>> i don't think the bull cases have gone away. >> there's a lot of movement still to be having the first half of this year. >> in january all of the market moves we have in december get completely unwound. >> as the market broadens out that means the former winners will start to decline. >> not sure if markets know what to expect and that creates volatility. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: i from new york city this morning, good morning. bloomberg surveillance starts right now. coming into 2025 following the

best back yearly gains since the late 1990's. equity futures bouncing back from four days of losses. the s&p we are higher .6%. on the nasdaq we are up .8%. your forecast shaping up as follows. the average, about 6600. the highest is 7100. the low is 6000. lisa: this is not exactly a terrible year of losses after the biggest gains in the s&p 500 going back to the late 1990's. the real question is where the leadership will come from. we have seen a narrowing in breath. this past year was supposed to be the year big tech lost its dominance to the rest of the equal weight. that has not happened. can big tech continue to power the rally we have seen? jonathan: postelection we all had the calls. we were going to see increased

participation. we would see small caps pick up the mantle. that in december they had a terrible month. as for january, january 10 we get payrolls. that is next friday. the week after that you get cpi on january 15 and then he inauguration unchaining or 20 before we get the federal reserve -- we get the inauguration on january 20. the year does not really begin until we get the data on the 10th and 15th and for many people the year will not begin until inauguration day in america. lisa: we can get revisions to the forecasts starting in march. start writing your your head forecast in march at a time there a lot of questions about a tale of two habs that we hear for equities and bonds. the first half of the year will be this question of what the trump administration can do, the back half will be their invitation for some of those plans as we go into effect. that is the reason why there's more confidence baked in about the first half and the second

half about dollar dominance and outgoing gains. jonathan: jim reed at deutsche bank writes "for the last four years the first trading day has been a contrarian indicator with the s&p 500 ending the year the opposite direction it moves the birthday." -- it moves the first day." lisa: ignore it all, go home. you have had a massive rise in 10 year yields that has created this question, is it that rates are too expensive or too cheap but is it that stocks are too expensive? that will be the question and it will not be established today on january 2 when everybody comes back to work before we get payrolls or cpi or a real sense of what the donald trump and ministration will look like. jonathan: 17 basis point move on the 10 year. the 10-year this morning for .53. hsbc max kettner says we are in a danger zone and will be a copyright for the first month of

2025. have to get used to saying 2025. equity futures to kick off a brand-new year elevated .6%. coming up we will catch up with geoffrey yu of bny, looking for a continuation of trends. james lussier ahead of a house speaker vote and dan ives from wedbush on his top 10 tech winners. stocks rising to kickoff 2025. the s&p 500 closing off its best to your run since 1998 despite ending 2024 with four days of losses. jeff you writing the set up markets -- geoffrey yu writing the setup is -- all of the plans for 2025 expected to change on june or 20th when president-elect trump starts his term. welcome to the program in happy new year. what have you told clients about how to approach the be getting of the year when for many of the year does not begin until the 20th? geoff: we would agree with the

date in question. on the u.s. side we said last year if it's not broke don't fix it. u.s. exceptionalism is something we believe in. it will manifest itself through differentials being priced in by the dollar. also for europe i think where there may be a slight trend change, it is not suddenly everything getting better but may be less bad. if you have that less bad narrative coming in some of the other trends which will be maintained, i'm still targeting euro-dollar towards parity but how much further can we go through that? are people talking about further downside in chinese equities when there is such a strength and feeling domestically surrounding the need for growth to stabilize or improve as the leadership has highlighted. that less bad narrative elsewhere outside the u.s. could provide some surprises ahead. jonathan: saw the downside in chinese stocks earlier, the csi

300 down close to 3%. the hang seng finishing the session lower by more than two. four days of losses in a holiday period. we saw that through much of december, the negative breath lisa was talking about, the underperformance we saw in the small caps after a monster gain for november. much weight are you putting on some of the weakness we sought a finished what he 24 into 2025? geoff: i would back you up by saying our flow indicators on the volume side and affects in particular has dropped off quite a bit in q4. not something we would want to see. in 2024 we had the u.s. election and the december fed. this did not force a rise in activity. people are happy with their positioning. it is how much follow-through, how much incremental positioning can you allocate to what you have done already. that is something we have to be concerned about in terms of what is driving markets. do people want to be more overweight current positions

compared to where they were? that is where the nervousness is coming through and relative value trades for the time being, especially q1 is where people will deploy risk. lisa: i can buy this idea of exhaustion, the idea that people have had a good year and they do not know how much more risk they want to put on. the weakness we saw at the end of the year came with rising yields, raising the question of why. was it really just that the fed had a more hawkish tone? was it something about the data outperforming we've already seen consistently? if anything the surprise index has fallen off. why did we see such an increase in real yields which is max kettner says is reaching the danger zone? geoff: real yields back to 2022 or 2023, what do yields reflect? they reflect fear over inflation. if there is an inflation surprise to the upside, real yields will need to be higher and as a result financial conditions will need to be

tighter and in the u.s. how is that manifest itself? lower equities. we look at credit spreads and yield levels and equities. equities, that seems to be the last shoe to drop in terms of a tightening of financial conditions. it all goes back to u.s. policy. where does fiscal like and where does the tariff situations? these factors contribute to the inflation outlook. if the household will get everything and say inflation will rise and they will be much more cautious, i think that is where the caution will be needed on the equity performance front as well. that's cross that bridge when we get there. lisa: this is the reason why there is this question. do we need to come into january 20 until we get some inauguration and policies from donald trump? at what point can you say what do you have rates too cheap or stocks too expensive? can you weigh in on that or just tread water until the inauguration? geoff: i think it will be quite

cautious into inauguration levels. it is not taking off risk. going to what we have seen there may be a lack of interest in putting on risk. we get into q1 -- if i look at fed pricing markets are not really looking for a full cut until after q1 and may be closer to meet year, the june meeting. in that context is just a holding pattern for the first six months. that is where the inflation expectations will be built. looking into the earnings season in q1, the guidance incorporates, what are they seeing, what are their contacts and congress telling them about policy? how it will impact them and how the fed will react question mark -- how the fed will react? jonathan: many republicans spent the holiday season arguing over h-1b visas. what is your understanding of what the priorities might be? geoff: in a labor market contest

-- and a labor market context is where it matters for wage growth. look at the trouble every single central bank has had with labor supply. this may be a smaller component. the policies need to be done in a way which boosts real income growth rather than nominal income growth. if it is just nominal, than the inflation builds on top of that. people do not feel richer. if we have the right policy mix which guarantees productivity gains, it is potential productivity growth that is stronger than elsewhere. let that guide real income growth. i would hope the rest of the world could try to emulate the u.s.. getting the productivity side wrong means you get real income growth wrong and that is where you can get an inflation spiral again. jonathan: some people believed that by the middle of december last year the federal reserve was starting to incorporate some

of the policy changes from the incoming ministration. did you agree with that view and where does that leave them at the end of this month when they meet? geoff: i don't think they are incorporating things. they would not be flying blind. if i the sense of 50% or 20% tariffs that you can feed that back in your inflation models and act accordingly. may be preemptive action or guidance is needed but you can do that in terms of communication. what a lot of central banks are operating, if i look at the rate expect comments -- if i look at the rinks bank comments they are looking for stabilization. europe is sounding a bit more positive right now even though they could be on the wrong end of tariffs. that context, the growth risk and thereby the inflation risk is still to the upside for this year. i think that is what the fed and global central banks need to be attuned to. growth risk, they do not need to be worried about, but inflation

risk they need to look to the upside. jonathan: a lot of people are looking -- lisa: a lot of people are looking at this in saying the bad news has been baked in and then we get the news of ukraine shutting off supplies of russian gas to europe. this is not necessarily something they're not prepared for but it does increase natural gas prices and raises the question of a greater degree of inflation. how confident are you the ecb is able to thread this needle of fighting what you need as the potential for upside inflation while also supporting an economy that a lot of news has been baked in that is bad but it does not look very good. geoff: to be frank the pivot opportunity was last year when they could have escalated or strengthened their easing. if they did not do that last year where the pmi's were given how things seem to be stabilizing, that less bad narrative, we will get a new german government coming through. france seems to have stabilized for now. if that investment narrative from the mario draghi report

comes through i do not think the ecb will change its language. given my euro-dollar view it is more the fed pulling back from its rate cut at various points last year. that is what is driving things right now. i look at our flow data, you are positioning to the short is very extreme right now. if we go through parity and have a look at fundamentals, assuming no geopolitical shocks, looking to stabilization from there and see how growth performs but still on a net-net basis i think the u.s. outperforms europe for the time being. it is a question of how europe turns things around for the u.k. and that element as well. that is where the market is underpricing cuts. that is where the central bank surprise could be relative to current expectations. jonathan: we are set up for a year ahead. geoffrey yu of bny. i think we should rounded down. euro-dollar 1.03, lowe's we have not seen going back to november

2022. lisa: i was looking at the dollar index and how much it has outperformed and i think jeffrey summarized perfectly. it has been a story of european underperformance. now is a shift to bad news being baked in and the fed not cutting nearly as much as people think? you cannot have your cake and eat it too with respect to rate cuts, ongoing american exceptionalism, and potentially an economy that keeps delivering these types of stockings. -- these types of stock gains. jonathan: deutsche bank, only 2% believe u.s. growth will be below 1% in 2025. only 2% of respondents believe u.s. growth will be below 1% in 2025. that is the average expected in europe. that gives a decent sense of where expectations are for u.s. versus europe into the new year. lisa: which is the reason less bad was the emphasis of geoffrey yu. a much bad news has been baked into europe and how much good news has been baked into the

u.s.? do we get a sense of more fiscal expansion in addition to tax cuts do not have to be paid for from everywhere? a lot of people are saying that is not realistic yet that is what is getting priced into a lot of american exceptionalism. jonathan: kicked fuchs of socgen -- kit juckes coming up a little later. with your brenna bird brief let's crossover to dani burger. dani: a deadly attack in new orleans french quarter very early on new year's day killed at least 15 people and injured dozens. the suspect was killed at the scene. the fbi is investigating the attack which involved a pickup truck and improvised explosive devices. the fbi is also looking at a potential connections to terrorist groups and whether the suspect acted alone. the attack happened hours before the sugar bowl was said to kick off. the game was postponed until this afternoon. elon musk says the explosion of a tesla cyber truck was probably

active terrorism. the driver was killed in seven people suffered minor injuries. this series of posts on x the ceo says the explosion was caused by fireworks or a bomb in the truck and was not related to the vehicle itself. president biden says officials are investigating whether there is any connection to the attack in new orleans. donald trump says he will lobby house republicans if necessary to help reelect mike johnson as speaker. trump-endorsed johnson on monday ahead of a house vote scheduled for tomorrow. johnson faces criticism within the party after backing a temporary spending deal that left out trump demands. that is your brief. ♪ thank you -- jonathan: thank you. up next, the house speaker ship on the line. >> i support speaker johnson. most everybody likes him. others are good but they have 30 or 40 people that do not like them. jonathan: that conversation is

up next. live from new york city, good morning. ♪ 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. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll.

it is, right. he gets it. yeah. mom. mom, look what i got. (laughing) the best way to make family memories in the caribbean is at a place founded by a family from the caribbean. you have to make it. and if you want a successful business, all it takes is an idea, and now becomes the future. a future where you grew a dream into a reality. it's waiting for you. mere minutes away. the future is nothing but power and it's all yours. the all new godaddy airo. get your business online in minutes with the power of ai.

