sonali: from new york city, i'm sonali basak and bloomberg real yield starts now.

coming up, the first real yield show of 2025. we are going to take you through the year in fixed income. we are going to be watching geopolitics, along with everything that plays into the bond market. we will focus on credit as issuance surges and private credit is poised for some more gains. we are going to begin with the big issue. big questions looming on policy and the macro backdrop. >> volatilities going to be a little bit higher in the rights market this year simply because the fed is so data dependent. >> on the fixed income side we still see a lot of challenges. >> we have come into this year with no bond boost. >> markets think the fed has already done too much, and the fed is coming around to that view as well. >> what do yields reflect? they reflect fear over inflation. >> the key driver of corrections

has been higher yields in the backend of the curve. that is clearly a risk. >> there is a lot that can cause volatility and that is what we think we are going to see for the first quarter of this year. sonali: i want to take a look at the 10-year yield since election day, continuing to churn higher. you have seen it trough and a bid come back into the bond market in late november, but by december you saw a lot of that wiped away. in the 10 year hitting 4.6% above that level, then coming back down to just above 4.5%. really testing 4.6% once again. let's flip up the board and look at the twos-tens spread. sitting at the highest levels in years because you to see that decoupling. a lot of that tin your move has to do with fiscal concerns, as well as a term premium demanding more of investors for the risk they are taking on. but you do see the fed's

interest-rate rate cutting strategy not really hit the mark when it comes to those longer-term expectations. speaking of rising yields earl davis of bmo says the uncertainty over tariffs brings an opportunity for investors to add duration. >> we tell people tariffs is providing us with an opportunity to go longer fixed income. reason why that is is all of the talk about tariffs and the unknowns, have increased yields to these levels, to locally looking relatively attractive levels both on a treasury and corporate space. we have been using this as an opportunity to add to duration and credit. sonali: joining us now, ed al-hussainy of columbia threadneedle and leslie falconio of ubs. take a look at some of the dynamics in the bond market, that volatility under the surface, it is the biggest thing you are looking for as you start the year? ed: it is the policy mix. i think the biggest source of

uncertainty this year is definitely the policy mix coming in. whether it is on the trade front, immigration, obviously fiscal policy toward the end of the year. underlying all of that i think the change in fed strategy we saw at the end of last year and how that is going to play out his top of mind. sonali: you brought up the fiscal and monetary, and leslie, which force is stronger heading into this year for the bond market? leslie: on the monetary side of the market is completely recalibrated. now they are looking for 38 basis points of cuts in 2025. e also believe there is only going to be about two cuts, one in june and one in september. but i do think monetary policy is going to play an important role, because they are data dependent. while the market is pricing in this forward-looking policy implementation, you do not know the impact of that until further out in the year.

i think both are going to be equally important. the fed is going to react to some of this policy implementation, that data goes for a long time at the end of the year. now everyone is focused on what the fed is going to do. sonali: if you think about the fed's moves and where it could hit policy implications in the near term, and you have an issue where you have janet yellen writing to congress, saying the new debt limit right be hit around the time of inauguration, you have a speak about happening as we sit here now, how do you really parse through those critical moments when policy can start to up and the bond market a bit? ed: with respect to the debt ceiling, the treasury buys itself a little bit of time through these extraordinary cash management operations. i think they still have, perhaps well into the second order, to manage that. where it is going to impact us on the right side is with respect to the fed's balance sheet.

we are going to start to see tensions in terms of excess liquidity, the lack of t-bill supply starting to attack the front end of the curve. when we think about further out on the curve i think the good news for now is we are going to have to wait for the ticket items. most importantly, tariffs and fiscal policy next year. sonali: so many people when they think about the federal reserve they think about that first and foremost function, the control of those interest rates. ed rings up an important point about tightening. you still have a massive amount of money on the fed's balance sheet and the banking system reserves shrinking. it tumbled below $3 trillion to the lowest since october 2020. this is a critical story a lot of people are keeping an eye on. how do you see that impacting the dynamics for tightening? leslie: the reserves are shrinking, that as logan has pointed out we still have reserves. we do believe that more than

