fairness in media and whether

networks like abc and cbs are treating everyone equally, particularly republicans. so that is going to be an ongoing issue for sure. carol: what you think will be one of the biggest stories you we watching out for in 2025 in your world? chris: deals. certainly the paramount deal will get approved with some bumps from the fcc. everyone expects a lot more transactions under a trump administration. carol: that means we are going to be talking to you a lot in the new year. be well, happy new year. chris palmeri, bloomberg's leader covering media and entertainment. we are getting ready to wrap up but before we do so we know when of the most top watched events tonight will be the iconic new year's eve ball drop from one times square in new york city. this year's ball weighs nearly six tons and is covered with more than 2600 crystals. joining us to talk about it is michael phillips, president of

the real estate investment manager that owns one times square. my understanding is you're going to have dinner first and then head down there. what is going on right now to make it happen? michael: it is all about to launch. the crowds are filling the square and obviously the fdny and the police department and all city officials have created an incredible opportunity and supported this event really all year long. so it is amazing to see it is amazing to see all coming together. vonnie: about two years ago you announced you were transforming that building into something that could be used year-round. how is that going? michael: we are opening late summer 2025. it's amazing, about a $500 million rebuild of the building from the skeleton up. it sits on state, federal, and local writer ways which is quite astounding. carol: so it very easy project

to do. michael: very easy. many people don't realize the building has been vacant for over 60 years. it has just been a signboard instead -- part -- we are creating 20 floors of experience inside the building which will be an immersive experience in a 21st century visitors center for new york city. carol: how do you think about new york city office commercial property in general? one of the large conversations we continue to have here coming off the pandemic is what happens to a lot of office space. you are in this industry. give us some thoughts about maybe what this means. does the ball drop on commercial office property in 2025? is there something still bad to come? michael: i think it is evolving. long before covid there were winners and losers in the office space. either esg compliant new build

buildings or highly a minute ties to buildings. carol: but the pandemic showed -- i mean, we did shows from home. michael: increasingly people are finding the efficiency of that is much less than being in person. hybrid has become more like four days a week, not two or three days a week. we just heard recently the announcement that many of the companies on the west coast are going back into the office. we saw that with salesforce in san francisco. while i think it has not been great news for the office market, and i think you will see less overall back office, things that can be taken out of the physical place will continue to happen. i think what you will see is a genesis of new building. the cranes in cities like london are over the skyline. as you think about what that means to new product coming online, i think there are exciting things yet to come. vonnie: tell us about how you

actually make a six ton ball of christmas -- crystals drop. i did not realize it is six tons. michael: it is on a 135 foot tall mast. and it's very digitally advanced, or was in 2008 when that ball was created. this is the last year of that ball. in 2025 there'll be a much more advanced new one. it is interesting. this year we had a local crystal company from upstate new york do all the crystals. we are not using irish crystals anymore. it might come back. carol: why the switch? michael: we really thought local new york was great. we also are launching in the building something called ever, which is a 365 day a year wedding venue which we think will be really interesting. we did ever crystals all over

the ball and we did a crystal giveaway in times square and gave away to 700 people to crystals of the ball before we changed it out. many people do not realize that for 120 years, one times square has been the backdrop for all the major events that has played out on the world stage from a u.s. perspective. vonnie: 16 million colors and billions of patterns. i didn't even know there were that many colors. what is your next project? michael: we are working on a series of projects around the world. vonnie: the one you're most excited about. michael: i am very excited about a rooftop in rotterdam in the netherlands. also a big innovation hub which has been coming to market the last few years. carol: based on what you are seeing, the global economy, how would you describe it? michael: certainly there is some fragility. i think the political cycle has

not been helpful. but one hopes that we are now in a stable moment and we can advance from here. i think it has been a bit of a rocky few years but we are optimistic. carol: i think we will all take stability. a busy evening for you. have a safe one in happy new year. michael: same to you. carol: looking forward to watching later on. michael phillips chairman and president of jamestown joining us. he of course is the real estate investment manager who owns one times square. that does it for us traffic not on this final day of 2024. your final thoughts? vonnie: i am curious to what your new year's resolution is. carol: less clutter, less things, and just living life. vonnie: i am not going to make one. there we go. carol: all we are going to say is have a good and safe one. we really appreciate our audience on radio, tv, youtube, and bloomberg originals. you keep us sane and honest. happy new year everyone.

from vonnie quinn, i'm carol massar. this is bloomberg. ♪

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>> i think most of us, when we talk about progress, have biased