jonathan: let's get back to work. equity futures on the s&p 500 up .6%. lisa: you are so excited. jonathan: i say that reluctantly. up the following gains of 20%. in the bond market yields are lower by three basis points. on the session we are down to 4.5328. under surveillance the house speaker ship on the line. >> i support speaker johnson. i think we'll have a great time in washington and i think we will get great support. he is the one that can win right now. almost everybody likes him. others are very good but they have 30 or 40 people that do not like them.

that is pretty tough. jonathan: congress cooking up 2025 with uncertainty surrounding the speaker of the house. donald trump throwing his support behind mike johnson. james lucia writing don't worry about speaker johnson getting reelected. there are no alternatives. how about a new year's resolution for congress? get rid of the debt limit. james joins us. we have a lot to talk about including national security across several dimensions. let's leave where you started. the issue around the debt and the amount of appetite this incoming administration has two at even more debt to the national debt pile. much appetite you think there is? james: first of all happy new year to you and lisa. i think most investors have been expecting congress to pile on with giant tax cuts unpaid for and maybe even china across the board tariffs. what this exercise of the past few weeks show is the ability of

house republicans to execute on giant tax cuts is very questionable. they will elect a speaker. the fact that we have so much drama involved in a simple set up thing like electing the speaker shows the ability to pass large tax cuts is limited because the same people opposing mike johnson are also people who profess to be against large amounts of new debt. what you think the policy priorities actually are? james: i think the policy priorities are immigration. the first reconciliation bill to deal with the border and defense issues, but ultimately it is about the economics. i think it is about the tax cuts , both to stimulate the economy and also to redirect resources from the energy transition economy back into what we call the old economy.

i do think we will see tax cuts, but probably something on the order of $2 trillion to $3 trillion not paid for comment i think we'll see in effort to add some pay for's by deep spending cuts, by impoundments many deferrals of past spending, and a lot of creative efforts to find ways to offset the cost of the tax cuts that they will probably pass. those tax cuts will not come until june or july. lisa: which raises the question of how much we are baking in terms of hopes and dreams. i want to shift focus because overnight we had that attack in newer liens and also questioning what the attack -- in new orleans and also questioning the potential connection to the las vegas explosion in the tesla car. from your perspective are you concerned about the absence of leadership at a time where it is quite clear the united states is

coming under attacks on multiple fronts, whether it is the physical ones of the old-school ones in new orleans or las vegas or some of the high-tech probes we have seen, the leaks, the breaches from the treasury department on a cybersecurity level. james: this is an extraordinarily dangerous time, if you've been reading the coverage in the major newspapers, wall street journal but also the washington post and the new york times, there has been a real lack of response from the white house, a lack of ability from the white house to respond that may be linked with president biden's declining cognitive powers or so it is suggested. anytime you have a transition from one ministration to another you see probing attacks, you see new potential adversaries trying to see where the new president is coming from. it is a question of these attacks, how exactly will things start to unfold in ukraine?

what will happen in gaza when trump takes office? we tend to think of the pomp and circumstance surrounding the u.s. marine corps band playing hail to the chief. it all seems wonderful. our adversaries are testing the white house to see what it's responses are in every president tends to be tested early in his administration if not immediately before he takes office. jonathan: of all the national -- lisa: of all of the national security threats which concerns you the most? james: right now we are watching russia and ukraine more than anything else because that will be topic a. what other activities could russia undertake as part of its hybrid war campaign to try to strengthen its position? to try to force ukraine into submission. we will look at that. the middle east and iran is another source of great agitation. north korea too. it is the usual suspects.

i would put the emphasis more on russia than any of the others. jonathan: appreciate your time and happy new year. forgot that at the start. james lucier of capital alpha partners. that we are all used to this awkward period postelection from early november to january 20. this is somewhat unique and we have people openly questioning the cognitive ability of the sitting president. we heard that from james just moments ago. lisa: there's a question about how present he is. there been a number of reports about how much he has retreated and how much some of his aides or to get president biden to the four. a question about what kind of owner ability is there in the united states in this period? what kind of security will there be on inauguration? whether some of these attacks were targeted at president-elect trump, whether this is something else. it was the reason why over the weekend i was searching for any details. i we put this into perspective?

markets are not responding but there's a question of what this means for the next 20 days. jonathan: i am pleased you brought up national security dimension. the attacks on new year's day is something we will cover throughout the morning. also the cyberattacks allegedly coming from the chinese on the u.s. treasury department. there are multiple dimensions to consider as we ought to think about national security in the united states. jonathan: and it focuses cap -- lisa: it focuses the efforts on the efficacy of government agencies and goes to the heart of the promises of president-elect trump. jonathan: coming up, dan ives of wedbush and what he sees as the top 10 tech winners for the alley revolution. that conversation is right around the corner. ♪

jonathan: equity market curve bouncing back from four days of losses. buyer .6%. a lot of people will talk about the big yearly return. it is a monster your return of more than 20% following in more than 20% return the year before. we should also reflect on how week december was. the s&p down more than 2%, the worst month for the s&p since april. on the russell we were down 8% on the small caps and that is the worst month back to 2022. lisa: which raises the question of whether we see tech leadership as the ongoing dominance in this market, the idea use on a per 4% drawdown in

the russell 2000 highlights what a head fake it has been all year with people talking about equal weight, about the broadening out of small caps and it came in tandem with that rise in yields. jonathan: november the best month of the year for the russell, december the worst month of the year. let's turn to the bond market. front end of the curve, the two year ended 2023 4.4499. the two year at 4.2416. the two-year almost totally anchored. the 10 year is where you saw all of the action. almost 70 basis points higher on the 10-year last year. lisa: indian higher year -- in the entire year. this raises the question of what was driving this huge selloff in bonds when nothing material he had changed. you have the policy prescriptions baked in, you have not seen any coming to fruition of any of those and you had some outperformance of some metrics but not necessarily to write

home about which raises the question of who is right? our bonds underpriced or are stocks overpriced at a time were essentially people are saying there needs to be a higher yield premium baked into a bond market that is facing a lot of uncertainty in 2025. jonathan: compare and contrast the performance of bond markets elsewhere where yields in china totally cratered. at the front end of the german curve we dropped by 30 basis points and the 10-year rose only half as much as the u.s. 10 year did. push it through foreign-exchange. euro very close to parity. euro-dollar 1.0 321. lisa: going back to geoffrey yu's point, how much of this is baking in europe but how much is the opposite, the federal reserve not being able to cut rates as much as people thought. is that where the surprise will come from that could have more your weakness? are we reaching the tipping point for how far this can go?

at the same time i've not heard one person say american exceptionalism is a farce. i have not heard one person said the u.s. is poised to severely underperform and i've not heard anyone say europe is on the precipice of some sort of riproaring expansion and that is the big question. jonathan: which is why the dollar index only had one down week through the whole of q4, only one through the whole of the fourth quarter. under surveillance, and attack in new orleans leaving at least 15 people dead and dozens more injured after a pickup truck drove into a crowd early on new year's day. the fbi singly discovered in isis flag with the vehicle. hours later in las vegas a tesla cyber truck exploded outside donald trump so tell. real questions about whether these events are linked. lisa: questions being raised by president biden himself. he was speaking from camp david. a question about what the broader implication is, what type of prevention measures are in place ahead of the

inauguration and what further threats. we were just talking about this with james lucier. what further threats at a time when it is unclear where the leadership has come from, especially in the national sphere when president-elect trump has already taken the mantle and president biden has stepped back. jonathan: is a theme to start 2025. national security issues across several dimensions. the u.s. treasury department saying it was hacked by a chinese state-sponsored actor, the announcement coming just days after the biden administration said china is behind a vast espionage campaign affecting nine telecommunications companies. lisa: we have seen the drip drop of news regarding aipac and a host of different taxpayers in the united states from chinese actors and russian actors. my first thought was how does the u.s. government kept the tech expertise and a time where that is at a premium? where all of the companies are paying top dollar for the top

tech and cybersecurity analysts? how do you get those people into government to make sure you're staying ahead of all of the potential hackers? this to me is a huge issue. i'm curious what elon musk has to say. jonathan: you think that plays into h-1b argument at the moment? lisa: i think that has to do with the government. we look at the numbers, amazon, microsoft, what percent of their employees come from h-1b visas and people out of the countries. we look at how many openings there are in the country versus people eligible to fill them, that has to come from somewhere else. that is the reason elon musk has to said -- says we have to go with h-1b. that is the reason donald trump seems to be supporting that despite pushback. jonathan: the incoming president has been consistent he wants to attract the best of the best, what he does not want is them crossing the border illegally in the south. lisa: the question has been what those plans look like, what the reforms look like come and how much you can get other

republicans on board when there is an anti-immigration more broadly segment that expands to even h-1b visas. a question of how he implements, not any kind of inconsistency. jonathan: dan ives of wedbush joining us in just a moment. european gas prices rising the most since october 2023. the region bracing for freezing winter temperatures without a key source of supply after russian gas deliveries across ukraine were halted, a transit contract between the two nations expiring with no alternative in place. lisa: this is not a huge surprise. people expecting russian natural gas accounting for 40% of the imports to europe. through this pipeline it only counts for 5%. a real question about stockpiling for the future. this gets the attention turned back to the white house. the u.s. is one of the major sources of natural gas for europe in the absence of russia.

that has been an area of some debate with president biden, a real question about whether president-elect trump will open the floodgates with respect to exports of natural gas from the u.s. to europe. jonathan: he has already said he would like them to buy some more. a lot of people in this program have said he is pushing on an open door because the europeans are ready to buy and that is something ursula von der leyen said out of the gate after his election win. lisa: let's see what that does to pricing and if that increases prices in the u.s. given the international divide between the u.s. and europe in pricing of natural gas has increased. jonathan: we will get the latest from the bloomberg team in the next hour. dan ives of wedbush writing "we expect tech stocks to be up 25% in 2020 five cents as the street further digests the less regulatory spiderweb under trump with the ftc days in the rearview mirror. drunker ai initiatives on the white and goldilocks foundation for big tech and tesla looking into 2025 and beyond."

dan ives joins us for more. happy new year. we can talk about the big gains through 2024, palantir of 340%, tesla up 62%. this trip up 250 -- vistra up 258%. that is a utility company. what does that tell you about ai? dan: it is about second and third derivatives of ai. it is $2 trillion of ai cutbacks next year. that is numbers that will be in stone. there is a multiplier. for every dollar spent on the video chip there is an eight dollars to $10 multiplier across software and across the rest of tech and infrastructure. you think about the power and utilities, names like oppo and others. we are going into a new age. it is not just about big tech. do point about small caps, the big prove it moment is the multiplier playing out.