likely the fed will wind down the quantitative tightening in the first or second order. i think there is going to be plenty of liquidity in the system, but i think they are keeping a watchful eye in terms of rp. we are expecting them to start to, if not completely cease quantity tightening, slow it down in this first quarter and end by the second quarter. sonali: i want to go back to something earl davis had said earlier. this idea that duration is something investors should consider taking on. would you take on duration, given those risks that are still out there? if so, how aggressively? leslie: we are taking on duration, but we are taking around that five of the yield curve. for us we would extend further out that act and. we have not liked the back end of the yield curve for some time. i be if we got to that tony 24 high and we could consider

sending it out further. i think it is important to note it is not just about the fact that interest rates have gone higher. it is the velocity, how quickly they have moved. you have seen from the september to december fed meeting, from the third and fourth quarter about an 85 basis point rise in 10-year yields. we are adding on interest rate risk. but we are looking for opportunities to add further out the curve, where -- but we are going to sit tight for a while. sonali: if you have investors starting to take out duration you do see the potential for yields to moderate. ed you take on duration risk --ed, would you take on duration risk longer than that? what is the 10 year start to head this year? ed: there are two relative valuation points. one is relative to cash. the curve is steeping out, the prospects for maintaining those

returns on cash are dwindling. stepping out is becoming more attractive. the second is risk assets. when you're looking at credit spreads that are multi-decade tight, valuations in equities, the ration becomes a much more attractive offer against risk assets. where will the 10 year end? going into the long end of the curve you are dealing with fiscal risk. i think it is still quite scary when we talk about the 10 to 30 year part of the curve. when i take a step back i would say at the moment the curve is pricing rates to settle around the 4% level in the medium to long run. from my perspective i think that is quite high, given the risks to the labor market in particular and the success we have had in terms of ringing inflation down. sonali: what does that mean in terms of where you see the 10 year is headed? ed: i would say the 3.5% 4% area

would be my best bet. sonali: leslie, what would be your call? leslie: we are assuming that the terminal rate -- we don't think the terminal rate is going to end up at 4%. you're going to add a little term premium on that, so probably around that 4% level. sonali: spread makes a market. and how hussein he and leslie -- ed al-hussainy and leslie falconio to start the year for real yield. up next we are going to talk about the auction block, because there is a potential record-setting january for high-grade on sales. stay with us. we will talk about it next. this is bloomberg. ♪

sonali: i'm sonali basak and

this is bloomberg "real yield." it is time for the auction block. we start in europe, with the eu lead market-white volume for 2024 reached a record-setting 1.27 billion euros. -- trillion euros. here in the u.s. borrowers wasted no time with raising money in 2025. high-grade sales on thursday were 15 billion dollars, led by credit agricole, ford, and gm. kicks off what analysts say could be a record-setting january. an informal survey called for $200 billion worth of sales, and that could surpass the record we saw just last january. speaking of credit, join beyonca ocs major opportunities this year. -- joanne beyonca sees major opportunities this year. >> the number one area is

credit. we are in a better quality environment. to get lily in the u.s. high-yield market. there is more double-b's than there ever have been. the triple-be market is higher than it has ever been. sonali: we are going to get deep into the credit markets now. we are joined by a keeley gray wall and sinjin bowron -- a keeley gray wall and sinjin bowron. both of you know how to manage risk. you are looking at from the beginning of december to the end of december a drastic change in expectations for rate cuts heading into 2025. in a higher for longer environment what is that mean for borrowers? do you have to recalibrate how much debt they could take on? given that you have rates elevated? >> i think it has been a recalibration of where people

are expecting rate cuts to go. we were in the bank of thinking that the raw cash thinking that the long-term rates were going to settle around 4%. that being said, that will be an elevated rate environment. borrowers are going to have to think about the type of debt they are willing to take on. for credit markets we think particularly private credit will and if it from a longer environment for higher rates. we are looking forward to being -- being able to employ that. sonali: what does this mean in terms of where you would rather put your bets? you chase yield in the safer parts of the market or start to dive into some distress? sinjin: i think it is a mix. at each point we deploy capital across the entire quality spectrum, in trying to capitalize on that healthy mix of having both high carrie, first lien, top of the cap

structure, safer level of investments combined with pretty significant deployment into different distressed opportunities. 2024 was a good example where distress on the high side was one of the biggest drivers of return, but it should also be pointed out that floating-rate credit outperformed fixed income despite having four times the amount of default activity. we would expect that would continue into 2025. deploying capital into more floating-rate seems to make sense at this point. sonali: when we are thinking about some of these distressed or deteriorating opportunities entering the market that could be good for some investors who want to capitalize on that. but are there types of deterioration that apollo is looking away from right now? especially given you see some real weaknesses in places like consumer or auto? akila: i think it is a great question. our expectation for 2025 is there is going to be a

meaningful dispersion across the credit markets and that will mean winners and losers. there likely will be more stress in distress. we will probably see more distressed activity. for us, we spend a lot of our time on the top of the capital structure. both in investment grade and non-investment-grade risk. we are focused on continuing that trend. when you think about our asset-backed business, it is a tale of two cities in terms of consumers that are homeowners versus consumers that are not. we are making a lot of effort to focus on those higher polity backing, and terms of the type of asset-opportunities we are focusing on. sonali: when you think about that push-pull between private markets and public markets, what do you think will be the most compromised in public markets? i cannot kill -- i cannot tell sometimes which part we should be talking about. whether you think about public or private. will we see more deal flow

heading in one direction or another based on the dynamics we are entering this year with? sinjin: potentially. i think there is convergence between these asset classes when there is higher spread -- excuse me, higher rate volume issuers can step back and choose what makes most sense to them to fill their financing needs. a lot of it is going to depend on what rate volume does. we agree with the theme that there will be higher dispersion most likely, and that is really driven by on the one hand you have solid credit fundamentals going into 2025, on the other hand you have tight evaluations. to the extent that any one of these asset classes sees more dispersion that tends to instill a little bit of reticence upon issuers going into that market, for various reasons. that might be a bigger driver of which of these asset classes are most capitalized on by the issuer itself. sonali: if we sat here talking a

year ago what we would talk about is, leveraged loan markets. to what extent are they going to make private credit more difficult? but apollo has been pioneering a way to make private assets more like public assets. a little more liquid. how far does that theme go? especially because there are some naysayers out there. akila: absolutely. we do believe there is a convergence between public and private credit. we have been talking about that for a long time and we also think that has been a theme of public markets being liquid and safe and private markets being a liquid and not safe. our view is that private can be just as safe, given that public markets are heavily concentrated and also not as liquid as they seem to be. particularly during periods of volatility. sonali: i want to also ask you a little bit about a popular trade from last year that i'm wondering how much it will spill over to this year.

this synthetic risk transfer trade. there was a since i heard from golden tree's founder a couple of months ago saying those spreads would start to compress. do you think this will still be an attractive trait from here? akila: we do, but it will be about picking your spots and making sure you have -- when we participate in srts we do not like line risk. we like to understand the constituent pieces associated with it. it will not be one-size-fits-all, but we do think there will be interesting opportunities. sonali: i get interested about srt's to this degree. it is an amount of risk being offloaded from the banking system to the private capital world. is there something inherently risky about these loans, or is this just another indication that the banking system will not be the end stop for this type of risk?

sinjin: i think we fall into the latter camp. this is just another iteration of that offloading of risk from bank balance sheets. we think this is, again, the latest flavor of it, but certainly not the end of it. sonali: i also want to double down on something you were saying before. we were talking about the dispersion. do you think, given where spreads have been of late, that investors are ignoring too many of the risks still underpinning this market? sinjin: there is enough uncertainty on the horizon in terms of international geopolitics, domestic politics, and specific policy proposals that would likely induce more volatility and probably point to wider spreads just using fair market value metrics. at the same time what i referenced in terms of underlying credit fundamentals, which are still very sound -- i mean, the leveraged credit power

base has shown they have robust pricing power. they have used the past several years to shore up their balance sheets, to improve their liquidity situations. profit margins are at or near all-time highs. leverage and other credit metrics are down the fairway in terms of being or midcycle. as a result the fundamentals sort of support tighter spreads. to the extent that we get some more exogenous impact to leverage credit from camino, a new tariff regime, for example, then credit spreads will likely go wider. i would reemphasize the theme of dispersion. that it will likely be more sector-specific and issuer-specific, which is what we have seen in the latter half of the fourth quarter after the election. sonali: one part of the market, we were talking about high-yield, but also leveraged loans have expected to come back in a big way. private credit is waiting for