it is the rest of tech, the rest of utilities, the rest of the market participating in this ai trend. at the party the only one let ins behind the velvet ropes were the mag seven. jonathan: nvidia has made a fortune, we've been seeing all the growth. to microsoft and google need to show some goal this year in a big way? dan: that will start this quarter. you will see the inflection point for microsoft, for amazon comerford google in terms of what we see with more and more of those clouds showing up. it is all about use cases. you look at ai, palantir, in terms of what they have done, that is just the first piece. salesforce has been another. software starts to participate in this ai revolution. that will be a key theme across 2025. m&a will massively accelerate

and is a theme will be seeing across tech. lisa: what we saw last year was other companies, the side effects of ai where the actual applications. we saw them take a pause in the applications of ai and study exactly the use cases, study the most efficient way to do it. they stopped applying as much cash. what makes you think they can apply ai technology quickly enough to keep delivering the kinds of expansion and gains of the hyper scalars to keep a 2025% return your expecting and 2025? dan: when we talked enterprise around the world and all of the traveling we do in asia, issuing these use cases are exploding. for the enterprise. as the roi starts to continue to increase that is why you starting to see palantir, you see it in salesforce, you see it in others, you are seeing it spread across the board on enterprise. the ship has left the port.

the ai will be there in 2025. it will be about showing it and proving it in numbers. that is the reason we think tech stocks will be up 25%. it is not just about big tech, it is about the rest of tech participating. haters hate. last few years i've been -- what we have seen in tech -- they will continue to fire in a crowded theater type situations. i think tech continues to move higher. lisa: how predicated is this theory on the idea there can be expansion of the h-1b visas? that there can be an ongoing increase in employees and top talent to the united states dan:? dan:for the first time in 30 years the u.s. is ahead of china when it comes to tech. to feel that in terms of ai revolution it is talent. what we have seen, we have seen a lack of supply and demand.

these companies more and more need to continue to fuel this with talent. when you look at what we are seeing with h-1b and ultimately as that plays out, it will be something very important that plays out in silicon valley and across the tech world in 2025. jonathan: elon musk has been at the forefront of this argument over the holiday period. let's talk about tesla. tesla an outlier in a pretty dreadful auto market. stan druckman says a lot of people would be surprised by what makes a stock go up or down. what makes tesla go up or down because it does not seem to be car sales? dan: we will have deliveries in the next few hours in terms of q4. this is an economist ai story for the next few years. it goes back to the bed for the ages that elon musk made on trump will play out as the eponymous future. that is what you are betting on from tesla. you do not see that in numbers

today but ultimately that is worth $1 trillion towards the ai story. the next few hours, this week we will be talking about deliveries. it comes down to china deliveries which were a disaster at points in the last 12 to 18 months have now started to rebound for tesla and that will be important. jonathan: what gives you the confidence that will continue because their similar questions in the luxury space. this china bottoming out for the consumer side of things? it is what we see -- dan: it is what we see in terms of the overall china market. i think tesla and a lot of those price cuts are in the rearview mirror. we will have white knuckle moments but ultimately i think china is something that could be up 20% when it comes to delivery for tesla and that is why i think right now it is one where the bears have misunderstood tesla. it is 10% to 15% a delivery story now. it is 85% to 90% ai autonomous

in terms of the future. lisa: when you put together some of the things you're talking about, you think the u.s. is ahead of china when it comes to development. at the same time tesla's dominance has hinged on its success in china. how do you see the evolution of the increasing isolation between china's tech stack and the united states tech stack and how those both compete but also evolved in parallel? dan: is a game of high-stakes poker because the reality is the reason jensen is the godfather of ai and what we've seen with nvidia where the chips are coming from china, coming from asia. that is why we will see this play out with the china tariff discussion. i believe elon musk will be heavily involved. cook 10% politician, 90% ceo. apple also plays a key role. that is something that ultimately will not spoil the ai

revolution. it will not spoil the chip trade. we will go through white knuckle moments but my view is you by the winners on those opportunities. that will be the theme this year. jonathan: your number one pick for 2025, what is it? dan: to me it continues to be nvidia. the reason is there is only one game in town when it comes to ai. it is the godfather of ai. stocks sold off. we sit here and with apple will be the first one in that exclusive for chile dollar market. jonathan: the stock is up -- good to see you. thanks for being here. for an update on stories elsewhere here is dani burger. dani: chinese stocks posted there were start to a year in nearly a decade. the csi 300 closing lower by 3%. data posted earlier this morning showed a slower pace of

expansion in december. in december china signaled more public borrowing and spending in 2025 with a shift of policy vocus and consumption and repair the economy week links. shares tumbled by a record in hong kong after alibaba agreed to sell its holdings in the -- the chinese e-commerce giant could receive up to $1.6 billion from the sale to dcb capital, much less than the $3.6 billion it paid in 2020. that deal accelerates alibaba's retreat from fiscal retail spaces, focusing on the cloud. retail prices climbed within touching distance of a record high to end 2024. a resilient property market gathered more momentum. it was the fourth consecutive monthly increase. data shows solid buyer demand despite affordability challenges. house prices are expected to climb 4% into a 25. jonathan: thank you. up next, dollar strength persisting.

>> a much stronger dollar for the first six months of the year. you will continue to see growth differentials and interest rate differentials drive the greenback. jonathan: kit jukes of socgen is just around the corner. ♪ (♪♪)

(♪♪) 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

jonathan: stocks are up, bond yields are lower, higher .8% on the s&p. on a 10 year yield we are down three or four basis points. euro weaker again. 1.0 328. the lows we have not seen since november 2022. euro weakness. under surveillance, the dollar strength persisting. >> a much stronger dollar for

the first six months of the year against a trade-weighted basket of currencies. you will see growth differentials and interest rate differentials drive the value of the greenback. the question of not will the dollar gift strong but will we get in a situation where the fun a mental underlying strength in the u.s. economy would get new policy piled on top of it turns into a situation where the dollar sores and we get calls for dollar devaluation. jonathan: traders watching if the greenback can sustain its momentum after the the strongest year nearly a decade. kit juckes writes given the recent economic and political trends dollar bear should hibernate during the winter. spring shoots of life in the european economy, signs of fatigue in the cycle and the clarity of policies of president trump may help by summertime. patience is required through the winter and spring. kit joins us to pick up 2025.

happy new year and welcome to the program. let's start with u.s. exceptionalism. what is it built on and how sustainable are the pillars? kit: some of it is sustainable. the technological gains are huge part of it. if we believe in the ai revolution in mag seven and everything that is happening, than the u.s. has cornered that. i would not necessarily knock the fact that the u.s. has run a more, did of fiscal policy since 2020. everybody in europe has been struggling to get budget balances back under control. the u.s. has kept policy and had more growth. that helps keep the deficit little bit more undercontrol than elsewhere. there is more than one piece to this. if the u.s. does have to tighten fiscal policy at some point that may slow things down. we will see how big the ai revolution really is in the next 10 years or so. i am not clever enough to judge

quite how much continued growth that can give. we will see whether the u.s. can cope with the demands of the labor force. the economy is running on wealth gains from asset price increases, a tight labor market, a barely divided economy in terms of winners and losers and it does not look to me like it has much potential to accelerate in growth or indeed to continue in growth rates for that long unless we can get a productivity miracle somewhere. lisa: what you think will dive further dollar strength if we get it and perhaps euro strength? will it be european disappointments, european surprises to the upside, will it be rate differentials are ultimately a question of what the neutral rate is in the united states? kit: i think the neutral rate is higher in the united states then europe. that is a challenge that does not get written up about enough, just that if my neutral rate is higher than your neutral rate,

my currency ought to be going up forever. it is not a stable equilibrium if we have these big divergences in neutral policy. that is a major factor. it is largely in the price. what i most uncertain about is the politics in the sense of have we priced in too much of what people expect from president-elect trump or have we not priced it all in at all yet in terms of what that does for the dollar? i've read some the pieces talking about possible negative growth effects of his tariff proposals, plans, threats, whatever you want to call them. if he wants to get a deal that is good for the u.s. it has to be a deal that is good for the world and good for global trade. if he does that there is more upside to growth elsewhere than there is in the u.s. from those deals if only everybody can embrace them. that would not be good for the dollar. at the margin i think the politics will be more important than the economics. if all we are doing is trading

what is happening economically now i think we will have a very strong dollar press far as the eye can see. the debate about whether it can get back to parity for euro-dollar were stronger generally that it is now is a tough debate. it is a really expensive currency that will stay expensive as long as the rest of the world is shoveling morbid savings into the united states to see how much money it can make from the u.s. equity market. lisa: is the spike we have seen in natural gas prices in europe just noise where is that something that could affect the payer? kit: i think we have to watch it pre-closely. we have known this was coming long enough that you would think some of it would be in the price. with raw materials nothing ever is. if the plant is closed down and it suddenly gets cold then you can have a short-term spike, a short-term impact on growth, a short-term impact on the currency that is negative. the way we got euro-dollar to 95 in 2022 was a terms of trade

shock caused by higher gas prices. we should not ignore it. jonathan: good to see you as always. kit juckes of socgen on foreign-exchange. lowest level for euro-dollar going back to 2022. lisa: this speaks to the fact that the strongest performance we have seen in europe are tourist locations where international tourists are going. some people are saying there you go again, but how may people went to europe over the winter break because it is so much cheaper given where the currency is? jonathan: have you booked yet? lisa: maybe. have you? jonathan: i have. will you admit you have now? i imagine we are not alone at 1.0 326 on euro-dollar. coming up we will catch up with sarah hunt, we will speak to bloomberg's tyler kendall and will kennedy and catch up with earl davis on the bond market. welcome back.

this is bloomberg. ♪

lock in let's go. rated e for everyone. [rock and roll music playing] xfinity. made for gaming. rewards members, get early access to an ea sports fc25 kit. visit xfinity.com/rewards.

>> i think markets are still euphoric. >> we think that's becoming a bit of a liability as you walk into next year. >> next few weeks will get a little choppy. >> i think we are getting off to a sloppy january. >> this is "bloomberg surveillance." jonathan: let's set some boundaries. january 10.

that is the deadline for happy new year. lisa: because it is payrolls day? i will debate that. if you have not seen someone for the whole the january, you can say happy new year. jonathan: it is disingenuous. how about that come back? lisa: i'm trying to bring people into my orbit. happy new year. jonathan: happy new year to you on this january 2. mastec 100 up by .1 .1% -- nasdaq 100. on the 15th, cpi. the 20th, inauguration. at the end of the month, the federal reserve. lisa: we have seen a shift upwards in yields. is it because there is this

promise of some sort of fiscal package that will increase the deficit and increase the yield premium? this is the key to where january goes and where the town will go. that has been behind some of the hiccup in december. jonathan: we had this 70 basis point move on the 10-year yield. lisa pointed out the 40 basis points came in the month of december. the world is becoming stressed. we will talk about the tri-polar world. the united states seems to be heading in its own direction, china and the opposite direction and europe somewhere in between. i'm not sure how much more stretched the story can become. lisa: how much has this been fully priced? the idea of american exceptionalism and everyone falling off a cliff. that is what we heard from jeff. there's more upside surprise to some of the laggards.

where is that exceptionalism going to come from? we were talking last year about how the economic surprises in the u.s. cap inflecting -- kept inflecting upward. it raises the question of, is the data starting to lag behind? how much momentum there is behind that story? jonathan: i can give you a sneak peek of the payroll survey. economists have posted estimates. 153,000 is the median at the moment. that is down from 227,000. coming up, sarah hunt as stocks close out their best to year run since 1998. we will speak to bloomberg's tyler kendall about the link between the new orleans attack and the vegas explosion. and the fixed-income outlook for the year ahead with earl davis.