that opportunity. how big is that opportunity this year? how do you wrap your head around what is possible in terms of the leveraged finance or private credit, and terms of m&a coming back? akila: it is a great point, because we do expect there to be a lot more flexibility as it relates to m&a, which should allow for more event opportunities for us to participate in the public and private credit or can. we think it is going to be a higher-dispersion market, but also one that is event-risk. we are going to be agnostic as it comes to private and public, it should be a big opportunity set. sonali: certainly an alphabet soup of opportunities this year. we thank you both for joining us on this first day back for real yield in 2025. a big year for bonds, but still ahead we have the final spread. the december jobs report on friday. this is real yield on bloomberg. ♪

sonali: i'm sonali basak, and this is bloomberg "real yield." it is time for the final spread. monday congress votes to certify the election results, plus u.s. durable goods and global pmi's. tuesday u.s. dock worker labor talks resume. plus dead speak from thomas barkin. wednesday, fomc minutes and samsung earnings. thursday the new york stock exchange and nasdaq will be closed in honor of jimmy carter's state funeral, with the bond market closing at 2:00 p.m. and friday, the u.s. jobs report. we are going to look at those jobs numbers. a lot riding on what is happening in employment. strength had been expected, but payrolls expected to come in at 150,000.

the end employment rate, expected to stay flat. we are watching the rounding, because rounding up would be a bad thing. but perhaps things are stronger than you thought. new york, that does it for us. this was "real yield." ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. lock in let's go. and relentlessly rated e for everyone. [rock and roll music playing]

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>> welcome to bloomberg markets. i'm scarlet fu. let's show you where we stand on day two of the trading year in 2025 have the s&p 500 covering from yesterday's losses. ending a five-day losing streak. it has been losing about 2% since christmas before today's decline. the magnificent seven and big tech leading the way. nvidia and tesla among the big advancers among the magnificent seven. not much move in the bond market. the manufacturing economy

performing better than expected but still shrinking. prices paid more than expected. that reinforces inflation concerns. that last line, cattle futures up for a third straight day, trading at a record high. it is expected to be someone tree whether that is coming in the coming days in the plains, and that will exacerbate an already-type beef market in the u.s. let's take a look at some movers on the equity side. first up is u.s. steel, falling as much as eight point 4% after president biden blocked its sale to nippon steel. biden cited national security risks. we are going to have more on this later in the program. next up, rivian shares jumping more than 20%. the ev maker recorded fourth quarter production that beat analyst estimates. consumers rushed to buy ev's at the end of the year as incoming president president donald trump has threatened to end tax credits for those vehicles.

staying with autos, shares of stellantis falling for fourth day, while vw dropped in german training. some of their plug-in cars lost access to u.s. tax credits under rules that took effect today. happening in washington, the house will vote on mike johnson's future as a speaker. those four seats could cost johnson the vote. >> when you have such a thin margin in the house, this is the way it is going to be all year. i truly think mike johnson is going to retain the gavel. i think it might take two or three ballots today, but ultimately there is this overarching sense of urgency among the republican caucus, and i think that is what is going to drive them to ultimately give

mike johnson the gavel again. there is no viable alternative to mike johnson right now. scarlet: bloomberg "balance of power" cohost kailey leinz joins us now. no one is expecting 15 rounds like two years ago, when it took kevin mccarthy it felt like days to get the speaker gavel again. kailey: did take days, and that is kind of the bar here. anything less than 15 rounds might prove to be a win for mike johnson, though he and others around him have projected confidence that he could get this on the first round of voting. that vote has not begun yet. have just finished a quorum call that showed 432 members are present. that means a couple of missing -- couple are missing. it would make the magic number for securing the gavel 217 votes. we know mike johnson does not have at least one republican vote. tom massey is a firm no.