stocks looking to snap a four-day losing streak. sarah hunt is staying cautiously optimistic, writing, "what will january bring? after two years or 20% plus returns on the s&p and better returns from the nasdaq, it is difficult to build in a third strong year." sarah, good morning and happy new year to you. sarah: happy new year. jonathan: we have had 20% plus returns. how rare would it be to see something similar in 2025? sarah: quite rare. it doesn't mean it can't happen. it is just a question of tempering expectations and saying we had this great run. i don't think disaster is looming but to expect that performance seems very surprising given revaluations are. you would have to see of good

economic backdrop. to your point about the tripolar world, if the u.s. is in one place and the rest of the world is in other places. jonathan: the numbers are important for the year before as well. looking out told month, the average forecast was 4800. it closed at 5881, 1000 points higher than expected. where did the surprise come from? sarah: if you had looked at earnings estimates from the beginning of last year, the way we look at the beginning of this year, people thought that was a little optimistic. you had stuff come through on the earnings front. the ai story which was the backbone building exercise in the beginning started to broaden out and other people talked about it and company started making money. that made a difference for earnings and sentiment. you layer on quantum computing, it's another leggin the technology story. -- leg in the

technology story. valuations starting here versus last year, even if you get the growth and people are starting to build in, you were growing at their earnings as opposed to expanding multiples. that is where the hesitation in growth comes from. lisa: 2024 was kind of a confusing year. a lot of stories layered on top of each other. underperformance of the russell 2000, the upper performance of those tech accelerators and the revolution we heard about from dan ives. cannot continue powering the gains -- can that continue powering the gains? the universe just had a terrible month. sarah: it's more about and than or. the tech sector will continue to do -- perform well. you have seen a lot of excitement for the needs to be more of the 'and'and that performance is getting to historic levels from a size standpoint and timing standpoint.

the economy has to be a decent shape. people are ok think the u.s. -- thinking the u.s. is in good shape. lisa: the global economy. sarah: the interest rate picture does reflect on the small caps and mid-caps. that was a problem and december. a lot of that performance came back through. lisa: we saw an 8.4 percent drawdown in the russell 2000 in december, the biggest since september of 2022. our rates cheap or are stocks expensive? sarah: yes. [laughter] it's a combination of things. our rates cheap? i'm not sure how that will play out. so many factors are at play. it is partially the fed, concerns about the deficit, where spending will go. globally, we have a lot of indebtedness that continues to climb.

at some point it is not going to be ok and i don't know when that point is. you could argue it should have been before or it will take another two or three years. it clearly ends up having an occasional spooking effect and equities wobble because they get worried if rates get higher they will have trouble given the fact you have multiples where they are. jonathan: how difficult the balancing act will be for the incoming administration. they want to high-growth the economy and a sustainable fiscal trajectory. sarah: and further tariffs in the mix and adds another level of complexity. it is difficult to balance that. that is where the market shifts to concerns about what might be bad and back and forth. that is what you saw in december after the fight over the cr. people going, if there is consensus maybe we don't get all the things we are building in as quickly as we want and some things we are worried about our coming to the fore. you have some real tension as to how this will play out. the beginning of the year can be quite the little.

-- volatile. jonathan: which one will it be? sarah: the u.s. growth situation is in pretty good shape. if you don't step on it or take some the things that are slowing it down, some regulatory pushoff, some things, that can be helpful. the rest of the world also has to do fairly well. you have tensions between spending. we have been spending money like the proverbial sailor. there are questions about that is sustainable and how you rein that in and to what degree that impacts growth as well. lisa: what is your biggest concern for this year? acceleration or an upside surprise and inflation, or downside surprise and the growth trajectory in the united states that has powered the global economy? sarah: some concerns would be where the data is going to go. we had revisions on the employment data. that is one thing people were pointing to to say the u.s. economy is strong.

revisionists said maybe it was not as strong as we thought it was. inflation has been a big worry for the fed when they cut in december but we got some data that may be took the sting out of it. i'm less worried that the huge problem than just a constant problem that makes other things a little more difficult. the u.s. economy is probably the biggest -- the biggest driver. kid needs to do well for the earnings to come through for companies to do well. that needs to continue. if it looks like it is not, that might be a problem. the index had been negative for a while and flipped positive for the first time in november or december. it's a mixed economic data. lisa: 18 days until inauguration. our real question about leadership and the potential attacks we have seen. how from a market's perspective you view some of these developments? at what point they weigh on some of your outlook or investing decisions, poor is that just

completely independent? -- or is that just completely independent? sarah: a lot of things like that are not enormously predictive for markets. something like what happened in new orleans, if there's a big thing going on and they are all linked, that starts to weigh on people's consciousness and psychology. it's a lot about where -- are we going to see where things like that or where are things going to go? if you continue on a reasonably good economic trajectory people don't seem to focus on that as much except for a new standpoint. jonathan: do you have a favorite sector? sarah: i was thinking about that. it is more about a theme than a sector and who participates. all the things we have talked about, not just ai but the contingent things around it, we need a lot of power generation and infrastructure. a lot of things that if they're going to happen, we need things for them and that plays into the

industrials, real estate market, the utilities. it plays into a bunch of different places. it is more about themes than specific sectors. jonathan: some had a stunning year last year. sarah, happy new year. sarah hunt. we could keep doing it for another week or so until january 10 and payrolls. we did get a sprinkle of economic data. jobless claims, 830 eastern time -- 8:30 eastern time. u.s. manufacturing pmi tomorrow. lisa: jobless claims used to be important and then they flatlined. i wondered when that becomes an important indicator. pmi will be an important indicator as they roll over and china. can the u.s. continue to see expansion in services with a catch up and manufacturing or will that stall -- in manufacturing or will that stall going forward? jonathan: we had this q3

employment head fake that shook the whole market. the federal reserve was going to cut aggressively, more than 100 points. it was time. you need to insulate the labor market. dollar weakness was the story only three or four months ago. lisa: the question from jay powell about how we will not welcome any further weakening in the labor market. this is why there was a shift in tone from the federal reserve and could be one of the reasons why we saw such a backup in rates. if we see a big increase in initial jobless claims, does that unwind some of what we saw in december? jonathan: 8:30 eastern time. let's get an update on stories elsewhere with dani burger. dani: a deadly attack in new orleans' french quarter early on new year's day killed at least 15 people and injured dozens. the suspect, an army veteran was killed at the scene. the fbi is investigating the attack which involved a pickup truck and improvised explosive devices. the fbi is looking into possible

connections to terrorist groups and whether the suspect acted alone. the attack happened hours before the sugar bowl was set to kick off at caesar's or proto--- superdome. elon musk says the explosion of a tesla cyber truck outside the trump las vegas hotel was probably an act of terrorism. the driver was killed and seven people suffered minor injuries. in a series of post, the tesla ceo says it was caused by fireworks or a bomb carried in the rented cyber truck and was not related to the vehicle itself. president biden says officials are investigating whether there's any possible connection to the attack in new orleans. bloomberg reporting nippon steel has offered a 10-year guarantee that it would not cut production capacity at u.s. steel mills in pennsylvania and several other states without approval from the treasury-led review panel. it aims to adjust concerns raised by the u.s. committee on foreign investment which said the takeover would lead to a decline in american steel output.

the report give you a steel shares of boost on new year's eve but president biden is still expected to block the deal. that is your brief. jonathan: the deal that will not go away. lisa: or the idea they are doubling down ahead of president like donald trump getting in -- president-elect donald trump getting in and this will have some legs. jonathan: of next, an important conversation. u.s. security in the spotlight. >> we are tracking the explosion of a cyber truck outside the trump hotel in las vegas. law enforcement, the intelligence community are investigating this as well. including whether there was any possible connection to the attack in new orleans. jonathan: that story is of next. ♪ -- up next. ♪

jonathan: the average forecast

on the s&p 500 for your rent is about 6600 on the s&p after closing last year at 5881. a series of big calls. looking for 7100 on the s&p 500. up by something like 1%. we have some jobless claims a little later this morning. s&p global manufacturing pmi at 9:45. tomorrow, ism manufacturing. january 10, payrolls. the week after that, cpi. the week after that, inauguration. the week after that, the federal reserve decision. lisa: and a pop up and expectations for the u.s. exceptionalism at a time when we just came off the biggest two-year gain in the s&p 500 since 1998. when you look at the expectations, this will be whether people have too much good news baked in or not enough at a time when the u.s. economy continues to outperform. jonathan: bond market, big moves

last month. over the last year, up 70. 10-year down about 4. u.s. security in the spotlight. >> we are tracking the explosion of a cyber truck outside the trump hotel in las vegas. law enforcement and the intelligence community are investigating this as well, including whether there was any possible connection to the attack in new orleans. there is nothing to report at this time. the spirit of new orleans will never, never be defeated. jonathan: officials investigating a pedestrian attack in new orleans that killed 15 people. also investigating a tesla cyber truck explosion out of a trump hotel. federal law enforcement is looking into a potential link. tyler kendall joins us from the white house.

let's start with the possible link. what evidence do with woody's is have that indicate these events might be linked? tyler: good morning. as you mentioned, we heard president biden saying the fbi is looking into whether or not there are any potential links. we are waiting for additional information on that front. law enforcement officials in las vegas have confirmed they are working with elon musk on the investigation into how this explosion happened. in terms of what we do know about the explosion, the federal -- the officials in las vegas noted elon musk has provided them with extensive video footage from tesla charging stations across the country so they can track this vehicle's whereabouts to the point of the explosion. elon musk says his team at tesla has confirmed it was not necessarily an explosion of the cyber truck itself, but rather fireworks or a bomb were in the truck that ultimately caused the destruction.

he went on to say that ultimately it was how the cyber truck was built that contained the blast. officials noting that likely helped to contain the blast and minimize the casualties and injuries we saw from the event. lisa: do we have intel in terms of whether the threat is persisting or there is any additional incidents people are investigating that could be connected? tyler: in washington we are starting to see reaction and security start to ramp up. the d.c. police in a statement saying they are going to ramp up security here in the nation's capital ahead of what is expected to be a busy month between january 6 and the inauguration on january 20. we are starting to see congressional reaction, saying they have to take action to confirm president-elect's nominees when it comes to national security to prevent any future attacks like this

happening so they can all get on the same page when it comes to the nation's security. lisa: this comes when there are reports of a potential hack into the u.s. treasury department. we have talked about the multifaceted threats to the u.s. government. how much bipartisan support is there to really come up with a comprehensive plan to hire the personnel and make sure there is the oversight to prevent these types of attacks? tyler: it's actually incredibly high. securing the nation's intelligence infrastructure and cybersecurity has been a bipartisan push during the biden administration. we expect to see it continue into the incoming trump administration. when we talk about foreign actors in these issues, china for example has long been a bipartisan cause for both republicans and democrats. we are starting to see lawmakers step up and say they are going to need to take action here. jonathan: we had a guest on who questioned the president's cognitive ability and whether foreign adversaries are testing

the united states of america if we are at a vulnerable time awaiting the handover of power on january 20. what did those conversations sound like in the nation's capital? tyler: one of the biggest issues the nation's capital is facing is the upcoming speaker election tomorrow. there is grumblings about how they could potentially impact january 6, the certification and count of the electoral college votes likely to go up as republican leaders are hoping without a hitch. president-elect trump is starting to get involved in those negotiations because he is trying to quell those fears that could be issues with getting the certification done. please trying to make sure he can push his agenda on congressional lawmakers. we will have to wait and see how effective that ultimately becomes. we just saw last month when he tried to weigh in on keeping government spending open, that backfired on him as he tried to push lawmakers to lift the debt ceiling.