it does not seem there is any world in which that would change. congresswoman victoria spartz of indiana, chip roy of texas, andy biggs, ralph norman, all of those are going to be the ones we are watching when this roll call actually takes place, which could begin moments from now after nominating speeches take place. we know a lot of these people who have been uncommitted in voting for johnson have expressed concern about fiscal matters. it doesn't seem mike johnson is trying to address those. he posted a kind of manifesto for what he wants out of his speakership. a lot of it focused on fiscal responsibility and a smaller scale of government. pledging to create an independent group that would work with the department of government efficiency to slimmed-down government. we'll have to see if that is enough to assuage some of these right-wing members, or if donald -- or if the calls donald trump had been making will be enough to make the difference.

donald trump and elon musk have thrown their support the hind mike johnson, but that is not clear if that will be enough. scarlet: we talked about how there are no rules stating the speaker must be a member of congress. is anyone thank elon musk's name is going to be thrown in as a possible speaker? kailey: no one in washington believes that. elon musk is not a born american. he was born in south africa, and by being the speaker of the house you are in the presidential line of succession, and the constitution did hates the person who is president has to be a u.s. citizen from birth. there are legal reasons why that may not actually happen. by and large most of the republican members of congress are supportive of mike johnson as speaker. it is a different scenario than what we are -- what we were dealing with when kevin mccarthy. -- with kevin mccarthy. he had to exercise leverage to secure those votes. mike johnson is not likely going

to have to dance that hard. though he may have to start acquiescing to the demands of some of these members that are currently giving him a hard time. scarlet: the dancing starts her ladies days. kailey leinz, thank you so much. we want to turn to the u.s. economy, because traders are anticipating a fresh week of data with december payrolls and the unemployment rate to out next friday. joining us is robert sockin, goebel economist at citi. happy. the consensus is the u.s. economy is growing faster than other developed markets and emerging economies and is at -- and its assets will outperform other assets. you maintain the u.s. economy as a wildcard. what are investors not pricing in? robert: i think if you talk to our u.s. economics team they still see a lot of reasons for concern in particular some softening in labor market as yours which have really been going on for more than a year with the rise in the unemployment rate, a fall in the hiring rates.

they remain concerned that that could be pointing to worse news ahead. however, my own view is that the data still feel more like a soft landing in the u.s. and that those worries in the labor market have really subsided in recent months as the market has shown signs of stabilizing. we have seen the unemployment rate move sideways. you have seen some pickup in some of the survey-based measures. but it is a question mark, and that is the wildcard. those worries about the labor market. or are we more in the soft landing camp? there are no signs of an imminent slowdown, but there are risk factors. scarlet: one area that has been shrinking as manufacturing. i think about today's ism manufacturing data. i wonder if it captures the dynamic where are going to see, which is better than expected reading, it still shrinking, but higher prices as well? robert: it is a very interesting

dynamic. we see it globally as well, which is the manufacturing cycle for the last few years you are seeing a pickup in the u.s. data, but not really definitive. still in contraction territory, but i'm not really too worried at this stage about price growth in the manufacturing sector, because it is running at a low level. you have negative price growth in the u.s., near zero globally. the risk is tariffs, looming with the trump administration. that poses some upside risk going forward, but the good news is we are starting from a relatively soft spot in price growth does not seem to be that big of a concern going into the year. i am hopeful that as we go further into the year we could see some of that manufacturing activity pickup, particularly as consumers rotate more spending to goods and interest rates continue to decline. so far that has been soft spot

globally, that manufacturing area. scarlet: he mentioned tariffs. goods inflation has come down compared to services inflation, which has been stickier. won't these promised tariffs on imported goods change that dynamic in a way where you wonder whether the impact will be a one-off or something more sustained? robert: in theory it should be a one-off if you get that jump in the price off of the tariffs. the worry is a could bleed into inflation expectations and lead to something more persistent. if we look around at the global economy and trump's potential policies the area we are most concerned about is tariffs. especially if they were implemented on a large-scale you could see a pretty sizable hit to u.s. growth and a pretty big boost to inflation. at least in the short term. and that risk could have longer-term effects. if i'm looking at 2025 i feel good about the u.s. economy, that i think the tariff is the