we are starting to see more congressional republicans voiced opposition against house speaker mike johnson despite him having president-elect trump's backing. jonathan: a range of issues there. tyler kendall in the nation's capital as the country faces national security issues across several dimensions. speaking of the incoming administration, annmarie said the early part of the administration everyone is a joe manchin and congress. -- in congress. lisa: there has not been cohesiveness which is why mike johnson has the backing of president elect trump and he will lobby for him because there is nobody else who could potentially win. a real question about what this means for policies and how much can actually get through. that is why people are focused on tariffs and things that can be done unilaterally rather than things that require consensus among the republican body. jonathan: i don't think the

consequences of tariffs are fully understood, it is difficult to understand them. it matters how they are calibrated and executed and whether people will retaliate. there are somebody variables that go into this. it is simplistic to say it is inflationary. we don't know if it will be at all because we don't really know how they will be implement it or formed in the month ahead. lisa: let's talk about washing machines. remember when that was the focus back in 2017? people thought this would be inflationary, and it was. the people did not buy those washing machines and delayed purchases and it a depressive impulse on activity. that is the type of pit people are looking at. the caveat is we are coming off an inflationary cycle, but is not necessarily going to be so targeted on such a narrow slice of overall products. that is what people are questioning. jonathan: and you have the fx

decisions or company that want to be president in the u.s. comedy bankers have come on the program and said there are a ton of companies looking to increase their presence in the united states? it is difficult to draw a conclusion about what this means. we will sit here in 12 months and say that was obvious. it is not obvious at all. lisa: i don't think we are going to say it was obvious. if anyone is, happy new year. looking forward to a happy new year in 2020 six. -- 2026. jonathan: up next, will kennedy as russia and ukraine end five decades of gas transit to europe. that is up next. ♪

jonathan: thank you to the team at bloomberg for this stat. the year ended with a four-day losing streak, the longest to end a year since 1966. who knew? we are bouncing back this morning. the nasdaq up by 1.2%. two hours away from the morning bell. let's cross to manus cranny. manus: i think 1966 had something to do with england and the world cup. nippon steel, anemic. there's a hail mary of a deal that's come across the table. we will let you decide what level of production we deliver.

it really is an opportunity for biden to consider having to veto or the next administration having to veto whatever cuts in production for u.s. steel might be. do some math. the world bank did this. the offer price is $55. the trading price is. $34.33 a deep discount. the market does not believe necessarily the $55 price tag will go through. there's a 10-year guarantee from the pond steel. one to watch as we count down. the countdown clock is running. tesla. you had a conversation with dan ives. waiting for delivery numbers. 10% to 15% of the stock price is about delivery. 85% is about autonomous driving nai. today -- and ai. we wonder if they can deliver over 500,000 vehicles in the fourth quarter and over the promise elon musk made,

potentially beating 2023, which is 1.8 one million vehicles. the stock has put on $733 billion since the election. byd chalking up a record in china. everybody's problem. a vicarious trade. is it is highly leveraged microstrategy to bitcoin? the correlation is beginning to unpick a little bit. bitcoin up 121%. it is a three to one leverage ratio. the relationship is just breaking down ever so slightly in the last month of the year. a coalition of the willing. bernstein, td. 70% upside on this if it continues to trade in the style it did last year. jonathan: thank you. manus is right. 1966.

for anyone who lived in england, you will have heard about 1966. it was last time the male football team won anything at all. lisa: i love that is where your mind goes. we are coming up with the sizes and scopes. it speaks to the santa claus rally that did not happen. people had to feel good and this year to did not feel good. jonathan: if you see that year, 1966. lisa: it is like 1986 for americans. jonathan: maybe you are happy it has been so long if you are english. lisa: this was not a my bingo card for today. thank you, manus. jonathan: providing some confirmation. let's get to syria stories. federal law enforcement is examining whether there's any link between a pedestrian attack in new orleans and a tesla cyber truck explosion in las vegas, both occurring on new year's

day. lisa: one connection aside from a potential suspected terrorist attack is that both cars were rented through a car sharing website, and i was wondering whether -- what this potentially could mean. is this something from an outside external actor? the suspect in new orleans with a u.s. citizen. what is it mean for other threats ahead of the inauguration? jonathan: the kind of threats law enforcement has been incredibly worried about and that is why some football games had to be pushed back. lisa: the sugar bowl which pushed back when new orleans was try to upgrade their projections -- protections around the street. there are questions around how to fortify a number of regions. my mind goes to washington, d.c. ahead of the january 20 inauguration. jonathan: incoming information still in coming. more headlines and we will bring them to you in about 10 minutes

time. south korean police are searching the airport were sunday's fatal aircraft happened. investigations are being led by the transport ministry in collaboration with u.s. officials and with boeing. a tragic incident over the holidays. lisa: there were some thoughts that maybe this could have been a bird strike that took out the engine or both engines over the airport. a question around why there wasn't further deployment of some of the speed reducing mechanisms that airplanes normally have. so many questions. such a tragedy. one of the worst, most fatal accidents you can imagine at a time where south korea is already struggling with a whole host of issues having to do with leadership and with what kind of security oversight they have. jonathan: the team in bloomberg news was writing about this. not a great year for the aviation industry. this is not the only incident. lisa: to be clear, it does not seem like this is a boeing

issue. the reason why i say that is because that was one of the first questions people had stopped there was a question about boeing issues, airbus issues with the engine. how much of this is a hangover from the pandemic and a lack of some of the personnel that were deployed? jonathan: that company had an awful 2024. japan's nippon steel is making a last-ditch appeal for its takeover of u.s. steel. sources telling us that nippon is offering veto power to the u.s. government over any reduction in u.s. steel's production capacity. is that enough to get this over the line? lisa: one question about this is, do they think president biden is more likely to sign off on this deal than president-elect donald trump? does that why they are moving to the last-ditch efforts now before january 7 when president biden has to either sign off or not? that is a key question at a time

where this is something the board wants, something the union pushed away from. jonathan: the deal that will not go away. there's a new sweetener. let's turn to energy. russia holding its gas deliveries to ukraine after a transit deal expires after five decades. keeping traders on the watch for faster withdrawal from storage injuries -- from storage. walk us to where this leaves the continent in the months and years ahead. will: happy new year and thank you for having me on. it is five years. 50 years of these exports three ukraine. it is a big moment in european energy. it had been a lease applying about 5% of europe's gas. not hugely material but it is significant, mostly for the countries that rely on russian

gas, slovakia, hungary and austria. it also means that gas will have to be replaced principally through lng imports from the u.s. and elsewhere. it will serve to further tighten the european gas market prices. already at the highest after this news in more than a year. while it is up, they are painful and energy costs are a drag on the struggling european economy. jonathan: lisa talked about looking at your work, it doesn't look like europe is running out of fuel but there could be difficulty restocking. walk us through how difficult that might be. will: the background is that stockpiles have been falling faster this winter then the previous five winters. that is partly driven by this news and partly by colder weather.

the cut off we are seeing for ukraine is happening when we will get some weather across europe, eastern europe and northern europe. that will force people to draw on gas inventories stockpiles and will tighten the market further. in the short term we have this twin effect of supply being constrained by the decision to cut off gas and demand being fueled by cold-weather. it means an overall tightening for europe. lisa: since 2021 when the russian oil accounted for about 40% of imports to europe there's been a huge diversification effort, particularly with qatar and the united states. do we have a sense of how much capacity can be ramped up and with the willingness is for both the u.s. and qatar in terms of increasing some of the exports to europe if this were to happen with respect to a cold surge? will: we see in america and

qatar, the main sources europe can turn to for lng imports, they are adding supply capacity. new projects being built and coming online in the u.s., notwithstanding the biden moratorium on new projects being approved. qatar has a plan to expand its capacity and its giant gas field. that will be available in the years ahead but the thing about lng is it competes on the global market and other rely on it, especially east asia. it creates vulnerabilities and volatilities and new political uncertainties. we have seen donald trump perhaps pegging trade relationships with europe on their willingness to import more u.s. gas. that becomes part of the equation. lisa: a lot of people have been talking about pushing on a door that's being opened real wide by

europeans in terms of buying liquefied natural gas from the united states. how quickly can that go into effect? will: some of the gas is coming because we are seeing new long plan facilities being opened. it takes years to build an lng plant. while we can see there is more gas coming and they will be more capacity in the years ahead, any huge further acceleration of that will take years to come. the global market probably can supply europe with the gas it needs. when you look at the balances in the years ahead, we are likely to see a global gas market remains relatively tight and most lng will be demanded in the open elsewhere. this period europe had a relatively high gas prices may not come to an end anytime soon. jonathan: does this undermine the effort across the continent to transition to renewable fuels

and away from fossil fuels? will: does it undermine it? it's under a lot of scrutiny. there's a lot of talk about the investment required to make the transition. it is a double-edged sword. yes, it is expensive and placing a burden on european bill payers and households at a time when they are having to pay more for existing gas and invest in windmills and solar panels. a lot of policymakers would say investment in renewables is essential to ensure that continent's kennedy -- energy security. the russian crisis has shown the dangers of being reliant on imports. if you can generate electricity at home using wind and solar, that does increase your energy security. there's a live debate but there are arguments and proponents on both sides at the moment. jonathan: the european consumers are paying up for it. will kennedy of bloomberg comparing and contrasting what

they are paying for energy compared to the u.s., night and day. lisa: will was right to point out the idea of energy independence looks different in the land that does not have as much oil. dear is a great point of how the conversation has shifted around fossil fuels, especially when there's a focus on artificial intelligence and how much you can power that. the focus is on sucking carbon out of the air. oh yeah, it will not be easy to slow this time given the energy demands. jonathan: was an update on stories elsewhere, including the latest from new orleans, let's get to dani burger. dani: we start right there. 15 people were killed in a deadly attack in new orleans' french quarter on new year's day. the fbi is investigating the attack which involved a pickup truck and improvised explosive devices. they are looking to possible connections to terrorist groups and whether the suspect acted alone. the suspect, a u.s. army veteran was killed at the scene.

another billion to dent in las vegas yesterday. a tesla cyber truck exploded outside the trump hotel. tesla's ceo elon musk said it was probably an act of terrorism. the driver was killed and seven people suffered injuries. president biden says officials are investigating if there was a connection to the attack in new orleans. u.s. dock workers union and employers are respected to resume contract talks on january 7. if there is not a resolution, the strike would occur on january 15, shuttering major ports on the u.s. east and gulf coasts. the issue is whether employers can add it semi-automated machines to terminals that the union sees as a threat to jobs. that is your brief. jonathan: the headline on cpi day, which is important. another event risk for the path forward. lisa: is used be one of the biggest risks people had. another supply disruption could increase costs. jonathan: up next, higher for longer. >> i say it all the time.

the most important number in the world is what the 10-year yield is being priced at. i think we start to really be concerned if we get another 50 basis points making its way into the market. jonathan: that conversation is annexed. this is bloomberg. ♪

jonathan: bouncing back from four days of losses on the s&p 500. we are higher. bond markets are down by five basis points. look out below if you are the euro. 103.23. below are the session. -- the low of the session. it is brutal out there for the europeans. lisa: and it is two-sided.