weakest risk. scarlet: it looms large and we don't know when it might be implemented and in what form. we know that is the outlook for the u.s. economy, and other countries have to react to whatever the president-elect decides. with these tariffs mean for the outlook of trading partners like japan? the boj decided not to do anything with rates at their last meeting, choosing instead to wait and see. robert: i think it is going to depend on the configuration of these policies globally. if the trump administration puts tariffs on trading partners, do they put tariffs back in kind? what does the global system look like under those dynamics? on balance, when we look at trump's policies we think on today or probably more risk of higher inflation in the u.s. than the would be otherwise. and for the rest of the world i think we are more concerned about an adverse demand shock from these policies, some potential for lower growth and

lower inflation elsewhere once you take in the totality of expectations. on net if i'm looking at interest rates, i would be more concerned about a fed that stays higher for longer, and i think there might be more potential for rate cuts in other economies if we get the full brunt of trump policies we are expecting. scarlet: and you are thinking the ecb in particular, given they have a lot more work to do to stimulate their economy? robert: absolutely. we are looking for sizable ecb rate cuts. we think they are going to take the policy rate down to 1.5% by next year. depending on the posture of trump's policies you could get something even lower than that. scarlet: are we going to see euro-dollar parity? robert: we are not that far off right now. we are at pretty levels for euro-dollar right now, and i think our base case is that these policies at up to a stronger dollar for the u.s. line you could see the euro go lower in that environment. scarlet: speaking of currencies

on a downward spiral, two to three weeks ago brazil was a mess. the currency was tanking and investors were dumping presenting assets because of the deficit spending and concerned about this wider fiscal crisis. i feel like the temperature has cooled. where do we stand? is it still in crisis mode? robert: i think the temperatures have cooled and brazil is in an interesting spot economically. it is an economy that the central bank hiked to early in the cycle, they started to cut, and then they found the economy and inflation were more resilient and expected. we are still expecting more rate hikes from the central bank. they are one of the few central banks that have had to turn around and start hiking. fiscal situation there is still a big concern, especially given the dynamics in the economy is that the central bank is going to have to keep hiking rates. i think we are outside crisis mode, but there are still important dynamics to follow their. scarlet: started with the u.s.

let's end with the u.s., but continue that thread of fiscal crisis. kailey leinz was talking about fiscal responsibility and how there were a couple of republicans that are concerned about that. do you expect -- what might cause bond vigilantes to appear in force in 2025? there is so much talk about how they could come out, but they have not so far. robert: this is the real challenge. the u.s. fiscal situation even before trump comes into office is pretty extreme. if you look at the congressional budget office's forecast of deficits, we are in a 6% of gdp deficit environment as far as the eye can see. debt to gdp should rise to record levels over the next few years. but so far there has been a sizable demand for treasuries, and this is the fear. when might this no longer be the case? i think right now this is a risk

case and we are not looking for any type of crisis in the near term. but it is something policymakers should pay attention to. the challenge is you look at things like doge, efforts to cut deficits, which have been tried in the past, most of the deficits are driven by mandatory spending, interest on the debt, defense spending. it's going to be hard to get the deficit on a more sustainable path. that will be the goal over the next few years, and in the background policymakers have to be thinking that these levels are worrying. scarlet: it only takes a couple of bond investors to make that point clearly. robert sockin is senior global economist at citi. our stock of the hour is u.s. steel, the shares stumbling after nippon steel's takeover deal was blocked by president biden. the companies putting out a strong response. that is next. ♪

scarlet: this is numbered markets. i'm scarlet fu. time now for the stock of the hour. u.s. steel down after president biden blocked the sale of the company to nippon steel, killing a deal that sparked a political firestorm and raised tensions with japan. the companies put out a strong response. josh wingrove joins us now with more. the companies published a statement saying they are left with no choice but to take all appropriate action to protect our legal rights. what does that mean? josh: they are all but saying they are going to sue here. they stopped just short of saying that, but they are saying this decision was unlawful and are essentially confused -- accusing the of working backwards off of they think was

a decision biden had made early on in the process and then filled in the justification after the fact to get to the answer he wanted to get to. that is their claim. the administration is saying they review found security risks here, that this would expose a key domestic sector to undo risk in the hands of even an allied country. reviews are normally aimed at more adversarial countries. almost always at china. this has been an unusual one up and down the docket. if this case does go forward it potentially means we are not done with this, although i am not a lawyer. i will say i have had a hard time finding people that have much optimism that there would be ample rounds here. it is an open question whether any legal challenge would be fruitful or whether there is elbowroom for a president to kill things on what they claim to be, at least, security grounds. scarlet: we know japan's government lobbied the white house for this deal to go

through. and i'm curious what biden's rejection means for the state of u.s.-japan relations overall? josh: some criticism already from our colleagues reporting that the japanese government and one of the ministers has criticized this as incomprehensible. biden has tried to approach things as sort of a friend-ensuring strategy, and this casts into question when rubber hits the road do you really believe in that or not? japan is a key ally, of course, in the indo pacific, but also in embracing key sectors, including steel against china. advocates said it would create a company with a big enough for rent to go toe-to-toe with chinese giants. questions over whether it will remain at something, whether it will be broken up, right now biden is saying and the administration is saying, this is not about japan. this is not about alliances abroad. but of course, the administration is not following

through with its pledge to align itself more closely with allies even when it gets a little tough. scarlet: and, of course, even if this deal was resuscitated the incoming president was not a fan of u.s. steel being sold to nippon steel either, although biden's decision spares the incoming president from having to make a call on it. josh: when explanation for why biden had stopped short until today of saying, i will block this deal, is making sure it withstood a legal challenge. that is a feasible explanation. trump was not particularly concerned with that, suffice it to say. he has been screaming from the rooftop that he would block it. the deadline and timelines gave biden either the choice to try to find some way to delay it again or decide his deadline was next week. he could not have left this on the desk for trump. scarlet: thank you so much.

josh joining us from washington. coming up, a certain flavor of hedge funds had a successful 2024 with trump's presidential victory. discovery seeing returns of more than 50% for the year. this is bloomberg. ♪ (cheerful music) (phone ringing) [narrator] not all multi-millionaires built their wealth the same way, you have... the fearless investor. the type a cpa. the bootstrapper. the bootmaker. yeehaw [narrator] but many do have something in common.

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scarlet: this is bloomberg markets. i'm scarlet fu. multi-strategy fund had a successful 2024, with some seeing returns of more than 50%. partly due to president trump's presidential victory. macro funds are wagering that this year will bring more of the same. joining us now is bloomberg's -- who covers hedge funds. the idea is the trump trade continues, and macro funds are in the best position to profit off of that. >> for cicely. they had been struggling for years. low interest rates tampered

their performance. now you are seeing them do quite well. you are seeing 50% return numbers for some of these guys. discovery, up 52% for the year. unreal. very good numbers. these funds tend to be more volatile than other strategies, but that is a great return. point state, 48%. seeing these funds benefit off of the back of the trump trade and our people telling us they expect that to continue as we continue? scarlet: how does that compare to multi-strategy? in the table you and your colleagues have put together some have done well, but others have been struggling to get high single digit returns. hema: the expectation is different than macro. macro tends to be more volatile. you bet on multi-strat because you want a return of at least 1% or 2% every month.

they generally are more secure. a 15% return from millennium or citadel is a good return. 11% for exodus point is decent. this is a fund that has not done well in recent years. some of these are poor -- are posting the best returns since 2020. scarlet: what other returns are you looking for? hema: we are looking at next. we have on our table they are, up about 19%. you're looking for the other equity hedge funds. tagger global, viking. that is what we are looking for. scarlet: we can complete our 2024 roundup of these hedge funds, but that 50% number really gets your attention from discovery. thank you so much. hema parmar covering hedge funds for us here at bloomberg news. i'm scarlet fu. that does it for bloomberg markets this hour. we'll be keeping an eye on the

u.s. house as we await this speakerphone. the vote is due to begin shortly , and mike johnson is once again in the running as speaker of the house. from new york, this is bloomberg doing -- from new york, 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.

announcer: from the world of politics of the world of business, this is "balance of power." ♪

live from washington d.c. ♪ joe: the new congress is called to order. welcome to the fastest show in politics. we do not have a speaker yet. i am geomet alongside kailey leinz in washington. kailey, the nominations have been set. hakeem jeffries, mike johnson, and the roll call vote is officially underway. kailey: there are 434 members present and voting as we speak, that makes 218 the magic number to secure the gavel and be the next speaker for mike johnson, the incoming speaker. that means they can only afford to lose to republican votes. we will see if anyone else joins tom massey in voting agains.