upside surprises from the u.s. and downside surprises from europe. not a good mix. jonathan: a real conversation emerging on the back end of last year about whether the federal reserve may need to hike interest rates over the next 12 months. under surveillance, higher for longer. >> i say it all the time. the most important number in the world is what that 10-year yield is being priced at. the movement you laid out over the course of the last couple of weeks is saying there's a lot of uncertainty about that very important number. i think we start to really be concerned if we get another 50 basis points of turn making its way into the market. jonathan: the latest this morning. u.s. treasury market holding steady after yields closed out 2024 with the biggest annual gain since 2022. earl davis joins us now for more. lower by five basis points.

happy new welcome to the program. there's a lot to consider for the next 12 months. three points you put down. tariffs, increased bond supply and a powell showdown. other conversations with your clients, what you spend the most time on? earl: we deftly spent time on terrace right now. -- tariffs right now. is providing us with an opportunity to go longer fixed income. the reason why that is, all the talk about tariffs and the unknowns have increased yields to these levels. what we would deem relatively attractive levels, both on a treasury and corporate space.we have been using this as an opportunity to add to duration and credit. jonathan: let's start with treasury and then credit. earl: we feel 10-year are adequate rewarded around 4.5%.

the first quarter will be telling for treasuries. typically in the first quarter what you get is real money account. i'm talking about not hedge funds. large insurance funds, large pension plans. typically real money accounts in the first quarter reallocate their risk between fixed income and riskier assets. given the price action we saw last year we should see a significant rotation into fixed income this first quarter. it's an unknown because of the inflation tariffs as to whether that would happen. we are putting our chips on the square that it will. from these levels at 4.5% in 10-year, there's a better chance of seeing 4.25% than 4.75%. lisa: how much is this driven by international accounts? we have talked about the euro and the divergence between rates and real rates in the u.s. versus europe. how much is that the real money you expect to come back in and say on a relative basis i would

rather put my money in treasuries? earl: in the analysis i just gave you and to the first quarter i did not take into account international. now you add in international with an increasing appetite for u.s. assets, that bodes well. just another argument why we believe in the first quarter it will not be higher for longer but there's a better chance of seeing 4.25%. one reason as to what we are avoiding duration in 10-year at these levels as we expect tax receipts to be pretty good, which means the refunding announcement or the amount of treasuries to be issued in the first quarter and first half of this year could surprise to the downside. lisa: normally when you have a rally in treasuries that is negative when it comes to risk assets, this time you see it being positive for credit. i'm curious about why given the fact typically when people pile into treasuries it is assigned

the economy is slowing. earl: you have to break down treasuries into two things. what is inflation and inflation expectation. the other is real rates. those are the drivers of treasury yields. why we think this could be good for both risk assets and fixed income, the reason why we rallied to 4.25%, we believe 10-year tips could easily go down to 2% and 1.9%. easily is because if you're an international investor looking to invest in the u.s. and you know you can get 220 basis points over inflation for the balance of your holdings, 10-year tips, that is where you go. the tip rally will be the driver of lower yield, which is also beneficial for risk assets. it reduces your discount rate on your cash flows. jonathan: can we sit on credit for a be longer?

inequities -- in equities, we talked about the underperformance of the market, the small caps, terrible month after a great november. did you see conversation of weakness in high yield at all? any reason for concern? earl: i would not say confirmation of weakness. we saw high spreads widen coming off of a profit-taking in december. we believe the context in which the economy is set up for in 2025 under trump's presidency is beneficial for small, medium and large size companies, the deregulation. that means a lower chance or probability of default in 2025. when we see a lower chance of probability of default, that makes high-yield more attractive. we are getting rewarded, especially on the all in yield for the risk we are taking.

we are looking for opportunities to increase our high-yield exposure selectively with selective names as an active manager does. jonathan: earl, good to see. earl davis. credit markets are important. spreads are tight with the recent whitening in the past month. how many times have people come on the program and said spreads are tight but yields are pretty decent? lisa: that is why people are buying. ccc rated corporate bonds, the lowest rated bonds, return more than 15% last year. that was second only behind the s&p 500 when you start looking at returns. this has been an incredible year. the all in yield looks enticing at a time when some people argue the actual quality of the debt has gone up. the companies are doing ok. they pushed out their maturity will and private credit has taken off some of the risk as well. jonathan: that is credit and then treasuries.

more likely to see 4.25% than 4.75%. yields are down five basis point on 10s. this is the argument. lisa: when you look at real yields and 10-year treasuries and strip out inflation expectations, 2.23%. that is off the high of 2.5% reached in the past couple of years. it is creeping up towards that high level. some people say on a real basis this looks good, especially international money, especially funds that are questioning some of the policy sequencing in the united states in risk assets. jonathan: bond yields lower across the curb. where did the holidays go? the third hour of "bloomberg surveillance" is up next. here's the lineup. oliver chen, aditya bhave, troy gayeski. the next hour is just around the corner. ♪

>> i don't think bold cases have on away. >> there are a lot of moves still to be had. >> what tends to happen is the

market moves we have in december get unwound. >> as the market broadens outcome of the former winners are going to start to decline a bit. >> i'm not sure if markets know what to expect. that creates some volatility. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the third hour starts now. we are higher across the board here on the s&p 500, up by 0.8% on the nasdaq, similarly for the russell, off to a terrible december. -- after a terrible december. january 10, we get payrolls. on the 15th, cpi. on the 20 inauguration day. a week after that, we hear from the federal reserve. lisa: it comes down to how much can economic data overwhelm the vacuum of what trump's policy

will look like on the road ahead. january 20 is when people see the year starting and understand where the priorities go. until then, do we continue to see the momentum that has supported equities to that biggest two year gain on the s&p 500, going back to 1998. jonathan: straight out of the gate, we are expecting executive action. the appetite for debt is another one for the republican party. the speaker of the house, i imagine it will be johnson and the guests inc. it will be johnson but we have seen infighting from the republican already. where are priorities going into 2025? lisa: when you talk about the underperformance of the russell 2000, it stems directly from backing away from u.s. government debt with this concern that may be some of these policy prescriptions are going to be a bit -- i don't want to say toxic -- but a bit of a headwind. jonathan: that's a bit

constructive. lisa: it's hard to go against anybody because brown's fall seems to be for u.s. everything. nobody is bearish on the u.s. jonathan: confidence is high for consumers and businesses alike. we will see what we get. i agree with you. it's not clear what we will actually get from the upcoming administration. lisa: and whether you can have your cake and eat it too. a lot of people are talking about how big tech can keep driving u.s. equity performance even though you have higher neutral rates and you have some signs that may be the optimism has been overplayed in markets. that is the mix that kind of feels a little bit like tension right now that needs to break one way. lisa: up by 1% on the nasdaq 100. jonathan: big move on the s&p 500. the russell down by more than 8% in december. back to back, november, best month of the year for the small caps. december, worst month of the year for the small caps.

coming up this hour, we will catch up with stuart keiser as the s&p 500 notches it's second consecutive end of year gain of over 20%. we begin this hour with stocks higher, looking to snap a multi-day losing streak as the s&p 500 clinched its best two year run since 1990 eight, boosted by ai enthusiasm and fed rate cuts along the way. looking ahead, we continue to like large-cap tech quality and growth given the higher for longer nature of the fomc. payrolls on january. the sep update and markets pricing just two cuts in 2025 and a 10% chance of 825 basis point rate cut in january. stuart joins us. let's talk about how different the set is now compared to 12 months ago.

last year, we bought six or seven p how different are things this time around? stuart: it's a lot different. it was the second consecutive year of we are going into a recession immediately. it's the first time in two or three years where recession has not been the top line up on the economic boards which means we will probably get it. the other part is the nature of the buying. talk about small-cap over performing. the buying was from foreign investors and etf's. you are coming to u.s. equity markets because we have large-cap tech growth stocks. i think the foreign flow tends to gravitate to that part of the market and that's probably why you saw the big differential. jonathan: do you need that pole, that so-called reservoir of negativity? do you need it this time around? can you find it abroad? is that sufficient to say things are so bad elsewhere? stuart: that's a fair point trade we talked to a lot of investors who are underweight

and concerned with how consensus positioning has gone. there's a little bit of that. there's not a lot of other options. japan is probably still positive trade. you have a lot of uncertainty in korea and china. you have what europe does. that mix the u.s. look better on a relative basis. that's an important aspect of it. lisa: is the concentration of u.s. equities and big tech a benefit or eight attraction to the investments into the u.s.? stuart: it's a good question. i am less concerned about concentration. those companies are performing well for a reason. they are a safe credit, they have a lot of fanatics behind them. i don't think the concentration is such a negative thing. i think there is a feedback. the international body is coming to the u.s., specifically for that. it kinda feeds on its self. i don't necessarily think it is

a negative. i think there is a big hurdle to investing outside of the u.s. i will say u.s. small-cap. you have to find those risk profiles within u.s. equity markets. it doesn't go back out, it moves around within the u.s. markets. lisa: if you are the executive of a small-cap and would like to write hate mail, feel free to write in. i do wonder what the relationship is with u.s. rates. we've been asking all morning this question of our rates cheap or are stocks expensive? that tension was at play at the end of december, it feels like. how much do you expect that to be the main driver of the dynamic going into this year? stuart: i think it's important. the question is which part of the yield do you focus on? are you more worried that tends go to 5% or that tends have a three handle on them?

you can argue the three handle is worse news because the three handle means your growth data has disappointed. you are not getting back down to three unless the unemployment rate starts to rise. i can paint a positive story, you have trump growth in polls and that pushes the tenure up to 5%. you could argue that lower tenure might be a bigger risk for a recession. in terms of the curve, we are most worried about higher yields. the third year is the part of the curve. we will be most concerned if it dislocated to the upside. the logic would be paying me a picture of why the 30 year gets to 5.5%. the data it would take to get the 30 year to those levels, it's hard to find a positive spin to get you there. it's hard to make a call either way. these questions are the questions that investors are asking right now. which direction is worse for me and what's the sequencing of data that will get me there? jonathan: he things we are in

the danger zone for tenure rates which disrupts risk assets. some evidence of that over the last week, credit to you, you've been consistent about this for the last 12 months. so lungs the labor market holds up, you should be buying u.s. equities. -- so long as the labor market holds up, you should be buying u.s. equities. is there any reason to change your mind? stuart: we will see. the fed has told you the unemployment rate is the single most important data point they are following. if that number stays low and they're forecasting will plan now, which i think is a bullish forecast for u.s. equities if that happens. then you can get 10 year yields higher, if that sequencing of data comes out. i think it is the labor market and you need to focus on it. as we played around with payrolls and claims, it's actually the unemployment rate that is the biggest human data point we are going to get. lisa: did we learn over 2024, essentially that this market is

insensitive to rate hikes? that basically this is not one that response given the fact that you continue to say ultimately that doesn't matter as much as the raw data. and if the raw data holds up, guess what, it isn't in that restrictive after all? stuart: i think it's the why. the inflation we got on july 11 convinced the market that this inflation number is moving lower. once you took that upside tail out of inflation, then the hikes and cuts became less important because it reorient to -- reoriented equity marks back to growth. yields moving about higher is -- i don't want to say inconsequential -- because it can matter. but big picture, if i'm an equity investor and the un-implement rate is 4.2%, it's hard for me to -- u.s. equities in the environment. lisa: what would it take for you to be positive on chinese equities given they have lost

the most since 2016? stuart: it would take quite a bit. as a u.s. investor. our asia guys are probably bullish. when i talk to investors in the u.s., the bar for them to reallocate into china is quite high. if you remember back to october and november, they announced some packages and we have the golden week holiday. the holiday had raised expectations for after this holiday, they will come back with the bazooka and they will announce all of these policies that will keep us going. and frankly, they just didn't. it wasn't that they didn't announce anything but they didn't meet expectations. every time you don't meet expectations, people get more and more skeptical. from a u.s. equity investor perspective, it's hard to justify going into china. lisa: the reason i ask this is i'm struggling to find a contrarian right now. i'm struggling to find someone who pushes against the idea of u.s. exceptionalism and finds opportunity elsewhere. maybe in europe on the margins, some people are getting excited on a tactical level for china. i'm wondering how concerning

that is for you. the contrarians seem to be dead and bears have been beaten up. stuart: they are dead because we don't like what they are saying. [laughter] jonathan: this is getting personal. lisa: [laughter] stuart: if you look at u.s. exceptionalism, one of the two things that has driven u.s. exceptionalism is massive fiscal and two, we have large cap road index and tech stocks. when you think about the u.s. and china, which is most likely to go the other way, it's the fiscal. fiscal is going to be a real issue. it looks like the fiscal importance -- impulse, the u.s. economists have the u.s. fiscal flat. some have it negative. the fiscal impulse reverses between those two countries. we are so far out of my expertise that i will probably get a text from some money that

i should shut up. jonathan: thank you. if those of you are interested in the performance of china, the csi 300 closed the session down by 2.9%. not a great start to 2025. lisa: manufacturing data cannot and it was negative. i was looking at how much the economy underperformed in 2024 in china about how the losses tied to their property declines are greater than anything the u.s. experienced during the heart of the financial crisis in 2008 and 2009. it raises a question. how much has this been baked in and how much more does that have to go? jonathan: to give you some credit and savior from the hole you dug in, china, take a look at the chart. and tell me which chart you would prefer. where would you rather be? the one with yields climbing because we have better growth impulse or the one with yields falling off of a cliff? because one is the united states and the others china. lisa: people are voting for the

united states. stuart made a fantastic point even though he dug himself immediately into a whole. which is ultimately, it is a divergence from fiscal policy. the u.s. loosened the tabs and china has been reluctant to do so. could that change? unclear in the speech that xi jinping gave. it did not seem like there was a real embrace of that. jonathan: happy new year. thank you, sir. the s&p up by 0.8%. an update on stories elsewhere. with your bloomberg brief, here is dani burger. >> a tragic start to the new year in new orleans. a driver rammed a pickup truck into a crowd in the french quarter. the fbi is investigating the act, the attack rather, as an act of terrorism. and they say they don't think the driver was solely responsible. at least 15 people were killed and dozens injured in the attack. the driver was a u.s. army veteran and was killed in a fight with the police. in vegas, a tesla cyber truck exploded outside of the trump

hotel. elon musk said the explosion was probably an act of terrorism. the driver was killed and several people suffered minor injuries. musk said the explosion was caused by fireworks or a bomb. president biden said officials are investigating whether there is a connection to the attack in new orleans. south korean police conducted raids on offices and at the airport for -- where a plane crashed earlier this week, killing 179 people. the investigation is aiming to uncover the cause of the country's deadly aviation disaster and determine responsibility. the planes data recorder, which monitors key flight information will be sent to the u.s. for repair and analysis. jonathan: more from dani burger in about 30 minutes time. up next on the program, the morning calls plus all of her chin -- oliver chen on what's next.

this is bloomberg. ♪

jonathan: we are higher by 0.8% on the s&p. down by 45 basis points, the 10 year yield is 4.5228. -- alphabet stock is still high, up by something like 1%. deutsche bank said china competition may undermine demand for its aircrafts. they are down just a touch, negative by 0.14%. bank of america reiterating nvidia at its top pick. citing a consumer electronics

show as a catalyst. the stock is up 1.5% on the morning so far he let's turn to retail. cautiously optimistic heading into the new year, oliver chen -- new product introductions in opening price points. oliver joins us for more. welcome to the show. happy new year to you. i want to talk about luxury and why you think we need to get beyond ordering, quiet luxury. who's doing that right now? oliver: the name we like is louis vuitton. we think that is a great idea in terms of the scale they offer in terms of this anyone times pe. and the rising mill class in china. there is an opportunity. they are spending $8 billion to $9 billion in marketing. the big has been getting bigger. that being said, as you know, china has been a tougher place, particularly with housing. it's something we are watching.

quiet luxury has been a big trend. however, what we want to see is more fashion and more color. louis vuitton has a new collection out in the new year. that will be a nice thing to see too as consumers are yearning for more fashion and more style. however, there is cross currency or with the lower and middle class under more pressure too with inflation, still. the consumer is feeling that as well. jonathan: let's talk about transitions and the 1990's. it was a phrase i hated but heroin chic. and then gisele arrived in the late 1990's and early 2000. and then you saw this big shift. are we witnessing that kind of shift right now in luxury? oliver: what we are seeing is y2k, going back to the 1990's references of paris hilton and others. nostalgia has been a big deal. that is a trend that should continue in part because when you look back to go forward,

consumers like the comfort twister. mixed trends in terms of what you are saying, a lot is working but nothing very dominant. you are seeing silhouettes, high-rise and lowrise genes. as well as skinny leg. what you are saying is true about fashion being eclectic. we are looking at a lot of basics. consumers are looking for value, personalization with a twist. lisa: i'm still trying to get over heroin chic. that was the era. jonathan: i'm uncomfortable with the phrase anyway. it's promoting something toxic. we are leaving woke behind and body responsibility. whether that was body positivity , we can debate another time.

and replacing it with something else. lisa: we saw that with victoria's secret. i am curious about whether a lot of what you are seeing and a lack of a trend is driven by the tiktokification and social media influencers moving in a way that can challenge brands? oliver: tiktok is a big deal in terms of what's happening with short form video. that is driving ultra fashion in terms of trends coming and going for leanne a myriad of trends. the industry performs better when there is one dominant trend but there has been deitch centralization -- decentralization as a theme. they need to get a lot faster in terms of supply chain. this integration of technology meets value, walmart was a top

idea for 2024. it's a value offering as well as offering discretionary product. we like cosco. the consumer will continue to look for value. then we are selective in luxury. in the luxury arena, we like lvmh the most. you see wealthier customers buy from walmart and shop at cosco. that's a trend to watch as well. lisa: with the idea of fashion dine, that that is offensive to jonathan ferro, i'm curious of what is driving that? in the past, it was to cater in particular to chinese retailers. to chinese consumers. is there something else that is making a comeback that you think benefits certain companies that you just mentioned? oliver: yeah, lisa. what will continue to happen is this idea of timelessness and consumers looking for value. that is actually happening in jewelry, selectively with

watches. at the high-end of other stocks like mez, executing pretty well with timeless good speed when you about what timeless means, you are offering products that will age very well and you will use for a long time. that trend is working. beauty, skincare, fragrances, that's a market that continues to be vibrant. going through some bombs. we like a stock called elf beauty. they do a great job on tiktok. they offer a compelling skincare and cosmetics product as well. that is something to watch. on the sidelines of names like ulta and target and we are hoping for interest rates to abate. the consumer continues to be pretty choice for the how they choose to spend -- choiceful for how they choose to spend.

we are hoping that discretionary dynamic become stronger going forward. jonathan: on china, where are you seeing scientific bottoming out? who is winning and who is trying to get around? oliver: going back to louis vuitton, we think they are well-positioned in terms of awareness and they are executing really well preach stocks we don't cover -- well. stocks we don't cover but hermez is executing at the highest level of luxury. our top is louis vuitton. jonathan: we appreciate it. gucci's problem is they are trying to go into quiet luxury. that's going to be difficult. lisa: especially because they have a reputation of loud luxury. the cosmetics thing, can we talk

about that? jonathan: please. lisa: i'm wondering at what point people start to push back against that. we did see a little bit of a hiccup but the beauty products being the hotspot, we saw teenage girls going into the and preteens. i wonder how long that will be the leader with some forests -- sephora and the like leading the charge. jonathan: we've had some interesting conversations. lisa: i wonder. if the cream costs $300, does it do anything that special to your skin? jonathan: certainly it does something. lisa: you better transform this thing. jonathan: a transformation. lisa: [laughter] ♪

it's time to grow your business. create a website. how? godaddy. coding... nah. but all that writing... nope. ai, done, built. let's get to work. create a beautiful website in minutes with godaddy.

♪ jonathan: jobless claims data is seconds away, about 20 seconds away. the estimate is 221 k. the previous week, it was 219. up by three quarters of 1% on the s&p. the nasdaq up by 0.9. in the bond market, all morning to start the session to kick off 2025, we have had a rally across the curve. lower by four basis points on the 30 year yield at 4.74. jobless claims come in at 211

against an estimate of 221. yields are lower across the curve. that is an exceptionally low jobless claims print. lisa: continuing claims come in below expectations of 1.8 million. the revisions are lower when it comes to continuing claims put much in line with the prior work when it -- week when it comes to the weekly data. this comes down to how much of a head fake was it? do we have a sense the u.s. economy is stable without that weakness in the labor market that the federal reserve used to be concerned about? jonathan: looking ahead to payrolls, not tomorrow, next friday on january 10, the service so far is 153 the previous month to 27. -- 200 between seven. equities -- 227. equities are up 7/10 of 1%.

10 year yield is down three basis points at 4.5348. lisa: this isn't an isolation. it's important to mention that. we got opening stata before we went off or break and it came in above expectations with the job openings and unemployment more than it was pre-pandemic. there is a question of how much this is a resilient labor market where any signs of weakness have been people trying to pick out little points rather than an actual trend. jonathan: anna wong berg joins us. we saw an employment head fake last year. we saw it in q3. there was a worry about a break in the labor market. how much of a head fake was the and how much worry did you see

beneath the surface to close out 2024? >> i wouldn't consider that a head fake. the improvement in q4 was the head fake. i would take different signals from initial claims. initial claims is suggesting the layoffs as low and indeed over the holiday period. some of the layoff announcement announced for example by stellantis, the automaker, has been canceled. that part of the labor market is doing fine. if you have a job, you seem to be doing fine. continuing claims, the average duration of the unemployed, the average unemployed person is 23 point seven weeks. which is exactly at about where the average maximum duration of unemployment benefits is. this suggests that if the initial claims continue at this level, the continuing claims

would peak currently or in a couple of months. that said, that's not a signal for unemployment. in this business cycle, which is a unique one, we have seen unemployed numbers trending up, even though continuing claims are following -- falling. the reason the claims would be peaking right now is that people have maxed out their benefits. lisa: i'm curious why you say the head fake was with positivity that we have seen in the labor market data rather than the negativity that we saw a couple of months ago. >> we drilled into the micro data that produced unemployment and we noticed that particularly the fall in unemployment rate in september was due to a surge in government hiring, driven by election related stakes. anna: this seems to happen in major election and presidential

election years of the past. typically, what you would see is that this surge in government, hiring will reverse in december to january. and we noticed that this reversal is already in train in the november micro data that the government is hiring a slowdown already. jonathan: this morning, not much sense of weakness. not much of the at all. 211 on jobless claims against an estimate of 221 thousand. that's exceptionally low. lisa: in a time when people were expecting it to be climbing. things had bottomed out in terms of the lows and averages going back to the pre-pandemic. to anna wong's point, how much this data has been distorted, we continue to hear that. the messiness of the information we are getting, she pointed to distortion related to government hiring around the

election. we have heard distortions around the hurricane. will we get distortions ahead of tariffs when you have stockpiling companies? how do you get a clean read on and economy -- on an economy that has been anything but clear. jonathan: let's try to get one. fantastic to see you. which one was the head fake, the strength or the weakness? >> the question for the fed and the broader economy is that in a downturn, the labor market does not deteriorate linearly. it deteriorates non-linearly. we are seeing some signs of softness in the labor market. it's been gradual. as lungs it remains gradual, i think we can become fit that we will avoid a downturn. if we flatten out. if the unemployment rate flattens out at 4.2 or 4.3, then the fed will feel confident about the labor market and it might be difficult for them to cut any further. jonathan: you say some signs of weakness. where are you seeing those signs?

where are they now? aditya: the unemployment is at 4.2%, that's fine. it was 4.246%. as close as you can be to rounding up to 4.3%. if we continue to move up, broadly, the unemployment rate has been taking up and moving down. as long as those trends continue, you want to keep and i on the labor market. that's the only point of concern with the u.s. economy. lisa: i'm trying to square the idea that companies are investing that much more because of the ai super cycle, that this sort of reassuring -- re-shoring or near shoring is spurring investments in the united states. and then this idea that people are worried about a labor market in a time where the economy does not have enough people to be deployed into all of these jobs, how do you understand that? aditya: it's a matter of sector by sector. right? there might be shortages in some

sectors but those sectors are not particularly large if you look at the overall labor market. so, most of the u.s. labor market, five out of six jobs are in services. a lot of those are blue-collar services. if those jobs slowdown, any potential growth from ai related jobs is not going to offset that. anyway, those jobs are relatively higher productivity, less labor intensive. so, the boost to the labor market from those jobs won't be as much. lisa: one of the big saving graces has been that the services sectors have been late reporting. that's been one of the trends of last year, especially post-pandemic. has that stopped or is that ongoing? aditya: we think this is a low higher, low fire environment. that's what we are seeing in the claims data as well. this is quite relevant for the upcoming jobs reports. typically, you see significant temporary hiring seasonal in

november and december and layoffs in january to the extent you don't get that sort of cycle this time around, you might see softer adjusted payrolls in november and december and stronger ones in january. jonathan: let's go through the federal reserve. on the 10th, we have payrolls and on the 29th, we have a federal decision and most believe it will stay unchanged. what will change the story between now and then? aditya: we have two more cuts for this year and that's it. the risk is they do less than that rather than more. in terms of this month, i think the bar for cutting in january is very high. you would need a disastrous jobs report. march is possible. what would it take to cut in march? it would be something like the un-implement rate continues to move up as it has done in the last couple of months and then inflation could benefit. if those two factors work out which we expect them to do to a certain extent, then you will get another cut in march.

jonathan: i wonder your thoughts on the previous round of forecasts, how much they have been influenced by the potential policy change of the incoming administration. aditya: some folks accounted for policy changes. that is what powell said. some didn't say whether they did or didn't and some aches with police that they didn't. i take him at his word on this. i think it is an entirely reasonable forecast. as i said earlier, you can get some base effects that are helpful in january and february. that's it, right? here is an interesting fact. core cpi inflation x housing has increased in the last year. the idea that there is this broad-based disinflation, we are heading in the right direction.

we have 2.8% for the end of this year on the core pc. that accounts for potential policy changes, tariffs, fiscal policy. 2.5%, you could get there without policy. lisa: this raises the question of how the fed traits the recent rise we have seen from longer end yields. housing inflation is no longer the issue. does that serve as an indictment of the rate cut so far? that essentially that has allowed longer-term inflation expectations to remain stickier and run counter to the fed's goals? aditya: from our perspective, it kind of does. we were surprised they went 50 in september. we did not think it was the right call. the 10 year moved up. some of that you can say we priced a policy era. the other thing that is going on

is the markets think the fed has done too much. the fed is coming around to that view as well which is why now the risks are that they might be done or they might be very close to being done. jonathan: this is something we talk about a few times to close out last year, the recent bias contributed to the high yield to the long and. lisa: which is why people were so alarmed by the 40 year basis point move in december alone. mortgage rate claims are climbing back up to 7%. they are the highest level now going back to july. you are seeing price disinflation on the margins in housing. at the same time that there is now an inflation issue that is getting sticky in other areas. it shows which base is it that the fed wants to slay. how do they do that with a market that is getting away from that? $417 for the average rate ?

we spent too much time talking about that at home. jonathan: you did? lisa: we were talking on super luxury, what with the median be? what you get is a lot less to browse the whole world. it's pretty crazy. jonathan: we will get more data for you. recent inflation readings shows the decline of inflation has stalled. there is a risk of re-acceleration for investors. the 60-40 portfolio underperformed significantly. joining us now is troy. i would love your take on the risk for 2025. do you agree with that? a repeat of 2022, what's the likelihood? troy: happy new year, good to see you and lisa again. from their point of view, he's

more accurate on the bond side than the equity side. we look at asset classes going into this year. it's more than likely that the trend remains your friend in equities. we will get the same amount of global expansion. there are questions about whether margins will expand to the same degree that's being priced into the s&p. it's more than likely we have another resource drawn. on the sixth income side, we talked about this a lot the last six to nine months, we see a lot of challenges. we have this stationary impact that we discussed. the fed has already cut too much which is steepening the yield curve. you have a limitless supply. for the next 10 years, we will be issuing 7% to 7.5% of all the treasuries that have ever been issued in history that are held by the public. it's questionable the buyers will be. we see a bigger challenge on the fixed income side with the acknowledgment that clearly if

inflation moves backup which we don't expect her medically, that can lead to -- equities. jonathan: why doesn't that constrain return to say equities? troy: like in, you can think of the reasons for why -- again, you can they come the reasons for why there should be less mobile expansion, despite the fact that the flow of the supply and equities has remained negative for quite some time and is expected to. you have, as you know, in this cycle, a key driver of corrections that has been higher yields of the bakken curve. that is a risk. you have higher yields throughout last year and we had a record year in equities. so, we hear the argument that higher yields can restrain equity gains and cause corrections. but if you think of the foreign outlook, particularly in growth stocks, the fundamentals are

very robust. we expect another strong year. just not to the same extent of 2023 or 2024. jonathan: i hear so many -- lisa: i hear so many people talk of a how we have had such a selloff. the yields look pretty good so you have real money coming back in. yes, there is a lot of debt being sold. and yes, the fiscal profligacy of the united states has been something that eventually could come back to roost. there is this question of we have had four straight years of yields rising. how are we going to get a fifth if that's the first time we have seen that happen since the 1980's. and inflation is coming down. troy: a lot of people said that coming into last year. how are you going to get a fourth? i think looking at history can be informative at times. i think when you look at the straight facts of the situation, we've only finally gotten a normally slow yield curve. the 10 year yield is slightly

higher than fed funds. that is an abnormal situation. particularly when you have an economy that is as were most as -- robust as this. we are a service economy, no longer a manufacturing economy which is a confusing point. when you think of yields, we are not saying it is a 0% probability that the backend of the curve goes lower. you would just need a material slowdown in the u.s. economy which, even if we get spending cuts from the government, you are still looking at a minimum of 2% gdp growth. more like 2.5% to 3% year. saying we won't get a fifth-year because we got a fourth year is probably not the greatest analysis. >> [laughter] troy: that being said, if you go to where yields will probably settle over the next couple of years, the fed will bring the front end lower, albeit at a slower pace. we've always thought a 10 year

makes sense from a value standpoint. then you will roll down the curve. much higher yields, lower duion risks. until we get there, we have to live with the fact that it will be a messy bond market for quite some time. lisa: troy, that was the highest sophistication i could come up with in terms of four straight years of yields rising. how can we get a fifth? i wonder, what's your topic for 25 yucca -- top that for 2025? -- top bet for 2025? troy: you had growth of the russell 2000 for the past several years. you had potential for certain positions. we've recently had valuations much lower than the russell and the s&p. we are stunned to see him and a

comeback -- mna come back. we articulate private equity is the -- you're getting growth but not paying out the nose for it. we are excited about that. on the private credit side, it's interesting. we have been in this higher, longer, stronger time. we will have higher base rates as far as the eye can see. the fall rate should state really benign. -- stay really benign. investors should enjoy higher for longer in terms of income without a hangover of defaults which is always the risk that you run when you are investing in public or private credit. jonathan: another reason global management was up by something like 77%. to hear from you. good to see you. we will head into 2025. lisa: a real question on how we

deal with the mess he sees in the treasury market. we've heard this for so long. how are people going to buy these treasuries. it's the reason why some people focus on auctions closely. we hear earl davis talking about how there is no alternative for people internationally and mystically. it's setting up an interesting tension. jonathan: the night for 30 year bonds. lisa: who's this? jonathan: we are a team. [laughter] what are you laughing for? lisa: i agree with you. please, take the helm with respect. jonathan: let's get an update for you on stories elsewhere this morning. here's your bloomberg brief with dani burger. >> at least 15 people were killed in a deadly attack at new orleans's french quarter early on wednesday. the attack involved a pickup truck and improvised explosive

devices. the fbi is looking into connections to terrorist groups and whether the suspect acted alone. suspect, a u.s. army veteran, was killed at the scene. a tesla cyber truck exploded outside the trump hotel in las vegas. elon musk says the explosion was probably an act of terrorism. the driver was killed and seven people suffered minor injuries. musk said the explosion was caused by fireworks or a bomb. the president says officials are investing further there is a connection to the attack in new orleans. elsewhere, new jersey asked a federal judge to block new york from moving forward with its congestion plan. a judge rejected new jersey's challenge. the congestion pricing program would charge nine dollars for drivers entering the manhattan central business district during peak hours starting this weekend. the plan was designed to reduce traffic and pollution. that's your brief. jonathan: thank you. one of those occasions where you

needed the camp= as dani burger was going through the -- cam as dani burger was going through the last story. lisa: new jersey benefits from being in new york but they don't want their residents to pay more so they have lower taxes. i'm just saying. jonathan: ok. have you reached out to governor murphy personally? lisa: i just think you need to let it go. jonathan: do a roundtable with kathy hochul. up next, the opening bell about 38 minutes away. ♪

jonathan: equities bouncing back

from four days of losses, the s&p 500 is higher by three quarters of 1%. >> kicking off the u.s. deal rallying by 9%. you, the government can decide what production cuts we do in the next 10 years. stocks are trading below $55. the magic number over 500,000 that will tip us into the record for the fourth quarter. 10% to 15% of the stock price is on deliveries. 80% is on ai. bitcoin rall -- rallies. microsoft goes in its wake. jonathan: a few things to watch going into the start of the new year. we get economic data. tomorrow, i assume manufacturing. -- ism manufacturing. tomorrow, the lineup to close

out the week to ease in will include priya of jp morgan. ♪ lock in let's go. rated e for everyone. [rock and roll music playing]

xfinity. made for gaming. rewards members, get early access to an ea sports fc25 kit. visit xfinity.com/rewards.

>> happy new year to all of you, a 30 minutes until the start of trading. >> bloomberg open interest starts right now. sonali: a new year rebound. stocks are kicking off 2025 with tech leading futures higher after a four-day slump. >> one stock in focus is tesla. the ev maker gaining ahead of a critical report that quarterly deliveries at a new record but failed to exceed last year's total. katie: